# EDGAR Filing Document

**Accession Number:** 0001076691
**File Stem:** 0001193125-23-078153
**Filing Date:** 2023-3
**Character Count:** 1794140
**Document Hash:** 0c7c9632bc83ac86763f7eaadba02fd4
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-23-078153.hdr.sgml**: 20230324

**ACCESSION NUMBER**: 0001193125-23-078153

**CONFORMED SUBMISSION TYPE**: 1-A/A

**PUBLIC DOCUMENT COUNT**: 46

**FILED AS OF DATE**: 20230324

**DATE AS OF CHANGE**: 20230323

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** OCONEE FINANCIAL CORP
- **CENTRAL INDEX KEY:** 0001076691
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** GA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 1-A/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 024-12151
- **FILM NUMBER:** 23757420

**BUSINESS ADDRESS:**
- **STREET 1:** 35 NORTH MAIN STREET
- **STREET 2:** PO BOX 205
- **CITY:** WATKINSVILLE
- **STATE:** GA
- **ZIP:** 30677-0205
- **BUSINESS PHONE:** 7067696611

**MAIL ADDRESS:**
- **STREET 1:** 35 NORTH MAIN STREET
- **STREET 2:** PO BOX 205
- **CITY:** WATKINSVILLE
- **STATE:** GA
- **ZIP:** 30677-0205

## Part

##### [**Table of Contents**](#toc)

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**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

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**Amendment No. 1** 

**to** 

**FORM 1-A** 

**REGISTRATION STATEMENT** 

***UNDER***

***THE SECURITIES ACT OF 1933***

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## OCONEE FINANCIAL CORPORATION
**(Exact name of registrant as specified in its charter)** 

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| | | |
|:---|:---|:---|
| **Georgia** | **6022** | **58-2442250** |
| **State of Incorporation** | **Primary Standard Industrial**<br> **Classification Code** | **I.R.S. Employer**<br> **Identification Number** |

---

**41 N. Main Street** 

**Watkinsville, Georgia 30677** 

**(706) 769-6611** 

**(Address, including zip code, and telephone number, including area code, of principal executive offices)** 

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**CONTACT INFORMATION** 

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| | |
|:---|:---|
| **Pre-Qualification** | **Service Agent** |
|  T. Neil Stevens<br> President & CEO<br> 41 N. Main Street<br> Watkinsville, Georgia 30677<br> (706) 769-6611<br> nstevens@oconeestatebank.com | Oconee Financial Corporation<br> c/o James R. McLemore<br> 35 N. Main Street<br> Watkinsville, GA 30677 |

---

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##### [**Table of Contents**](#toc)
**An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.** 

**PRELIMINARY OFFERING CIRCULAR — SUBJECT TO COMPLETION** 

**[INSERT OCONEE LOGO]** 

## Oconee Financial Corporation
**Up to [136,861] Shares of Common Stock** 

**at** 

**$[31.51] Per Share** 

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Oconee Financial Corporation, which we refer to herein as "Oconee," is offering shares of our common stock in connection with the conversion merger of Elberton Federal Savings & Loan Association, which we refer to as "Elberton," in which Elberton will convert from the mutual to the stock form of organization and simultaneously merge with and into Oconee State Bank, a wholly owned subsidiary of Oconee Financial Corporation. We are offering for sale up to [136,861] shares of our common stock on a "best efforts" basis. We are offering the shares first to eligible members of Elberton Federal Savings & Loan Association and then (if any shares remain available) to residents of Elberton or Elbert County, our existing shareholders and the general public. The purchase price for all subscribers is $[31.51] per share. The offering will commence on or about [**•**] terminate on [**•**], and we will only close the offering if we sell a minimum of [101,158] shares in the offering. We will escrow your subscription funds in a segregated deposit account at Oconee State Bank, our wholly-owned subsidiary.

Although our common stock is quoted on the OTCQX (symbol: OSBK), there has been a very limited trading market in our common stock, and it is not anticipated that an active market will develop as a result of this offering. *See* "RISK FACTORS." As of [January 23, 2023], the last reported sales price of our common stock was $[36.60].

**Investing in our common stock involves risks. See "[RISK FACTORS](#tx406793_8)" beginning on Page 20.** 

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Price to Public** | **Price to Public** | **Underwriting<br>Discounts and<br>Commissions** | **Underwriting<br>Discounts and<br>Commissions** | **Other Expenses** | **Other Expenses** | **Proceeds to Issuer** | **Proceeds to Issuer** | **Proceeds to Other<br>Persons** |
|  Per Share | [$| 31.51] | [$| 2.21] | [$| 3.71]<sup>1</sup> | [$| 25.59] | $0 |
|  Total Minimum | [$| 3187500] | [$| 223125] | [$| 375000] | [$| 2589375] | $0 |
|  Total Maximum | [$| 4312500] | [$| 301875] | [$| 375000] | [$| 3635625] | $0 |

---

**<sup>1</sup>** **Expenses fixed at $375,000, per share amount calculated based on sale of 101,158 shares.** 

**Neither the Securities and Exchange Commission, any state securities commission, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System nor the Georgia Department of Banking and Finance has approved or disapproved of the securities to be issued in connection with this offering or determined if the offering circular is accurate or complete. Any representation to the contrary is a criminal offense.** 

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**The securities to be issued in this offering are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of any bank, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.** 

**PERFORMANCE TRUST** 

**CAPITAL PARTNERS** 

For assistance, contact the Stock Information Center at [TBD].

**The date of this offering circular is [**●**], 2023** 

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##### [**Table of Contents**](#toc)
**<u>**TABLE OF CONTENTS**</u>**

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| | |
|:---|:---|
|  [FORWARD-LOOKING STATEMENTS](#tx406793_1) | 1 |
|  [SUMMARY](#tx406793_2) | 2 |
|  [SUMMARY FINANCIAL DATA](#tx406793_3) | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Selected Historical Financial Data of Oconee Financial](#tx406793_4) | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Selected Historical Financial Data of Elberton](#tx406793_5) | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Unaudited Pro Forma Condensed Combined Financial Information](#tx406793_6) | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Comparative Historical and Pro Forma Unaudited Share Data](#tx406793_7) | 19 |
|  [RISK FACTORS](#tx406793_8) | 20 |
|  [DILUTION OF EXISTING OCONEE SHAREHOLDERS](#tx406793_9) | 32 |
|  [TERMS OF THE OFFERING](#tx406793_10) | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General](#tx406793_11) | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Appraised Value of Elberton; Total Dollar Amount of the Offering and Number of Shares Offered](#tx406793_12) | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Purchase Price](#tx406793_13) | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Maximum and Minimum Purchase Limitations](#tx406793_14) | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Transfer Restrictions on Oconee Common Stock Being Sold](#tx406793_15) | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Offering Process](#tx406793_16) | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Timing of Completion of the Merger Conversion and Sale of Shares](#tx406793_17) | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Conditions to Completion of the Offering and Termination of the Offering](#tx406793_18) | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Certain Federal Income Tax Consequences](#tx406793_19) | 39 |
|  [DESCRIPTION OF MERGER CONVERSION AND RELATED AGREEMENTS](#tx406793_20) | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Merger Agreement](#tx406793_21) | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Daniel Graves Employment Agreement](#tx406793_22) | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Stock Award Agreements](#tx406793_23) | 48 |
|  [PLAN OF DISTRIBUTION](#tx406793_24) | 48 |
|  [USE OF PROCEEDS](#tx406793_25) | 49 |
|  [DESCRIPTION OF BUSINESS](#tx406793_26) | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Company](#tx406793_26a) | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Bank](#tx406793_26b) | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recent Accounting Pronouncements](#tx406793_26c) | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Market Area and Competition](#tx406793_26d) | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Employees](#tx406793_26e) | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Properties](#tx406793_26f) | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Legal Proceedings](#tx406793_26g) | 52 |
|  [MANAGEMENT DISCUSSION AND ANALYSIS](#tx406793_27) | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Critical Accounting Policies](#tx406793_27a) | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Recently Issued Accounting Standards](#tx406793_27b) | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Analysis of Financial Condition](#tx406793_27c) | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment Securities](#tx406793_27d) | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Loans and Asset Quality](#tx406793_27e) | 54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Deposits](#tx406793_27f) | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Income Taxes](#tx406793_100) | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Borrowing Activities and Liquidity](#tx406793_27g) | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Capital Resources](#tx406793_27h) | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Results of Operations](#tx406793_27i) | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Average Balances and Yields](#tx406793_27j) | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Rate/Volume Analysis](#tx406793_27k) | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Acquisition of Elberton Federal Savings & Loan Association](#tx406793_271) | 67 |

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##### [**Table of Contents**](#toc)

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| | |
|:---|:---|
|  [DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES](#tx406793_28) | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Security Ownership of Certain Beneficial Owners and Management](#tx406793_28a) | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Principal Occupations and Other Information Concerning Executive Officers and Directors](#tx406793_28b) | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Interlocks and Insider Transactions](#tx406793_28c) | 77 |
|  [COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS](#tx406793_29) | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Executive Compensation](#tx406793_29a) | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Outstanding Equity Awards at Fiscal Year-End](#tx406793_29b) | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Directors](#tx406793_29c) | 80 |
|  [SECURITIES BEING OFFERED](#tx406793_30) | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Authorized and Outstanding Capital Stock](#tx406793_31) | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Common Stock](#tx406793_32) | 81 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Liability and Indemnification of Directors and Officers](#tx406793_33) | 82 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Oconee 2021 Equity Incentive Plan](#tx406793_34) | 82 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Oconee Common Stock is Not Insured by the FDIC.](#tx406793_35) | 84 |
|  [SUPERVISION AND REGULATION](#tx406793_36) | 84 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Regulation of Oconee Financial Corporation](#tx406793_37) | 84 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Regulation of Oconee State Bank](#tx406793_38) | 86 |
|  [MARKET FOR COMMON STOCK AND DIVIDENDS](#tx406793_39) | 92 |
|  [LEGAL MATTERS](#tx406793_40) | 93 |
|  [EXPERTS](#tx406793_41) | 93 |
|  [WHERE YOU CAN FIND MORE INFORMATION](#tx406793_42) | 93 |
|  [DEFINED TERMS](#tx406793_43) | 94 |

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**FORWARD-LOOKING STATEMENTS** 

Certain of the statements contained in this offering circular may constitute "forward-looking statements" within the meaning of the meaning of the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Forward-looking statements are generally identifiable by the use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "would," "endeavor," "estimate," "expect," "forecast," "goal," "intend," "may," "objective," "potential," "plan," "predict," "project," "seek," "should," "will" or the negative of such terms and other similar words and expressions of future intent. These forward-looking statements are subject to certain known and unknown risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Such risks and uncertainties and other factors include, but are not limited to, adverse developments or conditions related to or arising from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• significant volatility and deterioration in the credit and financial markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adverse changes in general economic conditions, including any potential recessionary conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the effect of the COVID-19 pandemic on us and our customers, employees
and third-party service providers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• deterioration in our asset or credit quality, including changes in the level and trend of loan delinquencies and
write-offs and changes in our allowance for credit losses and provision for loan losses that may be impacted by deterioration in the residential and commercial real estate markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inflation and changes in the interest rate environment (including changes in the shape of the yield curve) that
reduce our margins or the fair value of financial instruments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in
real estate values in our market areas;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the availability of capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in laws or government regulations affecting financial institutions, including changes in regulatory costs
and capital requirements, as well as changes in monetary and fiscal policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the use of estimates in determining the fair value of certain of our assets, which estimates may prove to be
incorrect and result in significant declines in valuation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to attract and retain deposits and loans in view of increased competitive pressures and other
factors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increases in premiums for deposit insurance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to control general operating costs and expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the soundness of other financial institutions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the potential for regulatory action against us or the Bank, which could require us to increase our allowance for
credit losses, write down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• environmental conditions, including natural disasters, or the impacts of war or terrorist attacks, any of which
may disrupt our business, our operations or our borrowers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure or security breach of computer systems on which we depend;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the effects of changes in laws, regulations, and accounting rules, or their interpretations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic or business conditions in Georgia and other regions where the Bank has operations, including,
but not limited to, adverse changes in economic conditions resulting from a prolonged economic downturn;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to enter new markets successfully and capitalize on growth opportunities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in consumer spending, borrowing and savings habits;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, taxing
authorities and the Financial Accounting Standards Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other risks that are described in this offering circular under "RISK FACTORS;" and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to manage the risks involved in the foregoing.

Actual outcomes and results may differ materially from what is expressed in our forward-looking statements and from our historical financial results due to the factors discussed elsewhere in this report or otherwise disclosed by us. Forward-looking statements included herein speak only as of the date hereof and should not be relied upon as representing our expectations or beliefs as of any date after the date of this report. Except as required by law, we undertake no obligation to revise any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise. The factors discussed herein are not intended to be a complete summary of all risks and uncertainties that may affect our businesses. Though we strive to monitor and mitigate risk, we cannot anticipate all potential economic, operational and financial developments that may adversely impact our operations and our financial results. Forward-looking statements should not be viewed as predictions and should not be the primary basis upon which investors evaluate an investment in our securities.

**SUMMARY** 

This *summary highlights information contained elsewhere in this offering circular. Because this is a summary, it may not contain all of the information that may be important to you. Therefore, you should carefully read this entire offering circular before making a decision to invest in our common stock, including the risks discussed under the "RISK FACTORS" section and our financial statements and related notes which are included herein.*

As used in this offering circular, the terms "we," "us" and "our" refer to Oconee Financial Corporation and its subsidiaries unless the context indicates another meaning. The term "Oconee" refers to Oconee Financial Corporation, and the term "Bank" refers to Oconee State Bank, a Georgia state chartered commercial bank and the wholly owned subsidiary of Oconee. The term "Elberton" refers to Elberton Federal Savings and Loan Association. Please see additional definitions under "DEFINED TERMS," beginning on page 96 of this Offering Circular.

**Who We Are** 

Oconee is a registered bank holding company headquartered in Watkinsville, Georgia, and is the parent company of the Bank, which is a Georgia state bank headquartered in Watkinsville, Georgia. The Bank was established on February 1, 1960, and Oconee was established as a registered bank holding company on January 1, 1999. Our

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principal offices are located at 35 North Main Street, Watkinsville, Georgia 30677, our telephone number is (706) 769-6611 and our website is <u>https://www.oconeestatebank.com/</u>. Information on this website is not and should not be considered a part of this Offering Circular. As of December 31, 2022, we had total assets of approximately $536,748,000, total deposits of approximately $494,870,000, total loans of approximately $300,131,000 and shareholders' equity of approximately $29,083,000.

Oconee State Bank is a leading financial institution with a vision to be essential to the lives, businesses and communities we serve. With more than 60 years of service in the banking industry, we continuously strive to create remarkable experiences that significantly mark the lives of others. We are proud to provide an unparalleled commitment to personalized service, innovative products and solutions, and to bringing exceptional value to our customers through local ownership, involvement and decision-making. We currently operate from four full service branches located in Watkinsville, Bogart, Lawrenceville and Athens. The Bank is chartered by the Georgia Department of Banking and Finance, and its deposits are insured by the Federal Deposit Insurance Corporation up to applicable legal limits. The Bank is regulated by both the Georgia Department of Banking and Finance and the Federal Deposit Insurance Corporation.

We provide a wide variety of lending products for both businesses and consumers. Commercial loan products include lines of credit, letters of credit, term loans, equipment loans, commercial real estate loans, construction loans, accounts receivable financing, and working capital financing. Financing products for individuals include auto, home equity, overdraft protection lines and MasterCard debit cards. Real estate loan products include construction loans, land loans, mini-perm commercial real estate loans, and home mortgages.

As a community-oriented bank, we offer a wide array of personal, consumer and commercial services generally offered by a locally-managed, independently-operated bank. We provide a broad range of deposit instruments and general banking services, including checking, savings accounts (including money market demand accounts), certificates of deposit for both business and personal accounts; internet banking services, such as cash management and Bill Pay; telebanking (banking by phone); courier services and mobile banking.

**Our Focus and Strategic Plan** 

The Bank is a community-oriented bank headquartered in Watkinsville, Georgia, and is the only bank headquartered in Oconee County.

The Bank's overall strategic focus is to grow organically in the Oconee County, Clarke County and Gwinnett County markets. From 2022 to 2026, all three of these markets are projected to have growth rates in both population and median household income in excess of both state of Georgia and national averages. In addition, the Bank may seek to take advantage of prudent growth opportunities outside of these markets – through acquisitions such as Elberton, lending team lift-outs or expansion into new markets through the opening of loan production offices or de novo branches.

Our lending strategic focus is on commercial customers, especially owner and non-owner occupied commercial real estate borrowers. In 2016, the Bank adopted a strategy to deploy excess funds, as the Bank's loan to deposit ratio at the end of 2016 was 48%. The legacy Oconee County market has traditionally provided strong core deposits in excess of the loans the Bank could originate in Oconee County. In 2017, the Bank opened loan production offices in Athens (Clarke County), Georgia and in Lawrenceville (Gwinnett County), Georgia. In May 2022, the Bank expanded into the Macon (Bibb County), Georgia market. As of December 31, 2022, the Bank's loan to deposit ratio was 61% and the combined outstanding loans of these three new markets was $180 million ($108 million Athens, $62 million in Gwinnett County and $10 million in Bibb County).

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We have enjoyed a very stable, low-cost core deposit base. This is the result of our dominant market share in Oconee County. At June 30, 2022, the Bank had the number two market share in Oconee County, or 23% of the market. Core deposits, defined as non-time deposits, were 91% of our total deposits at December 31, 2022. Our strategic deposit focus is to increase the level of non-interest bearing demand deposits to total deposits by acquiring the primary operating account of our customers, particularly our commercial lending customers, which is the largest portion of our loan portfolio.

From an asset quality perspective, we underwrite to prudent debt service and loan to value ratios. Many of our underwriting practices and portfolio concentration limits are informed by lessons learned during the Great Recession of 2008-2010. Our largest lending category is owner-occupied real estate, representing 34% of our loan portfolio as of December 31, 2022. Our level of non-performing assets remains low at 1.77% as of December 31, 2022. From 2016 through 2022, we have had a cumulative recovery in excess of charge-offs of $39,000.

To improve our levels of profitability to those of our peers, we are focusing on improving our revenue per team member. Improvement in this measure will occur as we improve our operating leverage – by growing loans and improve yields on loans, improving our level of non-interest bearing deposits and limiting growth in expenses as the Bank grows.

**Our Mission**

Our primary objective as a community bank is to serve the financial needs of small businesses and individuals. The Bank believes its overall success will come from operating with a very strong sense of its mission, which is to create remarkable experiences that significantly mark the lives of others. For example, the Bank was an economic front line responder during COVID-19, making over $74 million of paycheck protection loans in its communities. Ultimately, our goal is to become Georgia's most remarkable community bank through focusing on profitable growth, safety and soundness and maintaining a great culture for the benefit of our people, our customers and our shareholders.

**Our Acquisition of Elberton Federal Savings & Loan Association**

This Offering is being conducted in connection with our proposed acquisition of Elberton Federal Savings and Loan Association. Oconee, the Bank and Elberton entered into an Amended and Restated Agreement and Plan of Merger Conversion dated as of December 15, 2022, and Elberton has adopted an Amended and Restated Plan of Merger Conversion dated as of July 15, 2021, each of which contemplate Elberton's conversion from a Federal mutual savings and loan association to a Federal stock savings and loan association and merger with and into the Bank. The Merger Agreement and the Plan of Conversion are included as <u>Exhibit 7.1</u> and <u>Exhibit 7.2</u>, respectively, to the Registration Statement, of which this Offering Circular is a part. The Merger Agreement, the Plan of Conversion and applicable rules and regulations promulgated by the Office of the Comptroller of the Currency, Elberton's primary Federal regulator, require us to conduct this offering in connection with the Merger Conversion and set forth certain required terms and conditions of this offering. For further information, please refer to the "Where You Can Find More Information" section of this Offering Circular on page 95.

Oconee is seeking to acquire Elberton primarily because it is an attractive avenue for expanding Oconee's geographic footprint in our core Northeast Georgia market. The Oconee Board believes the transaction is financially beneficial to Oconee, its customers and its shareholders; because it will improve its capital position as a result of this Offering and as a result of the addition of Elberton's retained earnings. We also believe the customers of Elberton will benefit from the Bank's expanded offering of products and services. The addition of new stockholders through this Offering has the potential to increase the liquidity of the Oconee Common Stock.

**This Offering**

Below is a summary of the key terms of the Offering:

Securities Offered Up to [136,861] shares of Oconee Common Stock on a best efforts basis, first to Eligible Members in the Subscription Offering and then (to the extent any shares remain available) to Community Offerees in the Community Offering.

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| Time Period for <br>Offering | The Subscription Offering and the Community Offering will run concurrently with each other. The Offering will commence on [**•**] and will expire on [**•**], unless earlier terminated or extended by Oconee. |
| Eligible Subscribers in <br>Subscription Offering | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The following persons will receive nontransferable subscription rights to purchase shares of Oconee Common Stock in the Subscription Offering in the following descending order of priority:<br>1) Each person that held deposits of $50 or more in Elberton on March 31, 2020.<br>2) Because the Eligibility Record Date is more than 15 months before the date of the latest amendment to the Application filed prior to OCC approval as described in the "Supplemental Eligibility Record Date" definition in 12 C.F.R. § 192.25, each person, other than Elberton's directors, officers and their Associates, that held deposits of $50 or more in Elberton on the last day of the calendar quarter preceding approval of the Plan of Conversion by the OCC; and<br>3) Any other person who is a member of Elberton as of the date fixed by the Elberton Board in accordance with Elberton's Bylaws and OCC regulations for determining the members eligible to vote at the Elberton Special Meeting. |
| Eligible Subscribers in <br>Community Offering | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To the extent there are shares of Oconee Common Stock available for purchase after allocation of shares in the Subscription Offering, the following persons will have the right to subscribe to shares of Oconee Common Stock in the Community Offering:<br>1) Natural persons, including trusts of natural persons, residing in Elberton, Georgia or Elbert County, Georgia;<br>2) Shareholders of record of Oconee on the last day of the month immediately preceding the effectiveness of this offering circular; and<br>3) The general public. |
| Valuation of <br>Elberton | Federal regulations require that in connection with the Merger Conversion, at a minimum, the aggregate purchase price of the securities sold in the Offering be based upon the estimated pro forma market value of Elberton as determined by an independent appraisal. Elberton has retained RP Financial, LC, which is experienced in the evaluation and appraisal of financial institutions, to prepare the appraisal. Pursuant to the regulatory conversion guidelines, the 15% valuation range indicates a minimum value of $3,187,500 and a maximum value of $4,312,500, with a midpoint of $3,750,000, for Elberton as of October 28, 2022. |

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|:---|:---|
| Minimum Investment | No person may purchase fewer than [15] shares of Oconee Common Stock. That means all investors in the offering must invest a minimum of $[472.65] in the Community Offering. |
| Maximum Investment | The maximum aggregate amount of Oconee Common Stock which any person, together with any associate or group of persons acting in concert may, directly or indirectly, subscribe for or purchase in the Offering, when combined with any shares of Oconee Common Stock already owned by such person(s), shall not exceed 5.0% of the total number of shares of Oconee Common Stock sold in the offering. |
| Price Per Share | $[31.51] per share. |
| OTCQX Symbol | <u>OSBK</u> |
| Limited Market for <br>Oconee Common Stock | Although our common stock is quoted on the OTCQX market, there has been a very limited trading market in our common stock, and it is not anticipated that an active market will develop as a result of this Offering. |
| No Preemptive Rights | Holders of shares of Oconee Common Stock are generally entitled to preemptive rights in the same class of shares in proportion to their holdings of shares of such class, but they are not entitled to preemptive rights in connection with this Offering because these shares are issued pursuant to an acquisition of Elberton. |
| Restrictions on Transfer | Purchasers of Oconee Common Stock in the Offering will be prohibited from transferring any Oconee Common Stock for a period of 60 days following the date on which the Merger Conversion is consummated in accordance with the Merger Agreement and the Plan of Conversion. In addition, shares of Oconee Common Stock that are purchased by Elberton's directors, officers and their Associates in the Offering may not be sold for one year after the Closing Date, except that in the event of the death of such director, officer or Associate, the successor in interest may sell the shares. |
| Shares of Oconee common <br>stock outstanding | 896,497 as of [March 14, 2023].<br>[1,033,358] after consummation of this Offering, assuming the maximum number of shares are sold. |

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|:---|:---|
| Dividends and Distributions | Oconee currently pays a dividend on its common stock on an annual basis, and it anticipates declaring and paying an annual dividend after the completion of the Merger Conversion. Oconee has no current intention to change its dividend strategy, but has and will continue to evaluate that decision on an annual basis. After the Merger Conversion, the final determination of the timing, amount and payment of dividends on Oconee common stock will be at the discretion of its board of directors and will depend upon the earnings of Oconee and its subsidiary, the financial condition of Oconee and other factors, including general economic conditions and applicable governmental regulations and policies. |
| Plan of Distribution | We are offering these shares on a "best efforts" basis through our directors and officers and with the assistance of Performance Trust Capital Partners LLC. Our directors and officers will not be entitled to receive any discounts or commissions for selling any shares. The offering is not underwritten, but we have retained the services Performance Trust as placement agent to assist us on a best efforts basis with the Offering. Performance Trust is not obligated to sell or to purchase any of the shares. |
| Participation of Oconee <br>Directors and Officers | Our executive officers and directors may subscribe to purchase shares in the Community Offering in their discretion, but they have made no commitments to do so, and any such subscription will not receive any preference or priority above other similarly-situated Community Offerees. |
| Participation of Elberton <br>Directors and Officers | Elberton's directors, officers and their Associates may subscribe to purchase shares in the Subscription Offering, but they have made no commitments to do so. In the event of an oversubscription, subscription rights received by Elberton's directors, officers and their Associates based on their increased deposits in Elberton during the one-year period preceding the Eligibility Record Date, will be subordinated to all other subscriptions of Eligible Members in the Subscription Offering.<br>Additionally, Elberton's directors and officers are receiving certain other financial payments and incentives in connection with the Merger Conversion. See page 47. |
| How to Subscribe | To subscribe for shares of Oconee Common Stock, Eligible Members and Community Offerees must complete the enclosed Stock Order Form and return it, with full payment. You may submit your Stock Order Form by (1) overnight delivery to the indicated address on the Stock Order Form and (2) hand delivery to the Bank's office located at 41 N. Main Street, Watkinsville, Georgia or Elberton's office located at 6 East Church Street, Elberton, Georgia, during normal business hours or (3) by mail using the postage-paid return envelope accompanying this Offering Circular. **Overnight or hand delivery is strongly encouraged**. Subscribers who have deposit accounts with Elberton may, instead of providing full payment with the Stock Order Form, include instructions on the Stock Order Form as to withdrawal from such deposit accounts. See "TERMS OF THE OFFERING—Method of Payment." |

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| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Use of Proceeds | We intend to use the net proceeds from this Offering for general and corporate working capital purposes, including funding for loans and to support future growth, and enabling the Bank to continue to meet applicable capital requirements. Future growth is expected to occur by focusing new efforts in the Elberton County market which we are entering for the first time in connection with the Merger Conversion, and by increasing loans and deposits at other existing branches. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expiration Date | All subscription rights granted in the Subscription Offering and the Community Offering will expire, if not exercised, at 5:00 pm Eastern Time on [**•**], unless this Offering is terminated earlier or such date is extended without notice to subscribers. |

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**Risk Factors** 

An investment in our common stock involves certain risks. You should carefully consider the risks described under "Risk Factors" beginning on page 20 of this offering circular, as well as other information included in this offering circular, including our financial statements and notes thereto, before making an investment decision.

**SUMMARY FINANCIAL DATA** 

The following table presents selected historical financial information concerning Oconee, which should be read in conjunction with our audited consolidated financial statements, including the related notes, and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," included in this offering circular. The selected financial data as of December 31, 2021 is derived from our audited consolidated financial statements and related notes which are included in this offering circular. The selected financial data presented as of December 31, 2022 is derived from our consolidated financial statements which have not been audited. Throughout this offering circular, information is for Oconee and its subsidiaries on a consolidated basis unless otherwise stated.

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**Selected Historical Financial Data of Oconee Financial** 

The following table sets forth certain of Oconee's consolidated financial data as of the end of and for the years ended December 31, 2022 and December 31, 2021. The consolidated financial information for the year ended December 31, 2021 is derived from Oconee's audited consolidated financial statements, which are included in this Offering Circular. The Consolidated financial information for the year ended December 31, 2022 is derived from Oconee's consolidated financial statements, which have not been audited. In Oconee's opinion, such unaudited consolidated financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of its financial position and results of operations for such periods. The selected historical financial data below is only a summary and should be read in conjunction with Oconee's consolidated financial statements.

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(Amounts in thousands)** | **(Amounts in thousands)** |
|  **<u>Results of Operations:</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | $17852 | $17272 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | 1443 | 1646 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income | 16409 | 15626 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for loan losses |  | 456 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income after provision for loan losses | 16409 | 15170 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noninterest income | 4850 | 4649 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noninterest expenses | 15930 | 16087 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income taxes | 5329 | 3732 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense | 1205 | 732 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $4124 | $3000 |
|  **<u>Financial Condition:</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $536748 | $571142 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities available for sale | 159640 | 162165 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net of unearned income | 300130 | 302523 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | (4549) | (4542) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | 494870 | 519694 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes | 9818 | 9794 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity | 29083 | 39333 |

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  **<u>Performance Ratios:</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Return on average assets | 0.75% | 0.56% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Return on average equity | 13.29% | 7.73% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest margin | 3.20% | 3.05% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Efficiency ratio | 75.54% | 80.02% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend payout ratio | 15.21% | 19.41% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average equity to average assets | 5.66% | 7.19% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loans to deposits at period end | 60.57% | 58.25% |
|  **<u>Asset Quality:</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses to total loans | 1.52% | 1.50% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-accrual loans to total loans, gross | 1.77% | 1.86% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nonperforming assets to total loans and other real estate owned | 1.77% | 1.86% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses to non-performing loans | 85.45% | 80.70% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loan losses (recoveries) to average loans | 0.00% | -0.01% |
|  **<u>Per Share Data:</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings per share, basic | 4.60 | 3.35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings per share, diluted | 4.60 | 3.35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash dividends paid | 0.70 | 0.65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Book value per common share | 32.43 | 43.88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted average shares outstanding, basic | 896991 | 896260 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted average shares outstanding, diluted | 896991 | 896260 |
|  **<u>Regulatory Capital Ratios:</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 capital to adjusted average assets (Leverage ratio) | 9.09% | 8.09% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common equity Tier 1 capital to risk-weighted assets | 13.39% | 12.88% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 capital to risk-weighted assets | 13.39% | 12.88% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total capital to risk-weighted assets | 14.63% | 14.13% |

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**Selected Historical Financial Data of Elberton** 

The following table sets forth certain of Elberton's financial data as of the end of and for the years ended December 31, 2022 and 2021. The historical financial information as of the end of and for the year ended December 31, 2021 is derived from Elberton's audited financial statements, which are included in this offering circular. The financial information as of and for the year ended December 31, 2022 is derived from Elberton's unaudited financial statements, which are included in this offering circular. In Elberton's opinion, such unaudited financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of its financial position and results of operations for such periods. The selected historical financial data below is only a summary and should be read in conjunction with Elberton's financial statements.

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(Amounts in thousands)** | **(Amounts in thousands)** |
| **Results of Operations:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | $935 | $956 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | 142 | 174 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income | 793 | 782 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for loan losses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income after provision for loan losses | 793 | 782 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noninterest income | 1 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noninterest expenses | 900 | 929 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income taxes | (106) | (145) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $(106) | $(145) |
| **<u>Financial Condition:</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $27884 | $28325 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities available for sale | 2239 | 2720 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net of unearned income | 23287 | 22495 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | (41) | (41) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | 20601 | 21308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total capital | 4762 | 4983 |

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| **<u>Performance Ratios:</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Return on average assets | -.40% | -0.51% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Return on average equity | -2.23% | -2.80% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest margin | 3.02% | 3.02% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Efficiency ratio | 113.60% | 118.44% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loans to deposits at period end | 113.04% | 105.57% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average interest-earning assets of average interest-bearing | 120.94% | 111.31% |
| **<u>Asset Quality:</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses to total loans | 0.17% | 0.18% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-accrual loans to total loans, gross | 0.77% | 2.17% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nonperforming assets to total loans and other real estate owned | 0.77% | 2.17% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses to non-performing loans | 22.91% | 8.34% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loan losses (recoveries) to average loans | 0.00% | 0.00% |
| **<u>Regulatory Capital Ratios:</u>** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 capital to adjusted average assets (Leverage ratio) | 18.02% | 17.58% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common equity Tier 1 capital to risk-weighted assets (1) | N/A | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 capital to risk-weighted assets (1) | N/A | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total capital to risk-weighted assets (1) | N/A | N/A |

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(1) Elberton elected to use the community bank leverage ratio (CBLR) for December 31, 2022 and 2021.
Therefore, they were not required to calculate tier 2 capital nor make any deductions that would have been taken from tier 2 capital for December 31, 2022 and 2021.

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**Unaudited Pro Forma Condensed Combined Financial Information** 

The following unaudited pro forma condensed combined financial information combines the historical consolidated financial position and results of operations of Oconee and Elberton, as an acquisition by the Bank using the acquisition method of accounting and giving effect to the related pro forma adjustments described in the accompanying notes. Under the acquisition method of accounting, the assets and liabilities of Elberton will be recorded by Oconee at their respective fair values as of the date the Merger Conversion is completed. In addition the unaudited pro forma condensed combined financial information includes the effect of Oconee's sale of [•] shares of stock. Certain reclassifications have been made to the historical financial statements of Elberton to conform to the presentation in Oconee's financial statements.

The unaudited pro forma condensed combined balance sheet gives effect to the Merger Conversion and sale of Oconee Common Stock as if the transaction had occurred on December 31, 2022. The unaudited pro forma condensed combined income statements for the year ended December 31, 2021 give effect to the Merger Conversion and to the sale of Oconee Common Stock as if the transaction had occurred on January 1, 2021.

A final determination of the fair values of Elberton's assets and liabilities, which cannot be made prior to the completion of the Merger Conversion, will be based on the actual net tangible and intangible assets of Elberton that exist as of the date of completion of the transaction. Consequently, fair value adjustments and amounts preliminarily allocated to a bargain purchase or goodwill and identifiable intangibles could change significantly from those allocations used in the unaudited pro forma combined condensed consolidated financial statements presented herein and could result in a material change in amortization of acquired intangible assets.

The unaudited pro forma condensed combined financial information included herein is presented for informational purposes only and does not necessarily reflect the financial results of the combined companies had the companies actually been combined at the beginning of the periods presented. The adjustments included in this unaudited pro forma condensed combined financial information are preliminary and may be revised and may not agree to actual amounts recorded by Oconee upon consummation of the Merger Conversion. This financial information does not reflect the benefits of the expected cost savings and expense efficiencies, opportunities to earn additional revenue, potential impacts of current market conditions on revenues or asset dispositions, among other factors, and includes various preliminary estimates and may not necessarily be indicative of the financial position or results of operations that would have occurred if the Merger Conversion had been consummated on the date or at the beginning of the period indicated or which may be attained in the future.

The unaudited pro forma condensed combined financial information should be read in conjunction with and is qualified in its entirety by reference to the historical consolidated financial statements and related notes thereto of Oconee and its subsidiaries, which are included in this offering circular, and the historical consolidated financial statements and related notes thereto of Elberton, which are also included in this offering circular.

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**Oconee Financial Corporation and Elberton Federal** 

**Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet** 

**As of December 31, 2022** 

*(Dollars in thousands)* 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |<br>**Oconee Financial**<br>(As Reported) |<br>**Elberton Federal**<br>(As Reported) | **Merger**<br>**Pro Forma**<br>**Adjustments** | **Pro Forma**<br>**for Stock**<br>**Offering** |<br>**Pro<br>Forma**<br>**Combined** |
|  **<u>Assets</u>** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $51430 | $1727 | $(600) | $3750 | $56307 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities available for sale | 159640 | 2239 |  |  | 161879 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted stock, at cost | 285 | 121 |  |  | 406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans held for sale | 140 |  |  |  | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net of unearned income | 300131 | 23287 | (41) |  | 323377 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | (4549) | (41) | 41 |  | (4549) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net | 295582 | 23246 |  |  | 318828 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment, net | 8001 | 215 |  |  | 8216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Core deposit intangible |  |  | 234 |  | 234 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | 21670 | 336 |  |  | 22006 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Assets | $536748 | $27884 | $(366) | $3750 | $568016 |
|  **<u>Liabilities and Stockholder's Equity</u>** |  |  |  |  |  |
|  Liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand | $120057 | $— | $— | $— | $120057 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing demand | 248623 | 10523 |  |  | 259146 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings | 83798 | 1426 |  |  | 85224 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time | 42392 | 8652 |  |  | 51044 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | 494870 | 20601 |  |  | 515471 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | 2977 | 21 |  |  | 2998 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other borrowed funds |  | 2500 |  |  | 2500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes, net of issuance costs | 9818 |  |  |  | 9818 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 507665 | 23122 |  |  | 530787 |
|  Stockholder's equity: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contributed Capital | 5928 |  |  | 3750 | 9678 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 36765 | 4862 | (366) |  | 41223 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income | (13610) | (62) |  |  | (13672) |
|  | 29083 | 4762 | (366) | 3750 | 37229 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and stockholders' equity | $536748 | $27884 | $(366) | $3750 | $568016 |

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**Oconee Financial Corporation and Elberton Federal** 

**Unaudited Pro Forma Condensed Combined Consolidated Statements of Income** 

**For the Year Ended December 31, 2022** 

*(Dollars in thousands)* 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |<br>**Oconee Financial**<br>(As Reported) |<br>**Elberton Federal**<br>(As Reported) | **Merger**<br>**Pro Forma**<br>**Adjustments** | **Pro Forma**<br>**for Stock**<br>**Offering** |<br>**Pro Forma**<br>**Combined** |
|  Interest income: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and fees on loans | $13860 | $828 | $14 | $— | $14702 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and dividends on securities | 3249 | 95 |  |  | 3344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other interest income | 743 | 12 |  |  | 755 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest income | 17852 | 935 | 14 |  | 18801 |
|  Interest expense: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest on deposits | 783 | 116 |  |  | 899 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other interest expense | 660 | 26 |  |  | 686 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | 1443 | 142 |  |  | 1585 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income | 16409 | 793 | 14 |  | 17216 |
|  Provision for loan losses |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income after provision for loan losses | 16409 | 793 | 14 |  | 17216 |
|  Other income: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Service charges | 646 |  |  |  | 646 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gain on sale of securities | 1 |  |  |  | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage origination income | 1018 |  |  |  | 1018 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | 1074 |  |  |  | 1074 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous | 2111 | 1 |  |  | 2112 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income | 4850 | 1 |  |  | 4851 |
|  Other expenses: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | 9496 | 428 |  |  | 9924 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Occupancy | 1181 | 93 |  |  | 1274 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other operating | 5253 | 379 | 23 |  | 5655 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | 15930 | 900 | 23 |  | 16853 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income tax | 5329 | (106) | (9) |  | 5214 |
|  Income tax | 1205 |  |  |  | 1205 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $4124 | $(106) | $(9) | $— | $4009 |
|  Net income per share | $4.60 | N/A |  |  | $3.95 |

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**Oconee Financial Corporation and Elberton Federal** 

**Unaudited Pro Forma Condensed Combined Consolidated Statements of Income** 

**For the Year Ended December 31, 2021** 

(Dollars in thousands) 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |<br>**Oconee Financial**<br>(As Reported) |<br>**Elberton Federal**<br>(As Reported) | **Merger**<br>**Pro Forma**<br>**Adjustments** | **Pro Forma**<br>**for Stock**<br>**Offering** |<br>**Pro Forma**<br>**Combined** |
|  Interest income: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and fees on loans | $15262 | $846 | $14 | $— | $16122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and dividends on securities | 1908 | 102 |  |  | 2010 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other interest income | 102 | 8 |  |  | 110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest income | 17272 | 956 | 14 |  | 18242 |
|  Interest expense: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest on deposits | 1001 | 121 |  |  | 1122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other interest expense | 645 | 53 |  |  | 698 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | 1646 | 174 |  |  | 1820 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income | 15626 | 782 | 14 |  | 16422 |
|  Provision for loan losses | 456 |  |  |  | 456 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income after provision for loan losses | 15170 | 782 | 14 |  | 15966 |
|  Other income: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Service charges | 459 |  |  |  | 459 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gain on sale of securities | 172 |  |  |  | 172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage origination income | 2068 |  |  |  | 2068 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | 179 |  |  |  | 179 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous | 1771 | 2 |  |  | 1773 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income | 4649 | 2 |  |  | 4651 |
|  Other expenses: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | 9300 | 396 |  |  | 9696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Occupancy | 1425 | 89 |  |  | 1514 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other operating | 5362 | 444 | 1125 |  | 6931 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | 16087 | 929 | 1125 |  | 18141 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income tax | 3732 | (145) | (1111) |  | 2476 |
|  Income tax | 732 |  | (233) |  | 499 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $3000 | $(145) | $(878) | $— | $1977 |
|  Net income per share | $3.35 | N/A |  |  | $1.95 |

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**Note A – Basis of Presentation** 

On December 15, 2022, Oconee entered into the Merger Agreement with Elberton. The Merger Agreement provides that Elberton will convert from mutual form to a federal stock savings association and simultaneously merge with and into the Bank, with the Bank as the surviving institution. The separate corporate existence of Elberton will terminate upon consummation of the Merger Conversion, and the Bank will assume and succeed to all of the rights, obligations, duties, and liabilities of Elberton. Oconee will acquire all 1,000 shares of Elberton common stock at a par value of $1.00 per share, to be authorized and issued by Elberton in its stock form as part of the Merger Conversion, in exchange for $1.00 in cash, without interest, for each share, or $1,000 total.

The unaudited pro forma condensed combined financial information of Oconee's financial condition and results of operations, including per share data, are presented after giving effect to the Merger Conversion and Offering. The pro forma financial information assumes that the Merger Conversion was consummated on January 1, 2021 for purposes of the unaudited pro forma condensed combined statements of income and on December 31, 2022 for purposes of the unaudited pro forma condensed combined balance sheet and gives effect to the Merger Conversion, for purposes of the unaudited pro forma condensed combined statement of income, as if it had been effective during the entire period presented.

The Merger Conversion will be accounted for under the acquisition method of accounting in accordance with FASB ASC topic 805, "Business Combinations," whereby the acquired assets and liabilities were recorded by the Bank at their estimated fair values as of their acquisition date. In addition, the difference between the purchase price over the estimated fair value of the assets acquired (including identifiable intangible assets) and liabilities assumed will be recorded as goodwill. However, because the pro forma goodwill is negative, this transaction is considered a bargain purchase.

The pro forma financial information includes estimated adjustments to record the assets and liabilities of Elberton at their respective fair values and represents management's estimates based on available information. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analysis is performed. The final allocation of the purchase price will be determined after the Merger Conversion is completed and after completion of a final analysis to determine the fair values of Elberton's tangible, and identifiable intangible, assets and liabilities as of the effective date of the Merger Conversion.

**Note B – Pro Forma Adjustments** 

The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are based on current valuations, estimates, and assumptions. Subsequent to the completion of the Merger Conversion, Oconee will engage an independent third-party valuation firm to determine the fair value of the assets acquired and liabilities assumed which could significantly change the amount of the estimated fair values used in pro forma financial information presented.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A fair value adjustment was recorded to Elberton's outstanding loan portfolio. This fair value adjustment
consists of an adjustment for credit deterioration of the acquired portfolio in the amount of $41,000 which represented a mark of 0.18% on Elberton's outstanding loan portfolio. To determine the adjustment related to credit deterioration,
Oconee estimated the credit deterioration based upon the amount of Elberton's recorded allowance for loan loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Elimination of Elberton's allowance for loan losses. Purchased loans acquired in a business combination are
recorded at fair value and the recorded allowance of the acquired company is not carried over.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Assumes no fair value adjustments of acquired fixed assets as of acquisition date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Oconee's estimate of the fair value of the core deposit intangible asset. This will be amortized over ten
years using the straight-line method. This estimate represents a 2% premium on Elberton's core deposits based on current market data for similar transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Assumes no fair value adjustment on deposits and on other borrowed funds as of acquisition date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Represents the net premium amortization on acquired loans assuming the Merger Conversion closed on
January 1, 2022 (see Note D). Premium will be amortized over 3 years using the straight-line method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Represents amortization of core deposit premium assuming the Merger Conversion closed on January 1, 2022
(see Note E). Premium will be amortized over ten years using the straight-line method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Represents one-time estimated transaction related costs of
$1.1 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Weighted average basic and diluted shares outstanding were adjusted to effect the transaction.

**Note C – Pro Forma Allocation of Purchase Price** 

The following table shows the pro forma allocation of the consideration paid for the conversion of Elberton's equity to the acquired identifiable assets and liabilities assumed and the pro forma goodwill generated from the transaction (*unaudited, dollars in thousands*):

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| | |
|:---|:---|
|  **Purchase Price:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value of consideration from conversion | $1151 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total pro forma purchase price | $**1151** |
|  **Fair value of assets acquired:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 1727 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities available for sale | 2239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted stock, at cost | 121 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net | 23246 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment, net | 215 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Core deposit intangible | 234 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | 336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | 28118 |
|  **Fair value of liabilities assumed:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 20601 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other borrowed funds | 2500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 23122 |
|  **Net assets acquired** | $**4996** |
|  **Preliminary pro forma goodwill (Bargain Purchase Gain)** | $**(3845)** |

---

The pro forma purchase price was determined using the assumed discount from the average market price of the Oconee Common Stock plus an estimated $600,000 in expenses relating to this Offering. Due to the pro forma goodwill being negative, this transaction is considered a bargain purchase. Oconee plans to record the bargain purchase as a gain in the noninterest income section of the Company's Consolidated Statements of Income when the acquisition occurs.

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**Note D – Estimated Amortization/Accretion of Acquisition Accounting Adjustments** 

The following table sets forth an estimate of the expected effects of the estimated aggregate acquisition accounting adjustments reflected in the pro forma combined financial statements on the future pre-tax net income of Oconee after the Merger Conversion (*unaudited, dollars in thousands*):

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2022** | **2023** | **2024** | **2025** | **2026** | **Thereafter** | **Total** |
|  Loans | $14 | $14 | $13 | $— | $— | $— | $41 |
|  Core Deposit Intangible | (23) | (23) | (23) | (23) | (23) | (119) | (234) |

---

The actual effect of purchase accounting adjustments on the future pre-tax income of Oconee Financial will differ from these estimates based on the closing date estimates of fair values and the use of different amortization methods than assumed above.

**Note E – Estimated Cost Savings** 

Estimated cost savings, expected to approximate 14% of Elberton's annualized pre-tax non-interest expenses, are excluded from the pro forma analysis. Cost savings are estimated to be realized at 100% beginning in 2022.

**Comparative Historical and Pro Forma Unaudited Share Data**

Summarized below is historical unaudited per share information for Oconee and Elberton and additional information as if the companies had been combined for the period shown, which is referred to as "pro forma" information.

It is expected that both Oconee and Elberton will incur merger and integration charges as a result of the Merger Conversion. Also anticipated is that the Merger Conversion will provide the combined company with financial benefits that may include reduced operating expenses. The information set forth below, which is helpful in illustrating the financial characteristics of the combined company under one set of assumptions, may not reflect all of these anticipated financial expenses and does not reflect all of these anticipated financial benefits or consider any potential impacts of current market conditions or the Merger Conversion on revenues, expense efficiencies, asset dispositions, and share repurchases, among other factors, and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had the companies been combined during the period presented.

In addition, the information set forth below has been prepared based on preliminary estimates of merger consideration and fair values attributable to the Merger Conversion; the actual amounts recorded for the Merger Conversion may differ from the information presented. The estimation and allocations of merger consideration are subject to change pending further review of the fair value of the assets acquired and liabilities assumed and actual transaction costs. A final determination of fair value will be based on the actual net tangible and intangible assets and liabilities of Elberton that will exist on the date of completion of the Merger Conversion.

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The information in the following table is based on, and should be read together with, the historical financial information and the notes thereto for Oconee and Elberton incorporated by reference into, or contained in, this offering circular.

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| | | | |
|:---|:---|:---|:---|
|  | **Historical** | **Historical** | |
|  | **Oconee** | **Elberton** | **Pro Forma**<br>**Combined** |
|  **Basic Earnings Per Common Share** |  |  |  |
|  For the year ended December 31, 2021 | $3.35 | N/A | $1.95 |
|  For the year ended December 31, 2022 | $4.60 | N/A | $3.95 |
|  **Diluted Earnings Per Common Share** |  |  |  |
|  For the year ended December 31, 2021 | $3.35 | N/A | $1.95 |
|  For the year ended December 31, 2022 | $4.60 | N/A | $3.95 |
|  **Cash Dividends Per Common Share** |  |  |  |
|  For the year ended December 31, 2021 | $0.65 | N/A | $0.57 |
|  For the year ended December 31, 2022 | $0.70 | N/A | $0.62 |
|  **Book Value Per Common Share** |  |  |  |
|  For the year ended December 31, 2021 | $43.88 | N/A | $46.49 |
|  For the year ended December 31, 2022 | $32.43 | N/A | $36.65 |

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**RISK FACTORS** 

In addition to general investment risks and the other information contained in this offering circular, you should carefully consider the following risk factors in deciding whether to participate in our offering. The risk factors described below are not inclusive of all risk factors but highlight those that Oconee believes are significant. You should also consider the other information in this offering circular.

***Risks Related to the Offering***

**Because the trading market for Oconee stock is not active, you may not be able to sell your shares at the times and in the amounts you want.** Shares of our common stock are not listed on any exchange or quoted by the Nasdaq<sup>®</sup> Stock Market, although they are quoted on the OTCQX under the ticker symbol "OSBK." The OTCQX is an electronic, screen-based market maintained and operated by the OTC Markets Group, which imposes considerably less stringent listing standards than the Nasdaq. The volume of trading in our common stock is limited and does not constitute an active trading market, and it is not anticipated that a more active trading market will develop as a result of this stock offering. Oconee does not expect to qualify for or seek a listing on any securities exchange in the foreseeable future. Thus, there can be no assurance that you will be able to sell your shares of our common stock at any time in the future or at all, or that an active trading market will develop in the foreseeable future, if ever. See "MARKET FOR COMMON STOCK AND DIVIDENDS."

**The price of our common stock may fluctuate significantly, and this may make it difficult for you to sell shares of common stock at times or at prices you find attractive.** The trading price of our common stock may fluctuate widely as a result of a number of factors, many of which are outside our control. In addition, the stock market is subject to fluctuations in share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations could adversely affect the market price of our common stock.

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Among the factors that could affect our stock price in the future are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated quarterly fluctuations in our operating results and financial condition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in revenue or earnings estimates or publication of research reports and recommendations by financial
analysts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• speculation in the press or investment community;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• strategic actions by us or our competitors, such as acquisitions or restructurings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actions by shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fluctuations in the stock price, trading volumes, and operating results of our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general market conditions and, in particular, market conditions for the financial services industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• proposed or adopted regulatory changes or developments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory action against us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• anticipated or pending investigations, proceedings, or litigation that involve or affect us; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• domestic and international economic factors unrelated to our performance.

The stock market and, in particular, the market for financial institution stocks, has experienced significant volatility over the past several years. As a result, the market price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate more than usual and cause significant price variations to occur. The trading price of the shares of our common stock also depends on many other factors which may change from time to time, including, without limitation, our financial condition, performance, creditworthiness and prospects, future sales of our equity or equity related securities, and other factors identified elsewhere in this offering circular. The capital and credit markets have been experiencing volatility and disruption for several years, at times reaching unprecedented levels. In some cases, the markets have produced downward pressure on stock prices and credit availability for certain issuers without regard to those issuers' underlying financial strength.

**There is limited public information concerning Oconee and its business, operations and financial condition.** There is limited publicly available information about Oconee. Our common stock is not registered, and Oconee does not file reports with the U.S. Securities and Exchange Commission under the Exchange Act. Oconee provides investors with periodic financial and other information, but does not make periodic disclosures of the type that would be available if it were subject to the reporting requirements of the Exchange Act.

**The offering may not be fully subscribed.** The subscription offering is only being made to qualifying Elberton members, and the community offering is being made to residents of Elberton and Elbert County, our existing shareholders and to the general public. However, there can be no assurance that all or any portion of the shares offered will be sold. To the extent that less than all of the shares offered are sold, we will have fewer funds for the uses described in "USE OF PROCEEDS."

**We may pursue additional capital in the future, which may not be available on acceptable terms or at all, could dilute the holders of our outstanding common stock, and may adversely affect the market price of our common stock.** In the current economic environment, we believe it is prudent to consider alternatives for raising capital when opportunities to raise capital at relatively attractive prices present themselves, in order to further strengthen our capital and better position ourselves to take advantage of opportunities that may arise in the future. Our ability to

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raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at the time, which are outside of our control, and our financial performance. We cannot provide any assurance that such capital will be available to us on acceptable terms or at all. Any such capital raising alternatives could dilute the holders of our outstanding common stock, and may adversely affect the market price of our common stock and our performance measures such as earnings per share.

**Your investment may be diluted because of the ability of management to offer stock to others.** Although the shares of our common stock have preemptive rights, you may not be entitled to buy additional shares if shares are offered to others in the future under certain circumstances. We are authorized to issue 1,500,000 shares of common stock, and as of December 31, 2022 we had 896,824 shares of our common stock outstanding. Under certain circumstances, we may offer additional shares of stock for fair value to others in the future without you having the right to purchase additional shares. Any such issuances of common stock would dilute our shareholders' ownership interests and may dilute the per share book value of our common stock.

***Risks Related to Oconee and the Banking Business***

**We have paid annual dividends in the past but may not be able to pay dividends in the future.** Oconee currently pays a dividend on its common stock on an annual basis, and we anticipate declaring and paying an annual dividend following the completion of the Merger Conversion. While Oconee currently has no intention to change its dividend strategy, we will continue to evaluate that decision on an annual basis. The final determination of the timing, amount and payment of dividends on Oconee common stock will be at the discretion of our Board of Directors and will depend upon the earnings of Oconee and our subsidiary, the Bank, the financial condition of Oconee, and other factors, including general economic conditions and applicable governmental regulations and policies. Information concerning our dividend policy and historical dividend practices is set forth below under "MARKET FOR COMMON STOCK AND DIVIDENDS."

**We rely heavily on the payment of dividends from our subsidiary, the Bank, which may be restricted by applicable laws and regulations.** Other than $2.5 million in cash available at the holding company level at December 31, 2022, our ability to meet debt service requirements and to pay dividends depends on the ability of the Bank to pay dividends to us, as we have no other source of significant income. The Bank is subject to regulations limiting the amount of dividends it may pay. For example, the payment of dividends by the Bank is affected by the requirement to maintain adequate capital pursuant to the capital adequacy guidelines issued by the FDIC. If (i) any capital ratio requirements are increased; (ii) the total risk-weighted assets of the Bank increase significantly; and/or (iii) the Bank's income declines significantly, the Bank's Board of Directors may decide or be required to retain a greater portion of the Bank's earnings to achieve and maintain the required capital or asset

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ratios. This would reduce the amount of funds available for the payment of dividends by the Bank to us. Further, the FDIC could prohibit the Bank from paying dividends if, in its view, such payments would constitute unsafe or unsound banking practices. The Bank's ability to pay dividends to us is also limited by Georgia state law.

**Because we have discretion in the use of the proceeds, we may not apply these funds effectively which could have an adverse effect on our business.** We cannot specify with certainty the amounts we will spend on particular uses from the net proceeds we will receive from the offering, and you may not agree with the manner in which our Board of Directors chooses to allocate and spend the proceeds. Our Board of Directors will have broad discretion in the application of the net proceeds. Our Board of Directors currently intends to use the net proceeds as described in "USE OF PROCEEDS." The failure by our Board of Directors to apply these funds effectively could have an adverse effect on our financial position, liquidity and results of operations by reducing or eliminating our net income from operations.

**The holders of our debentures have rights that are senior to those of our shareholders.** In 2020 we issued $10 million in fixed-to-floating rate subordinated notes due August 7, 2030 to institutional accredited investors. These debt securities are senior to the shares of our common stock. As a result, we must make interest payments on the debentures before any dividends can be paid on our common stock, and in the event of our bankruptcy, dissolution or liquidation, the holders of the debt securities must be paid in full before any distributions may be made to the holders of our common stock. In addition, we have the right to defer interest payments on the junior subordinated debt securities for up to five years, during which time no dividends may be paid to holders of our common stock. In the event that the Bank is unable to pay dividends to us, then we may be unable to pay the amounts due to the holders of the junior subordinated debt securities and, thus, we would be unable to declare and pay any dividends on our common stock.

**Our directors and executive officers control a large amount of our stock, and your interests may not always be the same as those of the board and management.** As of the date of this offering circular, our directors and executive officers together with their affiliates beneficially owned approximately 33% of Oconee's outstanding voting stock. As a result, if all of these shareholders were to take a common position, they might be able to affect the election of directors as well as the outcome of corporate actions requiring shareholder approval, such as the approval of mergers or other business combinations. Such concentration may also have the effect of delaying or preventing a change in control of our company. In some situations, the interests of our directors and executive officers may be different from the shareholders. However, our directors and executive officers have a fiduciary duty to act in the best interest of the shareholders, rather than in their own best interests, when considering a proposed business combination or any of these types of matters.

**Our business has been and may in the future be adversely affected by volatile conditions in the financial markets and unfavorable economic conditions generally.** National and global economies are constantly in flux, as evidenced by recent market volatility resulting from, among other things, the COVID-19 pandemic, Russia's military action in Ukraine, a new presidential administration and new economic policies associated therewith and the ever-changing landscape of the energy industry. Future economic conditions cannot be predicted, and any renewed deterioration in the economies of the nation as a whole or in our markets could have an adverse effect, which could be material, on our business, financial condition, results of operations and prospects, and could cause the market price of our stock to decline.

If the economy goes into recession or weakens considerably, the ensuing economic weakness could have one or more of the following undesirable effects on our business:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a lack of demand for loans, or other products and services offered by us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a decline in the value of our loans or other assets secured by real estate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a decrease in deposit balances due to increased pressure on the liquidity of our customers;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an impairment of our investment securities; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an increase in the number of borrowers who become delinquent, file for protection under bankruptcy laws or
default on their loans or other obligations to us, which in turn could result in a higher level of nonperforming assets, net charge-offs and provision for credit losses.

**Inflation could adversely affect our business and our customers**. Inflation is the decrease in the purchasing power of money, reflected in a general increase in prices. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the purchasing power of money. Recently, inflation has risen sharply and the Federal Reserve Board has raised, and will likely continue to raise, certain benchmark interest rates in an effort to combat inflation. As inflation increases, the value of our investment securities, particularly those with longer maturities, would decrease; however, this effect can be less pronounced for floating rate instruments. In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.

**Concentrations of real estate and real estate secured loans could subject us to increased risks in the event of a prolonged real estate recession, pandemic or natural disaster.** At December 31, 2022, approximately $270.6 million or 90.2% of our loan portfolio consisted of loans secured by real property, including approximately $217.6 million in loans secured by commercial real estate, $51.3 million in loans secured by single family residences and $1.7 million in loans secured by construction real estate. Real estate lending presents additional credit related risks, including a borrower's inability to pay and deterioration in the value of real estate held as collateral. Recent market trends demonstrate that the real estate markets can be extremely volatile and unpredictable. At December 31, 2022, nonperforming loans were approximately $5.3 million and 98.6% of these loans were secured by real property. The Bank had no OREO at December 31, 2022.

**Our concentration of commercial real estate loans exposes us to increased lending risks.** Commercial real estate loans, totaling approximately $217.6 million or 72.5% of our total loan portfolio as of December 31, 2022, expose us to a greater risk of loss than residential real estate and consumer loans, which are a smaller percentage of our total loan portfolio. Commercial real estate loans, typically involve larger loan balances to a borrower or group of related borrowers compared to residential loans, and an adverse development with respect to a larger commercial loan relationship would expose us to greater risk of loss than an adverse development with respect to a smaller residential mortgage loan.

**Repayment of our commercial loans is often dependent on the cash flows of the borrowers, which may be unpredictable, and the collateral securing these loans may fluctuate in value.** At December 31, 2022, we had $28.1 million or 9.4% of total loans in commercial loans. Commercial lending involves risks that are different from those associated with real estate lending. Real estate lending is generally considered to be collateral based lending with loan amounts based on predetermined loan to collateral values and liquidation of the underlying real estate collateral being viewed as the primary source of repayment in the event of a borrower default. Our commercial loans are primarily made based on the cash flows of the borrowers and secondarily on any underlying collateral provided by the borrowers. A borrower's cash flow may be unpredictable, and collateral securing those loans may fluctuate in value. Although commercial loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of collateral in the event of default is often an insufficient source of repayment because accounts receivable may be uncollectible and inventories may be obsolete or of limited use, among other things.

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**We may experience loan losses in excess of our allowance for credit losses.** We endeavor to limit the risk that borrowers might fail to repay; nevertheless, losses can and do occur. We create an allowance for credit losses in our accounting records, based on estimates of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• historical experience with our loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• evaluation of economic conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regular reviews of the quality mix and size of the overall loan portfolio;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a detailed cash flow analysis for nonperforming loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regular reviews of delinquencies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the quality of the collateral underlying our loans.

We maintain our allowance for credit losses at a level that we believe is adequate to absorb specifically identified probable losses as well as any other losses inherent in our loan portfolio at any given date. While we strive to carefully monitor credit quality and to identify loans that may become nonperforming, at any time there are loans in the portfolio that could result in losses, but that have not been identified as nonperforming or potential problem loans. We cannot be sure that we will be able to identify deteriorating loans before they become nonperforming assets, or that we will be able to limit losses on those loans that have been identified. Changes in economic, operating and other conditions, including changes in interest rates, deteriorating values in underlying collateral (most of which consists of real estate), and the financial condition of borrowers, which are beyond our control, may cause our estimate of probable losses or actual loan losses to exceed our current allowance. In addition, the FDIC and the GDBF, as part of their supervisory functions, periodically review our allowance for credit losses. Based upon periodic reviews by the FDIC or the GDBF, management may determine that an increase or decrease in our provision for loan losses or the recognition of further losses is necessary. Any increase in the allowance could reduce our earnings.

**Our use of appraisals in deciding whether to make a loan secured by real property does not ensure the value of the real property collateral.** In considering whether to make a loan secured by real property, we generally require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made, and an error in fact or judgment could adversely affect the reliability of an appraisal. In addition, events occurring after the initial appraisal may cause the value of the real estate to decrease. As a result of any of these factors, the value of collateral backing a loan may be less than supposed, and if a default occurs, we may not recover the outstanding balance of the loan.

**We are exposed to risk of environmental liabilities with respect to properties to which we obtain title.** Approximately $270.6 million or 90.2% of our loan portfolio as of December 31, 2022 was secured by real estate. In the normal course of business, we may foreclose and take title to real estate, and could be subject to environmental liabilities with respect to these properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could adversely affect our business and prospects.

**Adverse changes in the economic conditions of the markets where Oconee will operate could have a negative effect on the business.** Oconee's success will depend significantly on growth, or lack thereof, in population, income levels, job creation, deposits and housing starts in the geographic markets in which it will operate. Specifically, the local economic conditions in these areas will have a significant impact on Oconee's commercial and real estate loans, the ability of borrowers to repay these loans, and the value of the collateral securing these loans. Adverse changes in the economic conditions in Oconee's primary markets could negatively affect its financial condition, results of operations and profitability.

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**Our expenses could increase as a result of increases in FDIC insurance premiums or other regulatory assessments.** The FDIC charges insured financial institutions a premium to maintain the DIF at a certain level. In the event that deteriorating economic conditions increase bank failures, the FDIC ensures payments of deposits up to insured limits from the DIF. Although the Bank's FDIC insurance assessments have not increased recently, there can be no assurance that the FDIC will not increase assessment rates in the future or that the Bank will not be subject to higher assessment rates as a result of a change in its risk category, either of which could have an adverse effect on the Bank's earnings.

**Our business has been, and may continue to be, affected by a significant concentration of deposits with two customers**. As of December 31, 2022, the Bank had a concentration of deposits with two municipal customers of $54.4 million.

**We may not be able to continue to attract and retain banking customers at current levels, and our efforts to compete may reduce our profitability.** Competition in the banking industry in the markets we serve may limit our ability to continue to attract and retain banking customers. The banking business in our current and intended future market areas is highly competitive with respect to virtually all products and services. In Georgia generally, and in our service areas specifically, branches of major banks dominate the commercial banking industry. Such banks have substantially greater lending limits than we have, offer certain services we cannot offer directly, and often operate with "economies of scale" that result in lower operating costs than ours on a per loan or per asset basis. We also compete with numerous financial and quasi-financial institutions for deposits and loans, including providers of financial services over the Internet. New technology and other changes are allowing parties to effectuate financial transactions that previously required the involvement of banks. For example, consumers can maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. The process of eliminating banks as intermediaries, known as "disintermediation," could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on our financial condition and results of operations.

Furthermore, customers have become more concerned about the extent to which their deposits are insured by the FDIC. Customers may withdraw deposits in an effort to ensure that the amount they have on deposit with their bank is fully insured. Decreases in deposits may adversely affect our funding costs and net income. Ultimately, competition can and does increase our cost of funds, reduce loan yields and drive down our net interest margin, thereby reducing profitability. It can also make it more difficult for us to continue to increase the size of our loan portfolio and deposit base, and could cause us to rely more heavily on wholesale borrowings which are generally more expensive than retail deposits.

**New or acquired banking offices may not be profitable.** Oconee may seek to identify additional locations for new banking offices. The costs to start up new banking offices or to acquire existing branches and the additional costs to operate these facilities may increase Oconee's non-interest expense and decrease its earnings in the short term. It may be difficult to adequately and profitably manage Oconee's growth through the establishment of additional banking offices and Oconee can provide no assurance that any such banking offices will successfully attract enough deposits to offset the expenses of their operation. In addition, any new or acquired banking offices will be subject to regulatory approval, and there can be no assurance that Oconee will succeed in securing such approval.

**Negative public opinion surrounding Oconee and the banking industry generally could damage Oconee's reputation and adversely impact its earnings.** Reputation risk, or the risk to Oconee's business, earnings and capital from negative public opinion surrounding Oconee and the financial institutions industry generally, is inherent in the banking business. Negative public opinion can result from actual or alleged conduct in any number of activities,

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including lending practices, and from actions taken by government regulators and community organizations in response to those activities. Negative public opinion can adversely affect Oconee's ability to keep and attract customers and employees and can expose Oconee to litigation and regulatory action.

**If we are not able to successfully keep pace with technological changes affecting the industry, our business could be hurt.** The financial services industry is constantly undergoing technological change with the frequent introduction of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better service clients and reduce costs. Our future success depends, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands, as well as create additional efficiencies within our operations. Some of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our clients. Failure to successfully keep pace with technological change in the financial services industry could have a material adverse impact on our business and, in turn, on our financial condition and results of operations.

**Our operations could be adversely impacted if our third-party service providers experience difficulty.** We depend on a number of relationships with third-party service providers, including core systems processing and web hosting. These providers are well established vendors that provide these services to a significant number of financial institutions. If these third-party service providers experience difficulty or terminate their services, and we are unable to replace them with other providers, our operations could be interrupted which would adversely impact our business.

**Unauthorized disclosure of sensitive or confidential customer information, whether through a cyber-attack, other breach of our computer systems or any other means, could severely harm our business.** In the normal course of business we collect, process and retain sensitive and confidential customer information. Despite the security measures we have in place, our facilities and systems may be vulnerable to cyber-attacks, security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events.

In recent periods there has been a rise in fraudulent electronic activity, security breaches, and cyber-attacks within the financial services industry, especially in the banking sector. Some financial institutions have reported breaches of their websites and systems which have involved sophisticated and targeted attacks intended to misappropriate sensitive or confidential information, destroy or corrupt data, disable or degrade service, disrupt operations or sabotage systems. These breaches can remain undetected for an extended period of time. Furthermore, our customers and employees have been, and will continue to be, targeted by parties using fraudulent e-mails and other communications that may appear to be legitimate messages sent by the Bank, in attempts to misappropriate passwords, card numbers, bank account information or other personal information or to introduce viruses or malware to personal computers. Information security risks for financial institutions have increased in part because of new technologies, mobile services and other Internet or web-based products used to conduct financial and other business transactions, and the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others. The secure maintenance and transmission of confidential information, as well as the secure and reliable execution of transactions over our systems, are essential to protect us and our customers and to maintain our customers' confidence. Despite our efforts to identify, contain and mitigate these threats through detection and response mechanisms, product improvement, the use of encryption and authentication technology, and customer and employee education, such attempted fraudulent activities directed against us, our customers, and third party service providers remain a serious issue. The pervasiveness of cyber security incidents in general and the risks of cyber-crime are complex and continue to evolve.

We also face risks related to cyber-attacks and other security breaches in connection with debit card transactions that typically involve the transmission of sensitive information regarding our customers through various third parties. Some of these parties have in the past been the target of security breaches and cyber-attacks, and because the transactions involve third parties and environments that we do not control or secure, future security breaches or cyber-attacks affecting any of these third parties could impact us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them. We also rely on third party service providers to conduct certain other aspects of our business operations, and face similar risks relating to them. While we regularly conduct security assessments on these third parties, we cannot be sure that their information security protocols are sufficient to withstand a cyber-attack or security breach.

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Any cyber-attack or other security breach involving the misappropriation or loss of Bank assets or those of its customers, or unauthorized disclosure of confidential customer information, could severely damage our reputation, erode confidence in the security of our systems, products and services, expose us to the risk of litigation and liability, disrupt our operations, and have a material adverse effect on our business.

**If our information systems were to experience a system failure, our business and reputation could suffer.** We rely heavily on communications and information systems to conduct our business. The computer systems and network infrastructure we use could be vulnerable to unforeseen problems. Our operations are dependent upon our ability to minimize service disruptions by protecting our computer equipment, systems, and network infrastructure from physical damage due to fire, power loss, telecommunications failure or a similar catastrophic event. We have protective measures in place to prevent or limit the effect of the failure or interruption of our information systems, and will continue to upgrade our security technology and update procedures to help prevent such events. However, if such failures or interruptions were to occur, they could result in damage to our reputation, a loss of customers, increased regulatory scrutiny, or possible exposure to financial liability, any of which could have a material adverse effect on our financial condition and results of operations.

**We are subject to a variety of operational risks, including reputational risk, legal risk and compliance risk, and the risk of fraud or theft by employees or outsiders, which may adversely affect our business and results of operations.** We are exposed to many types of operational risks, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, and unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems.

If personal, non-public, confidential or proprietary information of customers in our possession were to be mishandled or misused, we could suffer significant regulatory consequences, reputational damage and financial loss. Such mishandling or misuse could occur, for example, if information were erroneously provided to parties who are not permitted to have the information, either by fault of our systems, employees, or counterparties, or where such information is intercepted or otherwise inappropriately taken by third parties.

Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified. Our necessary dependence upon automated systems to record and process transactions may further increase the risk that technical flaws or employee tampering or manipulation of those systems could result in losses that are difficult to detect. We also may be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control (for example, computer viruses or electrical or telecommunications outages, or natural disasters, disease pandemics or other damage to property or physical assets) which may give rise to disruption of service to customers and to financial loss or liability. We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as we are) and to the risk that we (or our vendors') business continuity and data security systems prove to be inadequate. The occurrence of any of these risks could result in a diminished ability to operate our business (for example, by requiring us to expend significant resources to correct the defect), as well as potential liability to clients, reputational damage and regulatory intervention, which could adversely affect our business, financial condition and results of operations, perhaps materially.

**Previously enacted and potential future financial regulatory reforms could have a significant impact on our business, financial condition and results of operations.** Dodd-Frank, which was enacted in 2010, had a broad impact on the financial services industry, including significant regulatory and compliance changes, and similar sweeping changes are possible in the coming years. Given the uncertainty associated with the manner in which any regulatory changes will be implemented, the extent to which such changes could impact our operations is unclear. These

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changes may impact the profitability of business activities, require changes to certain business practices, impose more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. In particular, the potential impact of regulatory changes on our operations and activities, both currently and prospectively, include, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an increase in our cost of operations due to greater regulatory oversight, supervision and examination of banks
and bank holding companies, and higher deposit insurance premiums;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the limitation of our ability to expand consumer product and service offerings due to more stringent consumer
protection laws and regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a material negative impact on our cost of funds in a rising interest rate environment, since financial
institutions can now pay interest on business checking accounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a potential reduction in fee income, due to limits on interchange fees applicable to larger institutions which
could ultimately lead to a competitive-driven reduction in the fees we receive; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a potential increase in competition due to our lack of ability to compete with nonbank financial service
companies that are not subject to the same regulatory regimes as us.

Further, we may be required to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements, which could negatively impact results of operations and financial condition. We cannot predict whether there will be additional laws or reforms that would affect the U.S. financial system or financial institutions, when such changes may be adopted, how such changes may be interpreted and enforced or how such changes may affect us. However, the costs of complying with any additional laws or regulations could have a material adverse effect on our financial condition and results of operations.

**Reductions in service charge income or failure to comply with payment network rules could negatively impact our earnings.** We derive significant revenue from service charges on deposit accounts, the bulk of which comes from overdraft-related fees. We have seen a drop in our service charge income, which is primarily attributable to lower insufficient funds and overdraft fees due to a general decline in customer spending activity driven by the economic impact of COVID-19 and inflation. In addition, changes in banking regulations could have an adverse impact on our ability to derive income from service charges. Increased competition from other financial institutions or changes in consumer behavior could lead to declines in our deposit balances, which would result in a decline in service charge fees. Such a reduction could have a material impact on our earnings.

**Reductions in interchange income could negatively impact our earnings.** Interchange income is derived from fees paid by merchants to the interchange network in exchange for the use of the network's infrastructure and payment facilitation. These fees are paid to card issuers to compensate them for the costs associated with issuance and operation. We earn interchange fees on card transactions from debit cards, including $985,000 during the year ended December 31, 2022. Merchants have attempted to negotiate lower interchange rates, and the Durbin Amendment to the Dodd-Frank Act limits the amount of interchange fees that may be charged for certain debit card transactions. Merchants may also continue to pursue alternative payment platforms, such as Apple Pay, to lower their processing costs. Any such new payment system may reduce our interchange income. Our failure to comply with the operating regulations set forth by payment card networks, which may change, could subject us to penalties, fees or the termination of our license to use the networks. Any of these scenarios could have a material impact on our business, financial condition and results of operations.

**We depend on our executive officers and key personnel to implement our business strategy and could be harmed by the loss of their services.** We believe that our continued growth and success depends in large part upon the skills of our management team and other key personnel. The competition for qualified personnel in the financial services industry is intense, and the loss of key personnel or an inability to continue to attract, retain or motivate key personnel could adversely affect our business. If we are not able to retain our existing key personnel or attract additional qualified personnel, our business operations would be hurt.

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**We may be adversely affected by the financial stability of other financial institutions.** Our ability to engage in routine funding transactions could be adversely affected by the actions and liquidity of other financial institutions. Financial institutions are often interconnected as a result of trading, clearing, counterparty, or other business relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. Even if the transactions are collateralized, credit risk could exist if the collateral held by us cannot be liquidated at prices sufficient to recover the full amount of the credit or derivative exposure due to us. Any such losses could materially and adversely affect our business, financial condition or results of operations.

**Changes in interest rates could adversely affect our profitability, business and prospects.** Net interest income, and therefore earnings, can be adversely affected by differences or changes in the interest rates on, or the re-pricing frequency of, our financial instruments. In addition, fluctuations in interest rates can affect the demand of customers for products and services, and an increase in the general level of interest rates may adversely affect the ability of certain borrowers to make variable-rate loan payments. Accordingly, changes in market interest rates could have a material adverse effect on our asset quality, loan origination volume, financial condition, results of operations and cash flows. This interest rate risk can arise from the Federal Reserve Board monetary policies, as well as other economic, regulatory and competitive factors that are beyond our control, and thus, we may be unable to anticipate changes in market interest rates.

**The value of the securities in our investment portfolio may be negatively affected by market disruptions, adverse credit events or fluctuations in interest rates, which could have a material adverse impact on regulatory capital levels.** Our available-for-sale investment securities are reported at their estimated fair values, and fluctuations in fair values can result from changes in market interest rates, rating agency actions, issuer defaults, illiquid markets and limited investor demand, among other things. As long as the change in the fair value of a security is not considered to be "other than temporary," we directly increase or decrease our shareholders' equity by the amount of the change in fair value, net of the tax effect. A relatively large increase in market interest rates, in particular, could result in a material drop in fair values and, by extension, in our capital. Investment securities that have an amortized cost in excess of their current fair value at the end of a reporting period are also evaluated for other-than-temporary impairment. If such impairment is indicated, the difference between the amortized cost and the fair value of those securities will be recorded as a charge in our income statement, which could also have a material adverse effect on our results of operations and capital levels.

**Non-compliance with USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions and curtail expansion opportunities.** Financial institutions are required under the USA PATRIOT Act and the Bank Secrecy Act to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. Financial institutions are also obligated to file suspicious activity reports with the U.S. Treasury Department's Office of Financial Crimes Enforcement Network if such activities are detected. These rules also require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Failure or the inability to comply with these and other regulations could result in fines or penalties, curtailment of expansion opportunities, intervention or sanctions by regulators and costly litigation or expensive additional controls and systems. During the last few years, several banking institutions have received large fines for non-compliance with these laws and regulations. Oconee cannot be assured that the policies it establishes to prevent violations of these laws and regulations will effectively protect it.

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***Risks Related to the Merger Conversion***

**The Merger Conversion may be more difficult, costly or time consuming than expected, and the anticipated benefits and cost savings of the Merger Conversion may not be realized.** The Bank and Elberton have operated and, until the completion of their Merger Conversion (defined in the "TERMS OF THE OFFERING"), will continue to operate, independently. The success of the Merger Conversion, including anticipated benefits and cost savings, will depend, in part, on Oconee's ability to successfully combine the businesses of the Bank and Elberton. It is possible that the integration process could result in the loss of key employees, the disruption of each organization's ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined organization's ability to maintain relationships with customers, depositors and employees or to achieve the anticipated benefits and cost savings of the Merger Conversion. The loss of key employees could adversely affect Oconee's ability to successfully conduct its business in the markets in which the Bank and Elberton now operate, which could have an adverse effect on Oconee's financial results and the value of our common stock. If Oconee experiences difficulties with the integration process, the anticipated benefits of the Merger Conversion may not be realized fully or at all or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that cause the Bank and/or Elberton to lose customers or cause customers to move their business to competing financial institutions. Integration efforts between the two organizations will also divert management attention and resources and may cost more than expected. These integration matters could have an adverse effect on each of the Bank and Elberton during this transition period and for an undetermined period after completion of the Merger Conversion on the combined organization. In addition, the actual cost savings of the Merger Conversion could be less than anticipated.

**The value of the shares after the Merger Conversion may be affected by factors that are different from those affecting the shares of Oconee currently.** Following the Merger Conversion, the value of our common stock will be driven by factors such as the results of operations and financial condition of the combined organization. These factors may differ from factors that drive the value of our common stock prior to the Merger Conversion.

**Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined organization following the Merger Conversion.** Before the Merger Conversion may be completed, approvals must be obtained from the OCC and the GDBF and a waiver of the requirement to submit a change in control application from the Federal Reserve. These regulators may impose conditions on the completion of the Merger Conversion or require changes to the terms of the Merger Conversion. Such conditions or changes could have the effect of delaying or preventing completion of the Merger Conversion or imposing additional costs on or limiting the revenues of the combined bank following the Merger Conversion, any of which might have an adverse effect on the combined bank following the Merger Conversion.

**The Bank and Oconee will be subject to business uncertainties and contractual restrictions while the Merger Conversion is pending.** Uncertainty about the effect of the Merger Conversion on employees and customers may have an adverse effect on Oconee. These uncertainties may impair the ability of the Bank and Elberton to attract, retain and motivate key personnel until the Merger Conversion is completed, and could cause customers and others that deal with either bank to seek to change existing business relationships. Retention of certain employees by both banks may be challenging while the Merger Conversion is pending, as certain employees may experience uncertainty about their future roles with the combined bank. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the Bank or Elberton, the business to be conducted by the combined bank following the Merger Conversion could be harmed.

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**Dilution of Existing Oconee Shareholders** 

The Offering, if consummated, will result in dilution of the ownership interest of existing Oconee shareholders. While holders of shares of Oconee Common Stock are generally entitled to preemptive rights in the same class of shares in proportion to their holdings of shares of such class, they are not entitled to preemptive rights in connection with this Offering because these shares are issued pursuant to an acquisition of substantially all of the assets of Elberton. The table below sets forth pro forma information about the expected dilution of existing Oconee shareholders' ownership interest in connection with the Offering:

Oconee Financial Corporation Acquisition of Elberton Federal Savings and Loan Association

Pro Forma Ownership Dilution Analysis

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|:---|:---|:---|:---|
|  | Appraisal Valuation and Regulatory Range | Appraisal Valuation and Regulatory Range | Appraisal Valuation and Regulatory Range |
|  | Minimum | Midpoint | Maximum |
|  Current Oconee Common Shares Outstanding | 896497 | 896497 | 896497 |
|  Elberton Offering Amount ($)(1) | $3187500 | $3750000 | $4312500 |
|  30 Day Value of Oconee Stock | $37.06 | $37.06 | $37.06 |
|  Purchase Discount (2) | 15.00% | 15.00% | 15.00% |
|  Purchase Price/Share | $31.51 | $31.51 | $31.51 |
|  <u>100% Participation by Elberton Members(3)</u> |  |  |  |
|  # of Oconee Shares Purchased by Elberton Members | 101158 | 119010 | 136861 |
|  Pro Forma Number of Oconee Shares Outstanding | 997655 | 1015507 | 1033358 |
|  <u>Pro Forma Ownership Percentages</u> |  |  |  |
|  Original Oconee Shareholders | 89.86% | 88.28% | 86.76% |
|  New Shareholders from Elberton | 10.14% | 11.72% | 13.24% |
|  <u>50% Participation by Elberton Members(4)</u> |  |  |  |
|  # of Oconee Shares Purchased by Elberton Members at $31.51/Share | 50579 | 59505 | 68431 |
|  # of Oconee Shares Purchased by Oconee Members at $31.51/Share | 50579 | 59505 | 68431 |
|  Pro Forma Number of Oconee Shares Outstanding | 997655 | 1015507 | 1033358 |
|  <u>Pro Forma Ownership Percentages</u> |  |  |  |
|  Original Oconee Shareholders | 94.93% | 94.14% | 93.38% |
|  New Shareholders from Elberton | 5.07% | 5.86% | 6.62% |

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(1) Midpoint Value based on independent appraisal filed with the application.

(2) Equal to the purchase price per share for all purchasers.

(3) Assumes members of Elberton purchase 100% of the Oconee shares in the offering.

(4) Assumes members of Elberton use 50% of the appraised value of Elberton (dollars) to purchase Oconee shares in
the offering.

**TERMS OF THE OFFERING** 

**General** 

We are offering up to [136,861] shares of our common stock, par value $2.00 per share.

This Offering is being conducted in connection with our proposed acquisition of Elberton Federal Savings and Loan Association. Oconee, the Bank and Elberton have entered into an Amended and Restated Agreement and Plan of Merger Conversion dated as of December 15, 2022, and Elberton has adopted an Amended and Restated Plan of Merger Conversion dated as of June 1, 2021, each of which contemplate Elberton's conversion from a Federal mutual savings and loan association to a Federal stock savings and loan association and merger with and

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into the Bank. The Merger Agreement and the Plan of Conversion are included as <u>Exhibit</u> <u>7.1</u> and <u>Exhibit</u> <u>7.2</u>, respectively, to the Registration Statement, of which this Offering Circular is a part. For further information, please refer to the "Where You Can Find More Information" section of this Offering Circular on page 95. The Merger Agreement, the Plan of Conversion and applicable rules and regulations promulgated by the Office of the Comptroller of the Currency, Elberton's primary Federal regulator, require us to conduct this offering in connection with the Merger Conversion and set forth certain required terms and conditions of this offering. The following discussion does not purport to be complete and is subject to and is qualified in its entirety by reference to all of the provisions of the Merger Agreement and the Plan of Conversion.

We are offering shares first in the Subscription Offering in the following order of preference: (1) to each person that held deposits of $50 or more in Elberton on March 31, 2020; (2) because the Eligibility Record Date is more than 15 months before the date of the latest amendment to the Application filed prior to OCC approval as described in the "Supplemental Eligibility Record Date" definition in 12 C.F.R. § 192.25, to each person, other than Elberton's directors, officers and their Associates, that held deposits of $50 or more in Elberton on the last day of the calendar quarter preceding approval of the Plan of Conversion by the OCC; and (3) to any other person who is a member of Elberton as of the date fixed by the Elberton Board in accordance with Elberton's Bylaws and OCC regulations for determining the members eligible to vote at the Elberton Special Meeting. The subscription rights of each Eligible Member are nontransferable.

Shares offered but not sold in the Subscription Offering are offered in the Community Offering in the following order of preference: (1) natural persons, including trusts of natural persons, residing in Elberton, Georgia or Elbert County, Georgia; (2) to shareholders of record of Oconee on the last day of the month immediately preceding the effectiveness of this offering circular; and (3) to the general public.

The Subscription Offering and the Community Offering shall commence concurrently with each other.

**Appraised Value of Elberton; Total Dollar Amount of the Offering and Number of Shares Offered** 

The total dollar amount for which all shares will be sold in the Offering shall be no less than 15% below the midpoint of the Appraised Value of Elberton and no more than 15% above the midpoint of the Appraised Value of Elberton.

The total number of shares of Oconee Common Stock to be offered in the Subscription Offering will be within 15% below or above the number determined by dividing (i) the Appraised Value of Elberton as it will be updated by (ii) the Oconee Market Price. No fractional shares will be issued. The total number of shares of Oconee Common Stock available for purchase in the Community Offering will equal the number of shares not subscribed for in the Subscription Offering.

Under the Plan of Conversion, the number of shares of Oconee Common Stock that must be offered in connection with the Merger Conversion is based on the Appraised Value of Elberton. Pursuant to the regulatory conversion guidelines, the 15% valuation range indicates a minimum value of $3,187,500 and a maximum value of $4,312,500, with a midpoint of $3,750,000, for Elberton as of October 28, 2022. The estimated range of [101,158] to [136,861] shares being offered hereby has been determined by dividing the Appraised Value by the Oconee Market Price.

RP Financial's appraisal was based in part upon Elberton's financial condition and results of operations, the effect of the additional capital that it theoretically would have raised from the sale of common stock in a stand alone standard conversion offering, and an analysis of a peer group of 10 publicly traded financial institution holding companies that RP Financial considered comparable to Elberton.

Two measures that some investors use to analyze a stock investment are the ratio of the offering price to an issuer's "book value" and "tangible book value" and the ratio of the offering price to an issuer's earnings. Book value is the same as total equity and represents the difference between the issuer's assets and liabilities. Tangible book value is equal to total equity minus intangible assets. Earnings are defined as net earnings after taxes. RP Financial considered the impact the completion of a standard mutual-to-stock conversion offering would have to Elberton's book value, tangible book value and earnings.

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The following table presents a summary of the pro forma pricing ratios for Elberton based on the financial impact of a stand-alone conversion and offering based on financial data as of and for the year ended September 30, 2022:

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| | | | |
|:---|:---|:---|:---|
|  | | Price-to- | Price-to- |
|  | Price-to-Book | Tangible Book | Earnings |
| Elberton FS&LA (pro forma) | Value Ratio | Value Ratio | Multiple (1) |
|  Minimum | 46.30% | 46.30% | NM |
|  Midpoint | 50.45% | 50.45% | NM |
|  Maximum | 54.05% | 54.05% | NM |

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(1) Elberton's pro forma price to earnings multiple would be "not meaningful" as the pro forma
earnings would be negative.

A copy of RP Financial's appraisal of which sets forth forth the methods and assumptions for the appraisal are included as <u>Exhibit</u> <u>99.1,</u> to the Registration Statement, of which this Offering Circular is a part. For further information, please refer to the "Where You Can Find More Information" section of this Offering Circular on page 95.

RP Financial is expected to receive fees totaling $60,000 for its appraisal report, including any appraisal updates (of which there will be at least one) and reimbursement of out-of-pocket expenses.

**THE APPRAISAL OF ELBERTON IS NOT INTENDED, AND MUST NOT BE CONSTRUED, AS A RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING SHARES OF OCONEE COMMON STOCK. THE APPRAISAL CONSIDERS ELBERTON ONLY AND SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE OF ELBERTON OR ITS VALUE FOLLOWING THE CONVERSION MERGER. IN ADDITION, THE APPRAISED VALUE IS NOT INTENDED, AND MUST NOT BE CONSTRUED, TO EXPRESS AN OPINION AS TO THE VALUE OF OCONEE COMMON STOCK TO BE OFFERED IN THE SUBSCRIPTION OFFERING OR THE COMMUNITY OFFERING.** 

**Purchase Price** 

We are offering shares in the Subscription Offering to Eligible Members and in the Community Offering to Community Offerees for $[31.51] per share, which is approximately, but not less than, 85% of the average daily closing price rounded to the nearest cent (with any amount equal to or greater than $0.005 rounded to the next higher $0.01), of Oconee Common Stock on the OTCQX market for the consecutive period of thirty (30) full trading days ending on and including the trading day immediately preceding the date of this Offering Circular; provided, however, if such price is less than $33.50, then the Oconee Market Price shall be $33.50, and if such price is greater than $41.00, then the Oconee Market Price shall be $41.00. The pricing collar described above is intended to minimize the risk that one or more trades during the relevant time period could artificially alter the purchase price to an extent that it does not provide the intended discount to the true market value of the Oconee Common Stock. The pricing collar was determined by establishing an approximate 10% limit on increases or decreases in the value of the Oconee Common Stock from the price of $37.28, the Market Price on June 1, 2021, when the parties executed the Merger Agreement.

Although the offering price represents a discount to the market price of Oconee Common Stock (at the time the offering price is established), subscribers may be unable to sell the shares for which they subscribed at a price equal to or greater than the offering price.

**Maximum and Minimum Purchase Limitations** 

The Plan of Conversion sets forth minimum and maximum investments for both the Subscription Offering and the Community Offering. No person may purchase fewer than [15] shares of Oconee Common Stock, and the maximum amount of Oconee Common Stock that any person (together with any associate or group acting in concert) may, directly or indirectly, subscribe for or purchase in the Offering shall not exceed 5% of the Oconee Common Stock sold in the Offering. Directors and officers of Elberton may not, directly or indirectly, purchase or subscribe to an amount of Oconee Common Stock that exceeds 35% of the Oconee Common Stock sold in the Offering.

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Notwithstanding the above, subject to any required regulatory approval and the requirements of applicable laws and regulations, but without further approval of Elberton's members, Elberton and Oconee may decrease these individual or the aggregate purchase limitations or increase such limitations to a percentage which does not exceed 9.99% of the total shares of Oconee Common Stock sold in the Offering, whether before, during or after the Subscription Offering or Community Offering. In the event that an individual purchase limitation is increased after commencement of the Offering, Elberton and Oconee will permit any person who subscribed for the maximum number of shares of Oconee Common Stock in the Subscription Offering or, in the discretion of Oconee and Elberton, the Community Offering, and who indicated a desire to be resolicited on the Stock Order Form, to purchase an additional number of shares, so that such person is permitted to subscribe for the then maximum number of shares permitted to be subscribed for by such person, subject to the rights and preferences of any person who has priority subscription rights. In the event of a resolicitation of such subscribers, Elberton and Oconee shall have the right, in their sole discretion, to require such persons to supply immediately available funds for the purchase of additional shares of Oconee Common Stock. Such persons will be prohibited from paying with cash or a personal check, but Elberton and Oconee may allow payment by wire transfer. In the event that any of the individual or aggregate purchase limitations are decreased after commencement of the Subscription Offering or the Community Offering, the orders of any person who subscribed for more than the new purchase limitation shall be decreased by the minimum amount necessary so that such person will be in compliance with the then maximum number of shares permitted to be subscribed for by such person. The maximum purchase limitations may be increased to 9.99%, provided that orders for Oconee Common Stock exceeding maximum subscription or purchase amount set forth herein shall not exceed in the aggregate 9.99% of the total shares of Oconee Common Stock sold in the Offering.

**Transfer Restrictions on Oconee Common Stock Being Sold** 

Purchasers of Oconee Common Stock in the Offering will be prohibited from transferring any Oconee Common Stock for a period of 60 days following the date on which the Merger Conversion is consummated in accordance with the Merger Agreement and the Plan of Conversion. In addition, shares of Oconee Common Stock that are purchased by Elberton's directors, officers and their Associates in the Offering may not be sold for one year after the Closing Date, except that in the event of the death of such director, officer or Associate, the successor in interest may sell the shares.

**Offering Process** 

Oconee and Elberton have caused this offering circular, a Stock Order Form and additional information concerning the Offering to be mailed to each Eligible Member and to each Eligible Oconee Shareholder. Public notice of the Merger Conversion has been published in *The Elberton Star* on [DATE/DATES], and any potential Community Offeree has had the opportunity to request copies of this offering circular. Additional copies of any of these documents are available upon request by calling the Stock Information Center at [TBD]. Any questions or requests for additional information regarding the Merger Conversion or the Offering may be directed to the Stock Information Center.

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Those who are Eligible Members may subscribe for shares of Oconee Common Stock in the Subscription Offering as set forth in this offering circular. **Under the OCC's regulations, no person may transfer or enter into any agreement or understanding to transfer the legal or beneficial ownership of rights to subscribe or of shares purchased in the Subscription Offering to the account of any other person.** No person is required to subscribe for any shares of Oconee Common Stock. Eligible Members may vote at the Elberton Special Meeting regardless of whether they subscribe to shares in the Offering. Those who are Community Offerees may subscribe for shares of Oconee Common Stock in the Community Offering as set forth in this offering circular.

*How to Subscribe.* To subscribe for shares of Oconee Common Stock, Eligible Members and Community Offerees must complete the enclosed Stock Order Form and return it, with full payment. You may submit your Stock Order Form by (1) overnight delivery to the indicated address on the Stock Order Form, (2) hand delivery to the Bank's office located at 41 N. Main Street, Watkinsville, Georgia or Elberton's office located at 6 East Church Street, Elberton, Georgia, during normal business hours, or (3) by mail using the postage-paid return envelope accompanying this Offering Circular. Overnight or hand delivery is strongly encouraged. Subscribers who have deposit accounts with Elberton may, instead of providing full payment with the Stock Order Form, include instructions on the Stock Order Form as to withdrawal from such deposit accounts. See "TERMS OF THE OFFERING—Method of Payment."

Stock Order Forms, together with full payment for the Oconee Common Stock subscribed for (or appropriate instructions for withdrawal from specified deposit accounts), must be received by us in accordance with the above delivery instructions by the Subscription Expiration Date (currently anticipated to be 5:00 p.m., Eastern Daylight Time, on [**•**]). Oconee reserves the right to reject orders submitted by facsimile transmission. Failure of Oconee for any reason to receive from any Subscriber a properly completed and executed Stock Order Form and payment or withdrawal instructions by such time will be deemed a waiver and release by such Subscriber of any rights that such Subscriber may have in the Offering. A Stock Order Form, once received by Oconee, cannot be amended, modified, or rescinded by the Subscriber. Oconee may, but is not required to, waive any immaterial irregularities in any Stock Order Form or require the submission of a corrected Stock Order Form or the remittance of full payment for subscribed shares by such date as Oconee may specify.

*Method of Payment*. Full payment or instructions for withdrawal from an Elberton deposit account of the Eligible Member for the amount of the Oconee Common Stock for which the Subscriber has subscribed must accompany each properly executed Stock Order Form for subscriptions to be valid. The actual number of shares issued to each such Subscriber will be equal to the amount received from such Subscriber, subject to adjustment for maximum purchase limitations (*see* "Maximum and Minimum Purchase Limitations") and oversubscriptions (*see* "Oversubscription Procedures"), divided by the 85% Price. Because no fractional shares will be issued, the Subscriber will receive as a refund an amount equal to (i) the total dollar amount for which each person subscribed minus (ii) the product of the number of whole shares to be received by such Subscriber and the applicable purchase price.

All shares of Oconee Common Stock purchased in the Offering may be paid for in cash, by check, by money order, by debit of an Eligible Member's Elberton deposit account. If an Eligible Member has a deposit account with Elberton with a sufficient balance to pay the Eligible Member's purchase price, such Eligible Member may pay for the shares subscribed for by authorizing and directing Elberton on the Stock Order Form to make a withdrawal from such deposit account in an amount equal to the aggregate dollar amount of shares of Oconee Common Stock for which such Subscriber wishes to subscribe. In the case of withdrawal requests, funds for which such withdrawal is authorized will remain in the Subscriber's account until withdrawn by Elberton on the Closing Date, and may not be withdrawn by such Eligible Member unless and until the Subscription Offering has been completed or terminated. Before such withdrawal by Elberton, any interest payable on such accounts will continue to be paid in accordance with the account's contractual rate of interest.

All amounts received for the purchase of shares in the Subscription Offering (other than by designation for withdrawal from an eligible deposit account) will be placed in a special segregated Oconee account for the Offering. Oconee will pay interest to the Subscriber on funds deposited in this account at Oconee's prevailing statement savings rate from the date payment is received until the Offerings are either completed or terminated. The amount of interest earned will be paid to each Subscriber and will NOT be applied toward the purchase of Oconee Common Stock.

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*Refunds*. Refunds to Subscribers in the Offering will be remitted (and funds designated by Eligible Members for withdrawal from deposit accounts released) (a) in lieu of the issuance of fractional shares in the Offering, (b) in the event of an oversubscription in the Offering (see "Oversubscription Procedures") and (c) in the event and to the extent that the Offering is terminated. In addition, any interest payable to a Subscriber on funds delivered as payment for shares will be remitted. Any refunds and/or interest due to Subscribers on funds remitted will be mailed to the Subscriber at the address designated on the Stock Order Form promptly after the Closing Date or the termination of the Merger Conversion, as the case may be.

*Oversubscription Procedures*. In the event of an oversubscription for the shares of Oconee Common Stock in the Offering, shares will be allocated to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Shares will be allocated among subscribing Eligible Account Holders so as to permit each Eligible Account
Holder to purchase the lesser of (x) the number of whole shares for which such Eligible Account Holder subscribed, and (y) the number of whole shares equal to the proportion that such Eligible Account Holder's Qualifying Deposit bears
to the total Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unsatisfied, provided each Eligible Account Holder will be entitled to purchase not less than 100 shares and no fractional shares shall be
issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Because the Eligibility Record Date is more than 15 months before the date of the latest amendment to the
Application filed prior to OCC approval as described in the "Supplemental Eligibility Record Date" definition in 12 C.F.R. § 192.25, any shares remaining after the allocations described in paragraph (a) will be allocated among
subscribing Supplemental Eligible Account Holders so as to permit each Supplemental Eligible Account Holder to purchase the lesser of (x) the number of whole shares for which such Supplemental Eligible Account Holder subscribed, and
(y) the number of whole shares equal to the proportion that such Supplemental Eligible Account Holder's Qualifying Deposit bears to the total Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions
remain unsatisfied, provided that no fractional shares shall be issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any shares remaining after the allocations described in paragraphs (a) and (b) will be allocated among
subscribing Other Members so as to permit each Other Member to purchase the lesser of (x) the number of whole shares for which such Other Member subscribed, and (y) the number of whole shares equal to the proportion that such Other
Member's subscription bears to the total subscriptions of all such subscribing Other Members, provided that no fractional shares shall be issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any shares remaining after the allocations described in paragraphs (a), (b) and (c) will be allocated
among Elberton Residents so as to permit each Elberton Resident to purchase the lesser of (x) the number of whole shares for which such Elberton Resident subscribed, and (y) the number of whole shares equal to the proportion that the
subscription of each such Elberton Resident bears to the total subscriptions of all such subscribing Elberton Residents, provided that no fractional shares shall be issued; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Any shares remaining after the allocations described in paragraphs (a), (b), (c) and (d) will be allocated
among Eligible Oconee Shareholders so as to permit each Eligible Oconee Shareholder to purchase the lesser of (x) the number of whole shares for which such Eligible Oconee Shareholder subscribed, and (y) the number of whole shares equal to
the proportion that the subscription of each such Eligible Oconee Shareholder bears to the total subscriptions of all such subscribing Eligible Oconee Shareholders, provided that no fractional shares shall be issued; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Any shares remaining after the allocations described in paragraphs (a), (b), (c), (d) and (e) will be
allocated among any Other Subscriber so as to permit each Other Subscriber to purchase the lesser of (x) the number of whole shares for which such Other Subscriber subscribed, and (y) the number of whole shares equal to the proportion that
such Other Subscriber's subscription bears to the total subscriptions of all such Other Subscribers, provided that no fractional shares shall be issued.

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*Persons in Non-Qualified States or Foreign Jurisdictions*. Oconee will make reasonable efforts to comply with the securities laws of all jurisdictions in the United States in which Eligible Members reside. However, subscription rights may not be offered to any person who resides in a foreign country, or who resides in any jurisdiction in the United States if any of the following apply: (i) a small number of persons otherwise eligible to subscribe for shares of Oconee Common Stock under the Plan of Conversion reside in such jurisdiction; (ii) the issuance of subscription rights or the offer or sale of Oconee Common Stock to such persons would require Oconee, under the securities laws of such jurisdiction, to register as a broker or a dealer or otherwise qualify the Oconee Common Stock for sale in such jurisdiction; or (iii) such registration or qualification would be impracticable for reasons of cost or otherwise. No payments will be made in lieu of the granting of subscription rights.

*Delivery of Shares of Stock*. All shares of Oconee Common Stock sold in this offering will be issued in book entry form and held electronically on the books of our transfer agent. Stock certificates will not be issued. A statement reflecting ownership of shares of Oconee Common Stock sold in the stock offering will be mailed by our transfer agent to the persons entitled thereto at the address noted by them on their Stock Order Form as soon as practicable following consummation of the stock offering.

**Timing of Completion of the Merger Conversion and Sale of Shares** 

The sale of the Oconee Common Stock offered in connection with the Merger Conversion must be completed within 45 calendar days after the expiration of the Subscription Offering. In the event the sale of Oconee Common Stock cannot be completed within the required 45-day period, one or more extensions of time to complete the sale may be granted by the OCC, but no single extension of time may exceed 90 days. No assurance can be given that an extension will be granted if requested. In the event of such an extension, Oconee will distribute to each Subscriber a notice of the extension of time.

After the expiration of the Offering but before the Closing Date, upon the occurrence of any event, circumstance or change of circumstance which would be material to the investment decision of a Subscriber, Oconee will provide notice of such event, circumstance or change of circumstance to Subscribers. Any such notice will grant to each Subscriber the right to increase, decrease or rescind his or her subscription for a period of not less than the greater of 20 days from the date of the mailing of such notice. The subscription of any Subscriber who does not respond to the notice may be automatically rescinded.

**Conditions to Completion of the Offering and Termination of the Offering** 

The respective obligations of Oconee and Elberton to consummate the transactions contemplated by the Merger Agreement, including the Offering, are subject to the satisfaction (or, in some cases, waiver) of certain conditions, including (a) receipt of certain required regulatory approvals, (b) approval of the Plan of Conversion by the members of Elberton (c) an opinion from Alston & Bird LLP with respect to certain tax matters (see "—Certain Federal Income Tax Consequences"), (d) material performance by Elberton and Oconee of all obligations and compliance with all covenants required by the Merger Agreement, (e) that there has been no material adverse change, and (f) that Elberton shall have divested a 6.00% Fixed-to-Floating Rate Subordinated Note Due 2030 made by Oconee and held by Elberton.

On [•], the OCC approved mailing of this offering circular and related materials, and conditioned final approval of the Merger Conversion upon the receipt of certain additional materials. Applications for the Merger Conversion with the FDIC, the GDBF and the Federal Reserve are pending. Oconee anticipates effecting the Merger Conversion as soon as practicable after all conditions to the Merger Conversion have been satisfied or waived.

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The Plan of Conversion may be amended or terminated by a two-thirds vote of each of the Board of Directors of Elberton and the Board of Directors of the Bank with the concurrence of the OCC until the Closing Date. The Merger Agreement may be terminated at any time before the Closing Date by the mutual consent in writing of Oconee and Elberton. Either party may terminate the Merger Agreement if the required conditions to such party's obligations have not been satisfied or waived. In addition, either party may terminate the Merger Agreement at any time if the other party has materially breached the Merger Agreement, or if the required regulatory approvals are not obtained and the time periods for appeals and requests for reconsideration have run. The Merger Agreement also may be terminated by either party if the Closing Date has not occurred by August 31, 2023.

In the event of a termination, all Subscribers in the Offering will receive refunds for amounts remitted for their subscriptions plus any interest (or funds designated for withdrawal will be released). See "The Offering—Refunds."

**Certain Federal Income Tax Consequences** 

*General*. The following is a summary discussion of certain anticipated federal income tax consequences of the Merger Conversion and certain considerations with respect to the purchase of shares by the Community Offerees. The tax treatment of Eligible Members who purchase shares pursuant to the Offering is discussed in the proxy materials for Elberton.

**Eligible Members are urged to review those proxy materials and Eligible Members and Community Offerees are urged to consult their own tax advisors as to the specific tax consequences to them of the Merger Conversion, and any purchase pursuant to the Offering, including, without limitation, tax return reporting requirements, the application and effect of federal, foreign, state, local and other tax laws, and the implications of any proposed changes in the tax laws.** 

This discussion is based upon the Code, the Treasury Regulations, judicial decisions and current administrative rulings and practice, all as in effect and available at the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion does not address all aspects of U.S. federal income taxation that may be applicable, and this discussion does not apply to certain shareholders to whom special rules could apply, such as brokers, financial institutions, insurance companies, regulated investment companies, real estate investment trusts, controlled foreign corporations, passive foreign investment companies, cooperatives, traders in securities or currencies who elect to apply a mark-to-market method of accounting, tax-exempt entities or qualified retirement plans, persons that are (or hold their notes through) partnerships or other pass-through entities, persons subject to special tax accounting rules, certain U.S. expatriates, persons who acquire the notes in connection with employment or other performance of services, persons deemed to sell the notes under the constructive sale provisions of the Code and persons that hold the notes as part of a straddle, hedge, conversion transaction or other integrated transaction. Furthermore, this discussion does not address the consequences of the alternative minimum tax, of the Medicare contribution tax on net investment income, or of any state, local, foreign, or non-U.S. income tax (such as the U.S. federal gift or estate tax). This discussion is not intended to constitute a complete analysis of all tax considerations of the Merger Conversion or the purchase, ownership and disposition of the shares in Oconee. No ruling from the IRS has been or will be sought regarding any matter discussed herein. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of those set forth below.

Oconee has received an opinion of Alston & Bird LLP, tax advisor to Oconee, which reaches certain conclusions with respect to certain federal income tax consequences of the Merger Conversion. However, such an opinion represents only that advisor's best judgment as to the matters expressed therein and has no binding effect on the IRS or official status of any kind. There can be no assurance that the IRS could not successfully contest in the courts an opinion expressed by the advisor as set forth in the Tax Opinion or that legislative, administrative or judicial decisions or interpretations may not be forthcoming that would significantly change the opinions set forth in the Tax Opinion.

*Reorganization Status and Certain Other Tax Effects*. The Tax Opinion provides that the Merger Conversion should qualify as successive tax-free reorganizations under Section 368(a) of the Code. Consequently, (i) Elberton should not recognize gain or loss on its conversion from a Federal mutual savings and loan association to a Federal stock savings and loan association (the "Conversion"); and (ii) neither Elberton nor the Bank should recognize gain or loss on the Merger Conversion.

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*Purchase of Shares Pursuant to the Subscription Offering*. Oconee should not recognize gain or loss on the receipt of money in exchange for its shares purchased pursuant to the Subscription Offering. Eligible Members are urged to consult with their own tax advisors as to the specific tax consequences to them of the Merger Conversion and the purchase of any shares pursuant to the Offering.

*Purchase of Shares Pursuant to the Community Offering*. Oconee should not recognize gain or loss on the receipt of money in exchange for its shares purchased pursuant to the Community Offering. The Community Offerees may recognize gain on the distribution to them of the nontransferable subscription rights to purchase shares pursuant to the Community Offering. Gain would be recognized if such subscription rights have a fair market value greater than zero. The IRS has not concluded that similar subscription rights have value. Assuming that the subscription rights have no value, a purchaser of shares pursuant to the Community Offering should have tax basis in the shares purchased equal to the purchase price thereof and should have a holding period for such stock commencing on the day following the date on which such stock is purchased. Community Offerees are urged to consult with their own tax advisors as to the specific tax consequences to them of the Merger Conversion and the purchase of any shares pursuant to the Offering.

**DESCRIPTION OF MERGER CONVERSION AND RELATED AGREEMENTS** 

**The Merger Agreement** 

*General* 

On June 1, 2021, Oconee, the Bank and Elberton entered into an original Agreement and Plan of Merger Conversion, and on December 15, 2022, amended and restated the original agreement by entering into the Merger Agreement. Pursuant to the Merger Agreement, Oconee will acquire Elberton in series of related transactions that will occur in immediate succession. Under the terms of the Merger Agreement and Plan of Conversion, Elberton will convert from a federal mutual savings association to a federal stock savings association. Immediately following Elberton's mutual to stock conversion, Oconee will acquire all of the shares of common stock of Elberton. Immediately following Oconee's acquisition of Elberton's common stock, Elberton will merge with and into the Bank, with the Bank as the resulting institution, and the Elberton common stock then held by Oconee will be cancelled.

Upon completion of the Merger Conversion, the Bank will acquire all of the assets and assume all of the liabilities of Elberton. The separate corporate existence of Elberton will be terminated as a result of the Merger Conversion. The Merger Conversion is structured to qualify as a tax-free reorganization under applicable law. After closing the Merger Conversion, the sole office of Elberton, which is located at 6 East Church Street, Elberton, Georgia 30635, will be retained by Oconee State Bank as a branch office by the Bank. The principal place of business of each of Oconee and the Bank will continue to be located at 35 North Main Street, Watkinsville, Georgia 30677 after the completion of the Merger Conversion.

Completion of the offering of Oconee Common Stock and the consummation of Elberton's conversion and merger with and into the Bank immediately thereafter are interdependent transactions.

*Merger Consideration* 

As part of the Merger Conversion, immediately following Elberton's mutual to stock conversion, Oconee will acquire 1,000 shares of common stock of Elberton in exchange for $1.00 in cash, without interest, per share. Eligible Members are not entitled to receive any consideration in the Merger Conversion. No assets will be distributed to Eligible Members in connection with the Merger Conversion.

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However, in connection with the Merger Conversion and pursuant to the Agreement and Plan Conversion, Oconee is offering up to [136,861] shares of Oconee Common Stock to Eligible Members in the Subscription Offering and, if the Subscription Offering is undersubscribed, to the general public in a Community Offering. Under the terms of the Agreement and Plan of Conversion, Eligible Members have non-transferable subscription rights to purchase shares of Oconee Common Stock in connection with the Merger Conversion.

*Representations and Warranties* 

Each party has made representations and warranties to the other party with respect to various matters, including its organization, capital structure, financial statements, business, legal proceedings, compliance with laws, regulatory filings, environmental matters, employee matters and benefit plans, which are customary for a transaction of this kind. These representations and warranties must be true and correct upon both signing of the Merger Agreement and the completion of the Merger Conversion.

Certain representations and warranties of the parties to the Merger Agreement are qualified as to "materiality" or "material adverse effect." For purposes of the Merger Agreement, a "material adverse effect," when used in reference to a party means any condition, event, change or occurrence that is reasonably likely to have a material adverse effect upon (i) the financial condition, properties, assets, business or results of operations of such party, taken as a whole or (ii) the ability of such party to perform its obligations under the Agreement and Plan. A material adverse effect will not include the impact of any of the following, either alone or in combination:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in laws and regulations or interpretations thereof that are generally applicable to the banking or
savings industries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in generally accepted accounting principles in the U.S. or regulatory accounting principles that are
generally applicable to the banking or savings industries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in global, national or regional political conditions or general economic or market conditions in the
United States or the State of Georgia, including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, and price levels or trading volumes in the United States or foreign securities markets affecting other
companies in the financial services industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general changes in the credit markets or general downgrades in the credit markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any outbreak or escalation of hostilities or declared or undeclared acts of war or terrorism;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any epidemic, pandemic or disease outbreak (including the Covid-19 virus
and its mutations);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actions or omissions of a party required by this Agreement or taken with the prior informed written consent of
the other party or parties in contemplation of the transactions contemplated hereby; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of this Agreement and the transactions contemplated hereby on relationships with customers or
employees (including the loss of personnel subsequent to the date of this Agreement);

except, with respect to the first six bullet points above, if the effects of such change or event are disproportionately adverse to such party, taken as a whole, as compared to similarly-sized institutions in the industry in which the party operates. The representations and warranties in the Merger Agreement do not survive the closing of the Merger Conversion.

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*Conduct of Business Before Completion of the Merger Conversion* 

Each of Oconee, the Bank and Elberton has agreed that, before the closing of the Merger Conversion (or earlier termination of the Merger Agreement), it will conduct its business and engage in transactions only in the ordinary course of business and consistent with past practice, except as otherwise required or permitted by the Merger Agreement or required by applicable law or with the prior written consent of the other party. Each of Elberton, Oconee and the Bank has agreed to use its best efforts to (1) maintain and preserve intact its business organization, properties, assets, leases, employees and advantageous business relationships and retain the services of its officers and key employees, (2) take no action that would adversely affect or delay the ability of Elberton, Oconee or the Bank to obtain any necessary approvals, consents or waivers required for the Merger Conversion, and (3) take no action that is reasonably likely to have a material adverse effect on such party.

Additionally, before the closing of the Merger Conversion (or earlier termination of the Merger Agreement), subject to specified exceptions, Elberton may not, without the prior written consent of Oconee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• hire any new employee or grant any severance or termination pay to, or enter into or amend any employment,
consulting or severance agreement with, any employee, officer, director, independent contractor or consultant, or increase the rate of base, incentive or other compensation or benefits of, or pay any bonus to, the directors, officers and employees
of Elberton;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• merge or consolidate with any other party, or acquire or dispose of any material amount of assets or liabilities,
surrender of its certificate of authority, or relocate or establish new offices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sell or dispose of any asset of Elberton other than in the ordinary course of business consistent with past
practice, or subject any asset of Elberton to a lien, pledge, security interest or other encumbrance, subject to certain exceptions and except in the ordinary course of business consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• take any action which would result in any of the representations and warranties of Elberton in the Merger
Agreement becoming untrue;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• change any method, practice or principle of accounting, or change any assumption method of calculation of,
depreciation of any type of asset or establishment of any reserve or increase the provision loan losses, unless required by applicable law or regulation or the direction of Elberton's regulatory authority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• waive, release, grant or transfer any rights of value or modify or change in any material respect any existing
agreement to which Elberton is a party, other than in the ordinary course of business and consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• amend its charter or bylaws, except as may be required to effect the Merger Conversion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• engage in any transaction with an affiliate, within the meaning of Sections 23A and 23B of the Federal Reserve
Act and Regulation W thereunder; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• change its lending, investment, deposit or asset and liability management or other banking policies in any
material respect, except as may be required by applicable law or regulations.

Before the closing of the Merger Conversion (or earlier termination of the Merger Agreement), subject to specified exceptions, neither Oconee nor the Bank may, without the prior written consent of the Elberton:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• take any action that would result in any of the representations and warranties of Oconee or the Bank in the
Merger Agreement becoming untrue;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• amend the articles of incorporation, certificate of organization (or similar organizational document) or bylaws
of Oconee or the Bank, except as may be required to effect the Merger Conversion; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issue or sell, or obligate itself to issue or sell, any shares of its capital stock or other securities or any
subscriptions, warrants, rights or options to acquire, or any securities convertible into, any shares of its capital stock, except for such issuances, reserves for issuances, grants or sales that are related to and necessary to affect the
transactions contemplated by the Agreement and Plan.

*Regulatory Matters* 

Completion of the Merger Conversion and the transactions contemplated by the Agreement and Plan are subject to the prior approval or non-objection of the OCC, the FDIC, the GDBF and, unless waived, the Federal Reserve. Oconee, the Bank and Elberton have agreed to use their respective best efforts to take all actions that are necessary to comply with all legal requirements with respect to the transactions contemplated by the Agreement and Plan and to obtain any permits, consents, approvals waivers or authorizations of any regulatory authority required or advisable in connection with the transactions contemplated by the Agreement and Plan. The parties have no reason to believe that all approvals will not be obtained without conditions in a timely manner. However, such approvals could be delayed or not obtained at all, including due to an adverse development in either party's regulatory standing, or any other factors considered by regulators in granting such approvals, governmental, political or community group inquiries, investigations or opposition, or changes in legislation or the political environment.

The approvals that are granted may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of the combined company's business or require changes to the terms of the transactions contemplated by the Merger Agreement. There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the Merger Agreement, imposing additional material costs on or materially limiting the revenues of the combined company following the Merger Conversion or otherwise reduce the anticipated benefits of the Merger Conversion if the Merger Conversion were consummated successfully within the expected timeframe. In addition, there can be no assurance that any such conditions, limitations, obligations or restrictions will not result in the delay or abandonment of the Merger Conversion. Additionally, the completion of the Merger Conversion is conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the completion of any of the transactions contemplated by the Merger Agreement.

Each party has also agreed to furnish all information reasonably necessary in connection with any statement, filing, notice or application made by any party with any regulatory authority in connection with the transactions contemplated by the Agreement and Plan, as well as to keep each other apprised of the status of matters related to the completion of the transactions contemplated by the Agreement and Plan.

*Voting Agreement* 

As a condition to Oconee and the Bank entering into the Merger Agreement, all of the directors of Elberton entered into a voting agreement pursuant to which each such person agreed, among other things, to vote all of the membership votes beneficially owned by such person to approve the Merger Agreement and Plan of Conversion. As of the record date for the Elberton special meeting of members, the directors who are party to the voting agreement beneficially owned and were entitled to vote an aggregate of 250 votes, which represented approximately [•]% of the membership votes outstanding on that date. The voting agreement may be terminated at any time prior to consummation of the Merger Conversion by the mutual written agreement of the parties hereto. In addition, the voting agreement will be automatically terminated upon the earlier to occur of (i) the consummation of the Merger Conversion, (ii) the termination of the Merger Agreement, or (iii) two years from the date of the Merger Agreement.

*Meeting of Eligible Members and Recommendation of the Board of Directors of Elberton* 

Under the terms of the Merger Agreement, Elberton has agreed to call a meeting of its members for the purpose of voting upon the proposal to approve of the Merger Agreement and the transactions contemplated thereby, including the Merger Conversion. The Plan of Conversion must also be approved by the Elberton members before the parties

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may complete the Merger Conversion. Elberton has agreed to use its best efforts to obtain a vote of its members approving the Agreement and the Plan. The board of directors of Elberton has unanimously recommended that the member of Elberton FOR the Agreement and Plan. Under the terms of the Merger Agreement, the Elberton board of directors may not withdraw or amend that recommendation, unless, upon advice of counsel, the board determines in good faith that its fiduciary duties otherwise require. Notwithstanding any recommendation change by the board of directors of Elberton, unless the Merger Agreement has been terminated in accordance with its terms, Elberton is required to convene a meeting of the Members and to submit the Merger Conversion proposal to a vote of the Members.

*Non-Solicitation Covenant* 

The Merger Agreement restricts the ability of Elberton to solicit other potential acquisition proposals. Specifically, the Merger Agreement provides that Elberton will not and will not permit any officer, director or employee of Elberton, or any investment banker, attorney, accountant or other representative retained by Elberton to, directly or indirectly, solicit, encourage, initiate or engage in discussions or negotiations with, or respond favorably to requests for information, inquiries, or other communications from any person other than Oconee concerning any acquisition of Elberton, or any assets or business of Elberton.

*Appointment of Director and Advisory Directors* 

One director of Elberton will be offered a position on the Bank's board of directors with compensation consistent with the amount paid to other Bank directors. The three Elberton directors other than Mr. Graves and the director who will serve on the Bank's board of directors will be invited to serve on an advisory board of the Bank for a period of at least three years following the completion of the Merger Conversion. Each such advisory director will be receive fees equaling the director fees currently paid by Elberton to its directors, subject to such terms, conditions and requirements as the Bank determines in its sole discretion.

*Other Expenses of Issuance and Distribution* 

The following table sets forth all expenses, other than the underwriting discounts and commissions, payable by the registrant in connection with the sale of the common stock being registered. All the amounts shown are estimates except the SEC registration fee and the FINRA filing fee.

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| | |
|:---|:---|
|  SEC registration fee | 25000 |
|  Transfer agent and registrar fees | 15000 |
|  Accounting fees and expenses | 75000 |
|  Legal fees and expenses | 185000 |
|  Printing and engraving expenses | 50000 |
|  Other | 25000 |
|  **Total** | $**375000** |

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*Director and Officer Indemnification and Insurance* 

The Merger Agreement provides that from and after the Closing Date, Oconee will indemnify and hold harmless each current and former director, officer and employee of Elberton, determined as of the closing date of the Merger Conversion, against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or before the closing date, whether asserted or claimed before, at or after the closing date, to the fullest extent that the indemnified party would be entitled under OCC regulations and charter and bylaws of Elberton in effect on the date of the Merger Agreement.

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Elberton has agreed to purchase four-years of past acts and extended reporting period insurance coverage, or a "tail" policy, under its (i) current directors and officers insurance, (ii) employment practices liability insurance, (iii) current financial institutions bond (or comparable coverage), (iv) errors and omissions insurance and/or bankers professional liability insurance, (v) mortgage errors and omissions liability insurance, (vi) cyber security or comparable coverage, and (vii) fiduciary liability insurance for each of the directors and officers of the Elberton currently covered under comparable policies held by the Elberton.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

*Recent Sales of Unregistered Securities* 

On August 7, 2020, Oconee successfully placed $10 million in fixed-to-floating rate subordinated notes due August 7, 2030, to institutional accredited investors. The offering was exempt under Section 506(b). Oconee used the net proceeds to retire preexisting debt, support organic growth and for general corporate purposes. The subject notes were structured to qualify as Tier 2 capital for regulatory purposes and bear interest at a fixed rate of 6.00% per annum until August 7, 2025, and thereafter until the end of the term, a floating rate equal to the three-month Secured Overnight Financing Rate plus 596 basis points, Oconee may redeem the subordinated notes at its option, in whole or in part, on or after August 7, 2025.

*Conditions to Completing the Merger Conversion* 

The respective obligations of Oconee and Elberton to effect the Merger Conversion are subject to the satisfaction or waiver of the following conditions specified in the Merger Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the accuracy of the representations and warranties of the other party contained in the Merger Agreement,
generally as of the date on which the Merger Agreement was entered into and as of the Closing Date, subject to the materiality standards provided in the Merger Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the performance by the other party in all material respects of the obligations, covenants and agreements required
to be performed by it under the Merger Agreement at or prior to the closing date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approval of the Merger Agreement by the members of Elberton by the requisite vote and by the sole member of the
Bank by the requisite vote;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all requisite regulatory approvals having been obtained and remaining in full force and effect, including all
approvals or non-objections from the OCC, the FDIC, the GDBF and, unless waived, the Federal Reserve, and (i) with respect to Elberton, do not impose any condition or requirement that would, directly or
indirectly, materially adversely affect the terms of the Merger Conversion as they relate to Elberton, its directors or employees, and (ii) with respect to Oconee, do not impose (a) any term or condition that could reasonably be expected
to have a material adverse effect on Oconee and the Bank, taken as a whole, or (b) any condition or requirement that would, directly or indirectly, materially impair the value of Elberton to Oconee, and all notice and waiting periods required
thereunder shall have expired or been terminated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no suit, action, or other proceeding initiated by any governmental agency seeking to enjoin the consummation of
the transactions contemplated by the Agreement and Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• there must not be in effect any order, decree or injunction of a court or agency of competent jurisdiction that
enjoins or prohibits consummation of the transactions contemplated by the Agreement and Plan;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the absence of the occurrence of a material adverse effect on Oconee, the Bank or Elberton since
December 31, 2020;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Regulation A offering circular to be filed by Oconee with the SEC for the offering of Oconee Common Stock to
certain Elberton members and Community Offerees in the Merger Conversion pursuant to the exemption from registration provided by Section 3(b) of the Securities Act and Regulation A promulgated thereunder must have been qualified by the SEC
under the Securities Act and must not have been deemed abandoned, withdrawn or otherwise unqualified;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each party must receive an officer's certificate from each other party regarding the satisfaction of the
satisfaction of certain conditions precedent to closing.

In addition, the obligations of Oconee and to effect the Merger Conversion are further subject to the satisfaction or waiver of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Elberton must have taken all reasonably necessary steps, to Oconee's satisfaction, such that the Merger
Conversion will not trigger any "excess parachute payment" (as defined in Section 280G of the Internal Revenue Code) under any employment, severance or change in control agreement, benefit plans, or similar arrangements between
Elberton and any officer, director, or employee thereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Elberton must have divested a 6.00% Fixed-to-Floating Rate Subordinated Note Due 2030 made by Oconee and held by Elberton; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Oconee shall have received an opinion of counsel to Oconee that the Merger Conversion will qualify as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code for federal tax income purposes.

*Effective Time* 

The Merger Conversion will be consummated if Oconee, the Bank and Elberton obtain all required regulatory approvals, non-objections or consents, and all other conditions to the Merger Conversion are either satisfied or waived. The Merger Conversion will become effective upon the filing of a certificate of merger with the GDBF. Oconee and Elberton both have the right to terminate the Merger Agreement if the Merger Conversion is not completed by August 31, 2023. However, the parties may agree to extend this deadline if Oconee, the Bank and Elberton reasonably believe that, through no fault of any party, the Merger Conversion cannot be completed within that time period. The parties expect to complete the Merger Conversion in the second quarter of 2023, although delays may occur.

*Termination* 

The Merger Agreement may be terminated at any time before completion of the Merger Conversion, even if the members of Elberton have approved the transaction, under the circumstances set forth below. The Merger Agreement may be terminated by mutual written consent of the parties if the boards of directors of Oconee and Elberton each approve the termination by a majority vote.

The Merger Agreement may also be terminated by either Oconee or Elberton under any of the following circumstances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in response to a material breach of any representation, warranty, covenant or obligation which is not cured
within 30 days;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if the Merger Conversion is not completed by August 31, 2023, or extended by mutual consent (such date, the
"end date");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if any required regulatory approval is not obtained;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if the approval of the members of Elberton is not obtained by reason of the failure to obtain the required vote
at the Elberton Special Meeting, or any adjournment or postponement thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if the Plan of Conversion terminates in accordance with its terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if there is in effect any final, nonappealable order, decree or ruling of a court of competent jurisdiction or
other governmental authority that would restrain, enjoin or otherwise prohibit the consummation of the Merger Conversion and the other transactions contemplated by the Agreement and Plan; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the event that any of the conditions to completing the Merger Conversion cannot be satisfied or fulfilled by
the end date, provided that the terminating party is not then in material breach of any representation, warranty, covenant, or other agreement contained in the Merger Agreement.

Oconee may also terminate the Merger Agreement (i) if the board of directors of Elberton does not publicly recommend in its proxy statement for the Elberton Special Meeting the approval of the Agreement and Plan by the Elberton members or (ii) if, after making such recommendation, the board of directors of Elberton withdraws, qualifies or revises its recommendation in a manner adverse to Oconee.

*Termination Fee* 

Elberton has agreed to pay Oconee a termination fee of $100,000, plus the amount of Oconee's expenses incurred in connection with the Merger Conversion, subject to a maximum aggregate amount of $750,000, in the following circumstances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Oconee terminates the Merger Agreement because the board of directors of Elberton does not publicly recommend in
the proxy statement for the Elberton Special Meeting the approval of the Merger Agreement and Plan of Conversion by the Elberton members or if, after making such recommendation, the board of directors of Elberton withdraws, qualifies or revises its
recommendation in a manner adverse to Oconee; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• either Oconee or Elberton terminates the Merger Agreement because the approval of the members of Elberton is not
obtained by reason of the failure to obtain the required vote of the Members at the Elberton Special Meeting, or any adjournment or postponement thereof, after Elberton's Board of Directors fails to recommend (or changes its recommendation)
that the Members of Elberton vote in favor of the transactions contemplated by the Merger Agreement and the Plan of Conversion, or within 12 months after the Merger Agreement is terminated Elberton enters into an agreement to be acquired by or merge
with a third party or to otherwise undergoes a change in control with a third party.

*Effect of Termination* 

If the Merger Agreement is terminated in accordance with its terms, Oconee and Elberton will each bear their own costs and expenses incurred in connection with the Merger Agreement and the Merger Conversion, the Merger Agreement will become void and there will be no further liability on the part of Oconee, the Bank or Elberton, except for the termination fee described above. However, no party is relieved or released from any liabilities or damages arising out of a willful breach of any provision contained in the Merger Agreement.

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*Amendment, Extension and Waiver* 

Subject to applicable law, at any time before the consummation of the transactions contemplated by the Merger Agreement, the parties may amend the Merger Agreement, extend the time for the performance of any of the obligations thereunder, waive any inaccuracies in the representations and warranties and waive compliance with any of the agreements or conditions contained in therein. The Merger Agreement may not be amended, except by an instrument in writing signed by duly authorized officers on behalf of the parties thereto.

**Daniel Graves Employment Agreement** 

The Bank has executed an Amended and Restated Employment Agreement with R. Daniel Graves that will become effective upon the completion of the Merger Conversion. The employment agreement provides that Mr. Graves will serve as the Community President of the Northeast Georgia Market of the Bank following the closing for an initial term of three years, with automatic 12-month renewal periods thereafter unless earlier terminated. Under the terms of the employment agreement, Mr. Graves is entitled to: (i) an initial annual base salary of $181,125, (ii) options to purchase shares of Oconee common stock with an exercise price equal to the fair market value of Oconee's common stock on the date of grant, with the number of options equal to 2.5% of the number of shares of Oconee Common Stock issued in connection with the Merger Conversion, which options will vest annually in equal installments for a period of five years following the grant date, subject to continued employment by Mr. Graves on each vesting date, and (iii) shares of Oconee restricted stock in an amount equal to 1.0% of the number of shares of Oconee Common Stock issued in connection with the Merger Conversion, which shares will vest annually in equal installments for a period of five years following the grant date, subject to continued employment by Mr. Graves on each vesting date. In addition, under the terms of the employment agreement, Mr. Graves is eligible to receive an annual performance-based bonus of no less than $17,950 for each of the first three years of employment. Mr. Graves will also be subject to certain ongoing non-competition and non-solicitation obligations. If the Bank terminates Mr. Graves without cause or Mr. Graves resigns for good reason (as such terms cause and good reason are defined in the employment agreement), subject to execution of a general release of claims, Mr. Graves will be entitled to receive a severance payment equal to 1.99 times the sum of his then current base salary and the amount of his prior year's annual performance-based bonus.

**Stock Award Agreements** 

The Bank has executed stock award agreements with each director of Elberton, other than Mr. Graves. Pursuant to the stock award agreements, each director will be entitled to receive (i) options to purchase shares of Oconee common stock with an exercise price equal to the fair market value of Oconee's common stock on the date of grant, with the number of options equal to 0.5% of the number of shares of Oconee common stock issued in connection with the Merger Conversion, and (ii) shares of Oconee restricted stock in an amount equal to 0.2% of the number of shares of Oconee common stock issued in connection with the Merger Conversion.

**PLAN OF DISTRIBUTION** 

We are offering these shares on a "best efforts" basis through our directors and officers and with the assistance of Performance Trust Capital Partners LLC. Our directors and officers will not be entitled to receive any discounts or commissions for selling any shares, but may be reimbursed for any reasonable out-of-pocket expenses incurred in connection with the offering, if any. We do not expect, however, that any such expenses will be significant. The offering is not underwritten, but we have retained the services of Performance Trust as placement agent to assist us on a best efforts basis with the Offering. Performance Trust is not obligated to sell or to purchase any of the shares. A copy of our agreement with Performance Trust is included as <u>Exhibit 1</u> to the Registration Statement, of which this Offering Circular is a part. For further information, please refer to the "Where You Can Find More Information" section of this Offering Circular on page 95.

In the Subscription Offering and the Community Offering, officers of Oconee and representatives of Performance Trust will be available to answer questions. Any such individuals are not authorized to make statements about Oconee or Elberton unless such information also is set forth in this offering circular, nor may they render investment advice, and if any such information or investment advice is given, it may not be relied upon. Eligible Members and Community Offerees will be instructed to send Stock Order Forms, together with payment in full for their subscriptions for Oconee Common Stock (or appropriate account withdrawal instructions), to the Stock Information Center. See "—The Offering—Method of Payment."

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Oconee and Elberton have retained Performance Trust to assist Oconee in marketing the shares of Oconee Common Stock in the Offering, and to provide related financial advisory services. Oconee will pay Performance Trust investment marketing and advisory fees and expenses as follows:

1) In connection with the Offering: Performance Trust will act as exclusive marketing agent for Oconee in the Subscription Offering and will serve as sole manager in the Community Offering. Oconee will pay to Performance Trust a Service Fee equal to 7% of the aggregate Actual Purchase Price of Oconee Common Stock sold in the Offering. Oconee also paid to Performance Trust a one-time nonrefundable management fee in the amount of $40,000, which will be credited against the Service Fee when it is due and payable. 

2) In addition to any fees that may be payable to Performance Trust as marketing agent, Oconee will reimburse Performance Trust for its reasonable out-of-pocket expenses incurred in connection with its engagement, regardless of whether the Offering is consummated, including, without limitation, legal fees and expenses, communications, syndication and travel expenses, up to a maximum of $45,000 for legal fees and expenses and $10,000 for all other out-of-pocket expenses for a total of $55,000; provided, however, in the event that a Syndicated Community Offering is conducted, such expense reimbursement amount shall be increased to $60,000. 

3) In connection with the Merger Conversion: Oconee paid to Performance Trust financial advisory and investment banking services of $15,000 in cash upon execution of the engagement letter, $25,000 in cash at the signing of the Merger Agreement and $95,000 in cash at the closing of the Merger Conversion, plus out of pocket expenses incurred by Performance Trust. 

Purchasers of Oconee Common Stock in the Offering will be prohibited from transferring any Oconee Common Stock or other securities of Oconee (whether currently or hereafter authorized and issued or granted) for a period of 60 days following the Closing Date. In addition, shares of Oconee Common Stock that are purchased by Elberton's Directors, Officers and their Associates in the Offering may not be sold for one year after the Closing Date, except that in the event of the death of such Officer, Director or Associate, the successor in interest may sell the shares.

**USE OF PROCEEDS** 

The net proceeds to us from the sale of Oconee Common Stock offered in the offering will be approximately $[3,659,775], net of offering expenses, assuming the sale of all shares offered hereby. The actual net proceeds to be raised in the offering will depend upon the number of shares sold in the offering and the actual amount of offering expenses incurred, which may differ from our estimate.

We intend to use the net proceeds from this offering for general and corporate working capital purposes, including funding for loans and to support future growth, and enabling our subsidiary, Oconee State Bank, to continue to meet applicable capital requirements. Future growth is expected to occur by focusing new efforts in the Elberton County market which we are entering for the first time in connection with the Merger Conversion, and by increasing loans and deposits at other existing branches. The amount and timing of the use of proceeds from this offering will depend on our capital needs and local loan demand. No assurance can be given that any new branches will be established in the future or, if established, that the resulting impact on our financial condition will be favorable.

**DESCRIPTION OF BUSINESS** 

**The Company** 

Oconee Financial Corporation, a registered bank holding company headquartered in Watkinsville, Georgia, was incorporated under the laws of the State of Georgia on October 13, 1998 and commenced operations by acquiring 100% of the outstanding shares of Oconee State Bank effective January 1, 1999. Oconee is primarily regulated by the Federal Reserve. All of Oconee's activities are currently conducted by its wholly-owned bank subsidiary, the Bank, which was incorporated as a bank under the laws of the State of Georgia in 1959. The Bank commenced operations on February 1, 1960 in Watkinsville, Georgia.

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On August 7, 2020, Oconee issued subordinated notes payable for $10 million. The notes mature on August 7, 2030, with interest payments due on March 28, June 28, September 28, and December 28 of each year at a fixed rate of 6.00% until August 7, 2025. After August 7, 2025, and until maturity, interest payments are due on the same payment schedule but at a variable rate of three-month SOFR plus five hundred ninety-six basis points resetting each quarter. The company may redeem the notes, in whole or in part, on or after the fifth anniversary of the note agreements.

Oconee's principal source of income has historically been dividends from the Bank. Oconee may also explore supplementary sources of income in the future. The expenditures of Oconee, including (but are not limited to) the payment of dividends to shareholders, if and when declared by the Oconee Board, the cost of servicing debt, legal fees and shareholder costs, will generally be paid from dividends paid to Oconee by the Bank.

As of December 31, 2022, Oconee had total consolidated assets of approximately $536.7 million, total consolidated gross portfolio loans of approximately $300.1 million, total consolidated deposits of approximately $494.9 million, and consolidated stockholders' equity of approximately $29.1 million.

Oconee's administrative offices are located at 41 North Main Street, Watkinsville, Georgia 30677 and the telephone number is (706) 769-6611.

**The Bank** 

Oconee State Bank is a state-chartered bank headquartered in Watkinsville, Georgia. The Bank was established on February 1, 1960. The Bank operates four full-service banking offices and one limited-service banking office. The Bank's main office is located at 35 North Main Street, Watkinsville, Georgia 30677.

The Bank's deposit accounts are insured under the Federal Deposit Insurance Act up to the maximum amounts allowable by law. The Bank is subject to periodic examinations of its operations and compliance by the FDIC and the Georgia Department of Banking and Finance. See "Supervision and Regulation."

The Bank provides a wide variety of lending products for both businesses and consumers. Commercial loan products include lines of credit, letters of credit, term loans, equipment loans, commercial real estate loans, construction loans, accounts receivable financing, and working capital financing. Financing products for individuals include auto, home equity, overdraft protection lines and, through a third-party provider, MasterCard debit cards. Real estate loan products include construction loans, land loans, mini-perm commercial real estate loans, and home mortgages.

As of December 31, 2022, the Bank had approximately $300.1 million in loans, net of unearned income. The Bank's lending activity is concentrated primarily in real estate loans, which constitutes 90.2% of the Bank's loan portfolio; commercial loans, which constitute 9.4% of the Bank's loan portfolio; and consumer loans, which constitute 0.4% of the Bank's loan portfolio as of December 31, 2022.

As a community-oriented bank, the Bank offers a wide array of personal, consumer and commercial services generally offered by a locally-managed, independently-operated bank. The Bank provides a broad range of deposit instruments and general banking services, including checking, savings accounts (including money market demand accounts), certificates of deposit for both business and personal accounts; internet banking services, such as cash management and Bill Pay; telebanking (banking by phone); courier services, ATM deposits and mobile banking services which includes mobile capture.

As of December 31, 2022, the Bank had approximately $494.9 million in deposits, which included $120.1 million in noninterest-bearing deposits and $374.8 million in interest-bearing deposits, representing 24% and 76%, respectively, of total deposits.

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**Recent Accounting Pronouncements** 

Information on recent accounting pronouncements, if applicable, is contained in Note 1 to the consolidated financial statements included herein.

**Market Area and Competition** 

The Bank's primary market area covers Oconee, Clarke, and Gwinnett counties in Georgia. In May 2022, the Bank announced expansion into the Macon (Bibb County, Georgia) market. The Oconee and Clarke combined market area is currently being served by approximately 17 competing banks represented by 40 full-service branches. The Gwinnett market area is currently being served by approximately 35 competing banks represented by 166 full-service branches. The Bibb market area is currently being served by approximately 14 competing banks represented by 36 full-service branches.

The banking business in these market areas tends to be highly competitive. Continued consolidation within the banking industry has contributed to the competitive environments over the past ten years, following on the heels of a relatively large number of FDIC-assisted takeovers of failed banks and other acquisitions of troubled financial institutions in the aftermath of the Great Recession. There are also a number of unregulated companies competing for business in our markets with financial products targeted at profitable customer segments. Many of those companies are able to compete across geographic boundaries and provide meaningful alternatives to traditional banking products and services. These competitive trends are likely to continue.

With respect to commercial bank competitors, the business is dominated by a relatively small number of major banks that operate a large number of offices within our geographic footprint. Many of the major banks operating in the area offer certain services that the Bank does not offer directly (but some of which the Bank offers through correspondent institutions). By virtue of their greater total capitalization, such banks also have substantially higher lending limits than the Bank.

In addition to other banks, our competitors include savings institutions, credit unions, and numerous non-banking institutions such as finance companies, insurance companies, brokerage firms, asset management groups, mortgage banking firms and internet-based companies. Technological innovations have lowered traditional barriers of entry and enabled many of these companies to offer services that previously were considered traditional banking products, and we have witnessed increased competition from specialized companies, including those that circumvent the banking system by facilitating payments via the internet, wireless devices, prepaid cards, or other means.

Strong competition for deposits and loans among financial institutions and non-banks alike affects interest rates and other terms on which financial products are offered to customers. Mergers between financial institutions have created additional pressures within the financial services industry to streamline operations, reduce expenses, and increase revenues in order to remain competitive.

In an effort to compete effectively, the Bank competes in its service area by using to the fullest extent possible the flexibility that its independent status and strong community ties permit. The Bank has a vision to be essential to the lives, businesses and communities that we serve. This includes an emphasis on creating remarkable experiences that significantly mark the lives of others. The Bank is proud to provide an unparalleled commitment to personalized service, innovative products and solutions, and to bring exceptional value to our customers through local ownership, involvement and decision-making.

**Employees** 

As of December 31, 2022, Oconee had 84 full-time and 2 part-time employees. Of these individuals, 37 were officers of the Bank holding titles of Assistant Vice President or above.

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**Properties** 

The Bank operates four full-service financial centers and one support services space. As of December 31, 2022, we entered into a new lease for a location in the Macon-Bibb County, Georgia market that will open in April 2023. A list of our locations as of December 31, 2022 are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Main Office – established February 1, 1960

35 North Main Street

Watkinsville, Georgia 30677

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Bogart Branch – established November 28, 1983

2441 Monroe Highway

Bogart, Georgia 30622

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Gwinnett Financial Center Branch (leased) – established September 4, 2018

2055 Sugarloaf Circle, Suite 50

Duluth, Georgia 30097

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Athens Financial Center Branch (leased) – established March 1, 2021

One Press Place

Athens, Georgia 30601

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Macon Financial Center Branch (leased) – opening in April 2023

502 Mulberry Street

Macon, GA 31201

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Corporate Headquarters – opened May 17, 2021

41 North Main Street

Watkinsville, Georgia 30677

Management believes that all of Oconee's properties are adequately covered by insurance.

**Legal Proceedings** 

From time to time, Oconee or the Bank may be involved in litigation relating to claims arising out of their normal course of business. As of the date of this Offering Circular, neither Oconee nor the Bank had any material pending legal matters or litigation.

**MANAGEMENT DISCUSSION AND ANALYSIS** 

The following discussion describes Oconee's results of operations and also analyzes its financial condition as of and for the periods indicated. The financial information as of December 31, 2022 is derived from Oconee unaudited consolidated financial statements. The financial information for the year ended December 31, 2021 is derived from the Oconee audited consolidated financial statements. The below discussion should be read in conjunction with Oconee's financial statements and the notes related thereto which appear elsewhere in this offering circular. This discussion and analysis contains forward looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under "RISK FACTORS" in this offering circular.

**Critical Accounting Policies** 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make a number of judgments, estimates and assumptions that affect the reported amount of assets, liabilities, income and expenses in Oconee's financial statements and accompanying notes. Management believes that the judgments, estimates and assumptions used in preparation of Oconee's financial statements are appropriate given the factual circumstances as of December 31, 2022.

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Various elements of Oconee's accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. Critical accounting policies are those that involve the most complex and subjective decisions and assessments and have the greatest potential impact on Oconee's results of operation. In particular, management has identified one accounting policy that, due to judgments, estimates and assumptions inherent in this policy, and the sensitivity of Oconee's financial statements to those judgments, estimates and assumptions, is critical to an understanding of Oconee's financial statements. This policy relates to the methodology that determines the allowance for credit losses. Management believes the level of allowance at December 31, 2022 and at December 31, 2021 was adequate to absorb losses inherent in the loan portfolio. For detailed information regarding the allowance for credit losses, see "Loans and Asset Quality" and Note 3 to the consolidated financial statements included herein.

**Recently Issued Accounting Standards** 

Refer to Note 1 to the consolidated financial statements contained herein for discussion of the recently issued accounting standards, if applicable.

**Analysis of Financial Condition** 

Total assets decreased $34.4 million to $536.7 million at December 31, 2022 from $571.1 million at December 31, 2021. The primary decrease in assets was in cash and cash equivalents which decreased by $34.3 million, or 40.0%, due to a decline in retail and municipal deposits and to the investment of excess cash and cash equivalents into available for sale investment securities

Total liabilities decreased $24.1 million, or 4.5%, to $507.7 million at December 31, 2022 from $531.8 million at December 31, 2021. The decrease in liabilities was primarily driven by a decrease in total deposits of $24.8 million, or 4.8%. The decrease in deposits was mainly attributed to a decline in retail and municipal deposits. In the last half of 2022, we experienced a decline in deposits resulting from declines in government stimulus programs and declines in the savings rates of consumer and businesses.

**Investment Securities** 

Total investment securities at December 31, 2022 decreased $2.5 million compared to December 31, 2021. The decrease is attributed to the decline in the gross unrealized gains/losses on the available for sale investment securities of $18.2 million being offset against the net purchases, sales and calls of investment securities of $15.7 million. Oconee has classified all of its investments as available for sale at December 31, 2022 and at December 31, 2021.

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The following table sets forth the amortized cost and fair value of Oconee's investment securities at the dates indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2022** | **2022** | **2021** | **2021** |
|  | **Amortized**<br>**Cost** | **Fair**<br>**Value** | **Amortized**<br>**Cost** | **Fair**<br>**Value** |
|  | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) |
|  U.S. Treasury | $47166 | $41981 | $36773 | $36648 |
|  U.S. Agency | 3100 | 2557 | 3047 | 3058 |
|  Mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSE residential | 83042 | 77837 | 76152 | 76059 |
|  State, county, and municipal | 36343 | 29913 | 38006 | 38324 |
|  Corporate securities | 8000 | 7352 | 8000 | 8076 |
|  Total investment securities | $177651 | $159640 | $161978 | $162165 |

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The following table summarizes contractual maturities for Oconee's investment securities and their weighted average yields at December 31, 2022. The actual timing of principal payments may differ from remaining contractual maturities, because obligors may have the right to prepay certain obligations. Yields are based on amortized cost of securities.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | **After 1 Year But** | **After 1 Year But** | **After 5 Years But** | **After 5 Years But** | | |
|  | **Within 1 Year** | **Within 1 Year** | **Within 5 Years** | **Within 5 Years** | **Within 10 Years** | **Within 10 Years** | **After 10 Years** | **After 10 Years** |
|  | **Amount** | **Yield** | **Amount** | **Yield** | **Amount** | **Yield** | **Amount** | **Yield** |
|  | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) |
|  U.S. Treasury | $— | —% | $12182 | 1.76% | $29799 | 1.33% | $— | —% |
|  U.S. Agency |  | —% |  | —% | 2557 | 1.73% |  | —% |
|  Mortgage-backed securities: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSE residential |  | —% | 3732 | 3.29% | 15283 | 2.17% | 58822 | 4.20% |
|  State, county, and municipal |  | —% | 3156 | 3.76% | 13002 | 1.78% | 13755 | 2.05% |
|  Corporate securities |  | —% |  | —% | 7352 | 4.74% |  | —% |
|  Total investment securities | $— | —% | $19070 | 2.38% | $67993 | 1.97% | $72577 | 3.74% |

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**Loans and Asset Quality** 

At December 31, 2022, Oconee's loan portfolio, net of allowance for loan losses, was $295.6 million, a decrease of $2.4 million, or 0.8%, when compared to total loans, net of allowance for loan losses, of $298.0 million at December 31, 2021. During 2022, Oconee experienced an elevated level of payoffs due to the competitive environment and to customers using their excess liquidity. Management was able to offset almost all of these loan payoffs with new loan production.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2022** | **2022** | **2021** | **2021** |
|  | **Amount** | **Percent** | **Amount** | **Percent** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
|  Real estate-mortgage |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $51340 | 17.05% | $46573 | 15.36% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | 9187 | 3.05% | 12787 | 4.22% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 208389 | 69.20% | 205965 | 67.91% |
|  Real estate-construction | 1724 | 0.57% | 1958 | 0.65% |
|  Commercial, financial and agricultural | 28147 | 9.35% | 29834 | 9.84% |
|  SBA Paycheck Protection Program Loans | 33 | 0.01% | 3736 | 1.23% |
|  Consumer | 2331 | 0.77% | 2451 | 0.81% |
|  Gross loans | 301151 | 100.00% | 303304 | 100.00% |
|  Less: SBA Paycheck Protection Program Loans | (33) |  | (3736) |  |
|  Total Non SBA PPP Loans | 301118 |  | 299568 |  |
|  Less: Deferred fees and costs, net | (1020) |  | (781) |  |
|  Less: allowance for loan losses | (4549) |  | (4542) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net | $295549 |  | $294245 |  |

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The PPP loans are 100% guaranteed by the SBA and are considered pass rated loans under the Bank's internal loan grading system. Therefore, PPP loans are not presented in the following tables below.

The following table shows the maturity distribution and repricing intervals of Oconee's outstanding loans at December 31, 2022. Balances of fixed rate loans are displayed in the column representative of the loan's stated maturity date. Balances for variable rate loans are displayed in the column representative of the loan's next interest rate change. Variable rate loans that are currently at their minimum rates are displayed at the loan's stated maturity date.

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| | | | | |
|:---|:---|:---|:---|:---|
|  |<br>**Within**<br>**One Year** | **After One**<br>**By Within**<br>**Five Years** |<br>**After**<br>**Five Years** |<br>**Total**<br>**Loans** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
|  Real estate-mortgage |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $27292 | $21277 | $2771 | $51340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel |  | 8643 | 544 | 9187 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 54176 | 95712 | 58501 | 208389 |
|  Real estate-construction | 761 |  | 963 | 1724 |
|  Commercial, financial and agricultural | 6173 | 18635 | 3339 | 28147 |
|  Consumer | 732 | 1352 | 247 | 2331 |
|  Total Non SBA PPP Loans | $89134 | $145619 | $66365 | $301118 |
|  Loans with variable (floating) interest rates | $58761 | $— | $— | $58761 |
|  Loans with predetermined (fixed) interest rates | $30373 | $145619 | $66365 | $242357 |

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*Nonperforming Assets* 

Nonperforming assets are comprised of loans for which Oconee is no longer accruing interest, and foreclosed assets or "other real estate owned" referred to as "OREO." If Oconee grants a concession to a borrower in financial difficulty, the loans falls into the category of a troubled debt restructuring, which may be classified as either nonperforming or performing depending on the loan's status. See "Note 3" of Oconee's audited consolidated financial statements for additional information on Oconee's Troubled Debt Restructuring policy. Loans are generally placed on nonaccrual status when they become 90 days past due unless management believes the loan is adequately collateralized and in the process of collection. OREO consists of properties acquired by foreclosure or similar means that Oconee intends to offer for sale. At December 31, 2022 and 2021, Oconee had no other real estate owned.

Accrual of interest is discontinued on a loan when management believes, after considering economic conditions and collection efforts that the borrower's financial condition is such that collection of interest is doubtful. Interest previously accrued but not collected is reversed against current period earnings, and interest is recognized on a cash basis or cost recovery method when such loans are placed on nonaccrual status.

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The following table provides information with respect to the components of Oconee's nonperforming assets at the dates indicated:

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | (Dollars in thousands) | (Dollars in thousands) |
|  **Nonaccrual Loans:** |  |  |
|  Real estate-mortgage |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $165 | $179 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | 5084 | 5450 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  |  |
|  Real estate-construction |  |  |
|  Commercial, financial and agricultural | 75 |  |
|  Consumer |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $5324 | $5629 |
|  Loans 90 days or more past due and still accruing |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $5324 | $5629 |
|  Total nonperforming loans | 5324 | 5629 |
|  Other real estate owned |  |  |
|  Total nonperforming assets | 5324 | 5629 |
|  Trouble debt restructurings (TDR) |  |  |
|  Nonperforming loans as a percentage of total loans | 1.77% | 1.86% |
|  Nonperforming assets as a percentage of total loans and other real estate owned | 1.77% | 1.86% |
|  Allowance for loan losses to nonperforming loans | 85.45% | 80.70% |

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*Allowance for Loan Losses* 

In originating loans, Oconee's management recognizes that credit losses will be experienced and the risk of loss will vary with, among other things, general economic conditions, the type of loan being made, the creditworthiness of the borrower over the term of the loan and, in the case of a secured loan, the quality of the collateral for such loan. The allowance for loan losses represents Oconee's estimate of the allowance necessary to provide for potential loan loss exposure. See Oconee's audited consolidated financial statements, Note "3", for additional information relating to Oconee's methodology which is included herein.

The allowance for loan losses is based on estimates and ultimate losses will vary from current estimates. These estimates are reviewed and adjustments are reported as provision expense if it becomes necessary to increase or decrease the allowance to ensure the balance is adequate given the risk inherent in the loan portfolio.

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The following table sets forth an analysis of the activity in Oconee's allowance for loan losses for the periods indicated:

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| | | |
|:---|:---|:---|
|  | **Years Ended<br>December 31,** | **Years Ended<br>December 31,** |
|  | **2022** | **2021** |
|  | (Dollars in thousands) | (Dollars in thousands) |
|  **Balances:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average total loans outstanding during period, net of unearned income | $297833 | $280443 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans outstanding at end of period, net of unearned income | 300130 | 302523 |
|  **Allowance for Loan Losses:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Balance at beginning of period | 4542 | 4057 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charge-offs: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Real estate-mortgage |  | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Real estate-construction |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial, financial and agricultural |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consumer | 4 | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total charge-offs | 4 | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Recoveries: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Real estate-mortgage |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Real estate-construction |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial, financial and agricultural |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consumer | 11 | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total recoveries | 11 | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loan charge-offs (recoveries) | (7) | (29) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for loan losses |  | 456 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Balance at end of period | $4549 | $4542 |
|  **Ratios:** |  |  |
|  Net loan charge-offs to average total loans | 0.00% | -0.01% |
|  Provision for loan losses to average total loans | 0.00% | 0.16% |
|  Allowance for loan losses to gross loans at end of period | 1.52% | 1.50% |
|  Allowance for loan losses to total nonperforming loans | 85.45% | 80.70% |
|  Net loan charge-offs to allowance for loan losses at end of period | -0.15% | -0.64% |
|  Net loan charge-offs to provision for loan losses | 0.00% | -6.36% |

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The following table provides a breakdown of the allowance for loan losses by categories at the dates indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** |
|  | **2022** | **2022** | **2021** | **2021** |
|  |<br>**Amount** | **% of Loans**<br>**to Total Loans** |<br>**Amount** | **% of Loans**<br>**to Total Loans** |
|  | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) |
|  Real estate - mortgage | $3045 | 89.31% | $2686 | 88.57% |
|  Real estate - construction | 12 | 0.57% | 10 | 0.65% |
|  Commercial, financial and agricultural | 219 | 9.35% | 145 | 9.96% |
|  Consumer | 17 | 0.77% | 19 | 0.82% |
|  Unallocated | 1256 | 0.00% | 1682 | 0.00% |
|  | $**4549** | **100.00%** | $**4542** | **100.00%** |

---

**Deposits** 

Total deposits at December 31, 2022 were $494.9 million, a decrease of $24.8 million, or 4.8%, when compared to total deposits of $519.7 million at December 31, 2021. The decrease in deposits was mainly attributed to a decline in retail and municipal deposits. In the last half of 2022, we experienced a decline in deposits resulting from declines in government stimulus programs and declines in the savings rates of consumer and businesses.

At December 31, 2022 and 2021, Oconee had concentrations of deposits with two municipal customers of $54.4 million and $64.8 million, respectively. The concentrations of deposits for these two municipal customers did not impose any restrictions on Oconee's operations. In addition, these two municipal customers tend to have larger deposit balances during the third and fourth quarter which correlate with their tax receipts.

Oconee had Insured Cash Sweep (ICS) deposits through Promontory/IntraFI Network of $66.4 million and $74.9 million at December 31, 2022 and 2021, respectively. Oconee's ICS reciprocal deposits consist of state, county and municipal deposits which are fully insured through this program.

The following table sets forth Oconee's deposits as a percentage of total deposits for the dates indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** |
|  | **2022** | **2022** | **2021** | **2021** |
|  |<br>**Amount** | **% of Total**<br>**Deposits** |<br>**Amount** | **% of Total**<br>**Deposits** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
|  Demand | $120057 | 24.26% | $107488 | 20.69% |
|  Interest-bearing demand | 176240 | 35.61% | 185071 | 35.61% |
|  Savings (includes MMDA) | 156181 | 31.56% | 173023 | 33.29% |
|  Time deposits | 42392 | 8.57% | 54112 | 10.41% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | $494870 | 100.00% | $519694 | 100.00% |

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##### [**Table of Contents**](#toc)
The scheduled maturity distribution of Oconee's time deposits at December 31, 2022 was as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **Time Deposits**<br>**$250,000 or**<br>**Greater** | **Time Deposits**<br>**Less than**<br>**$250000** |<br>**Total** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
|  Months to Maturity |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Three months or less | $563 | $4202 | $4765 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Three to six months | 989 | 5438 | 6427 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Six to twelve months | 1116 | 8573 | 9689 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Over one year | 10932 | 10579 | 21511 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $13600 | $28792 | $42392 |

---

**Income Taxes** 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management's judgment.

In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company's assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

In assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.

As of December 31, 2022 and 2021, management performed an analysis of the deferred tax assets and liabilities and determined that no tax valuation allowance was deemed necessary since Oconee is likely to realize the deferred tax asset.

**Borrowing Activities and Liquidity** 

*Subordinated Notes Payable* 

On August 7, 2020, Oconee issued subordinated notes payable for $10 million. The notes mature on August 7, 2030, with interest payments due on March 28, June 28, September 28, and December 28 of each year at a fixed rate of 6.00% until August 7, 2025. After August 7, 2025, and until maturity, interest payments are due on the same payment schedule but at a variable rate of three-month SOFR plus five hundred ninety-six basis points resetting each quarter. The company may redeem the notes, in whole or in part, on or after the fifth anniversary of the note agreements. Oconee incurred and capitalized debt issuance costs of $239,000, and these costs are being amortized into interest expense over the life of the notes on a straight line basis. The net carrying value of the subordinated notes payable was $9.8 million at December 31, 2022 and 2021.

*Liquidity* 

Oconee is approved to borrow from the Federal Reserve discount window program. As of December 31, 2022, Oconee has not pledged any loans or securities but would be required to if they want to borrow using this program. There were no borrowings outstanding under this program at December 31, 2022 and 2021.

Oconee is approved to borrow from the Federal Home Loan Bank of Atlanta. As of December 31, 2022, Oconee had pledged loans totaling approximately $133.7 million and had an available credit line of approximately $134.1 million. There were no borrowings outstanding under this line at December 31, 2022 and 2021.

Oconee had $12.0 million available for the purchase of overnight federal funds from two correspondent financial institutions as of December 31, 2022 and 2021. There were no amounts outstanding under these lines as of December 31, 2022 and 2021.

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##### [**Table of Contents**](#toc)
**Capital Resources** 

At December 31, 2022, Oconee had total stockholders' equity of $29.1 million compared to $39.3 million at December 31, 2021. The decrease of $10.2 million, or 26.1%, is mostly attributed to decline in the accumulated other comprehensive income of $13.8 million stemming from the unrealized losses in Oconee's investment portfolio and the cash dividends paid to our stockholders in 2022 being offset by the retained earnings.

Dividends paid by the Bank are the primary source of funds available to Oconee for payment of dividends to its stockholders and for other working capital needs. Banking regulations limit the amount of dividends that may be paid without prior approval of the regulatory authorities. These restrictions are based on the level of regulatory classified assets, the prior year's net earnings, the ratio of equity capital to total assets, and other specific regulatory restrictions. At December 31, 2022, approximately $2.3 million of retained earnings was available for dividend declaration without regulatory approval.

As of December 31, 2022, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's category. See Note 12, "Regulatory Matters," in the audited consolidated financial statements included within this offering circular.

The Bank's actual capital amounts and ratios are presented in the following table:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Actual** | **Actual** | **Minimum<br>Capital<br>Requirement** | **Minimum<br>Capital<br>Requirement** | **Minimum To Be<br>Well Capitalized<br>Under Prompt<br>Corrective Action<br>Provisions** | **Minimum To Be<br>Well Capitalized<br>Under Prompt<br>Corrective Action<br>Provisions** |
|  | **Amount** | **Ratio** | **Amount** | **Ratio** | **Amount** | **Ratio** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
|  **As of December 31, 2022:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Capital to Risk Weighted Assets | $53762 | 14.63% | $29395 | 8.00% | $36744 | 10.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 Capital to Risk Weighted Assets | $49213 | 13.39% | $22046 | 6.00% | $29395 | 8.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Equity Tier 1 Capital to Risk Weighted Assets | $49213 | 13.39% | $16535 | 4.50% | $23884 | 6.50% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 Capital to Average Assets | $49213 | 9.09% | $21662 | 4.00% | $27078 | 5.00% |
|  **As of December 31, 2021:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Capital to Risk Weighted Assets | $50004 | 14.13% | $28311 | 8.00% | $35389 | 10.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 Capital to Risk Weighted Assets | $45579 | 12.88% | $21233 | 6.00% | $28311 | 8.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Equity Tier 1 Capital to Risk Weighted Assets | $45579 | 12.88% | $15925 | 4.50% | $23003 | 6.50% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 Capital to Average Assets | $45579 | 8.09% | $22531 | 4.00% | $28164 | 5.00% |

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##### [**Table of Contents**](#toc)
**Results of Operations** 

*General* 

Oconee earns income from two primary sources: (1) net interest income, which is interest income generated by earning assets less interest expense on interest-bearing liabilities and (2) non-interest income, which primarily consists of customer service charges and fees, mortgage origination income, gain on sale of SBA loans, and earnings on bank-owned life insurance. The majority of Oconee's non-interest expenses are operating costs that relate to providing a full range of banking services to our Bank's customers.

The following table summarizes Oconee's results of operations and sets forth Oconee's return on equity and assets for the period indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **$Variance** | **% Variance** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
|  Net interest income | $16409 | $15626 | $783 | 5.01% |
|  Provision for loan losses |  | 456 | (456) | -100.00% |
|  Non-interest income | 4850 | 4649 | 201 | 4.32% |
|  Non-interest expense | 15930 | 16087 | (157) | -0.98% |
|  Income tax | 1205 | 732 | 473 | 64.62% |
|  Net income | 4124 | 3000 | 1124 | 37.47% |
|  Return on average assets | 0.75% | 0.56% |  | 0.19% |
|  Return on average equity | 13.29% | 7.73% |  | 5.56% |
|  Dividend payout ratio | 15.21% | 19.41% |  | -4.20% |
|  Average equity to average assets | 5.66% | 7.19% |  | -1.53% |

---

*Net Income* 

Oconee's net income was $4.1 million for the year ended December 31, 2022 compared to $3.0 million for the year ended December 31, 2021. The increase in net income of $1.1 million is mostly attributed to increases in net interest income from investment securities and interest-bearing bank balances. In addition, Oconee did not record any provision for loan loss for 2022 compared to $456 thousand recorded for 2021.

*Interest Income* 

Interest income was $17.9 million for the year ended December 31, 2022 compared to $17.2 million for the year ended December 31, 2021, a year-over-year increase of $581 thousand, or 3.4%. The increase in interest income is mostly attributed to an approximately $1.3 million increase from interest income on investment securities and approximately $641 thousand recognized on interest income from interest-bearing bank balances being offset by the decrease in interest income and related fees on loans of $1.4 million. During 2021, Oconee recognized approximately $1.2 million from interest income and related fees on loans originated from the PPP programs.

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##### [**Table of Contents**](#toc)
*Interest Expense* 

Interest expense was $1.4 million for the year ended December 31, 2022 compared to $1.6 million for the year ended December 31, 2021, a year-over-year decrease of $203,000, or 12.3%. The decrease is mostly attributed to interest expense on deposits decreasing due to a decline on average rates paid in 2022 versus 2021. See "Deposits" above for additional information related to Oconee's deposits.

*Provision for Loan Losses* 

The provision for loan losses is the periodic charge to operating earnings that management believes is necessary to maintain the allowance for loan losses at an adequate level. The amounts of these charges are based on management's analysis of the potential risk in the loan portfolio.

For the year ended December 31, 2022 Oconee did not record a provision for loan losses compared to $456 thousand of provision for loan losses recorded for the year ended December 31, 2021. The year-over-year decrease in the provision for loan losses of $456 thousand, or 100.0%, is attributed to the decrease in the loan portfolio during 2022. During 2022, loans, net of the allowance for loan losses decreased $2.4 million, or 0.8%, when compared to 2021. See "Loans and Asset Quality" above and Note 3, "Loans" in the audited consolidated financial statement included within this offering circular for additional information related to Oconee's allowance for loan losses.

*Non-interest Income* 

Non-interest income consist primarily of customer service charges and fees; net gain/loss on sale of securities; mortgage origination income; gain on sale of SBA loans; commissions from wealth management services; gain/loss on sale of fixed assets; and earnings on bank-owned life insurance. For the year ended December 31, 2022, the non-interest income was $4.8 million compared to $4.4 million for the year ended December 31, 2021. The year-over-year increase of $469 thousand, or 10.7%, is mostly attributed to an increase in the gain on sale of SBA loans of approximately $896 thousand during 2022 when compared to prior year. In 2022, Oconee was able to return their focus back to SBA lending since the PPP programs ended. In addition, Oconee recognized a gain on the sale of fixed assets of $218 thousand from the sale of one of its financial centers in May 2022. In 2021, Oconee recognized a loss on the sale of fixed assets of $268 thousand from impairment write-downs on several fixed assets. Oconee also increased earnings on bank-owned life insurance by $71 thousand when comparing 2022 to 2021. Oconee purchased additional bank-owned life insurance policies on several employees in November 2021. Mortgage origination income decreased $1.1 million during 2022 when compared to prior year. The decrease was attributed to a decrease in the volume of mortgage originations due to the rising rate environment that occurred in 2022.

*Non-interest expense* 

Non-interest expense totaled $15.9 million for the year ended December 31, 2022 when compared to $15.8 million for the year ended December 31, 2021. The year-over-year increase of $112 thousand, or 0.7%, is mostly attributed to an increase of $196 thousand in salaries and employee benefits and an increase of $183 thousand in brokerage fees related to new SBA loan originations during 2022. Occupancy expense decreased $244 thousand during 2022 when compared to 2021 due to the elimination of the rent expense of the previous operations center which expired in November 2021. In May 2021, Oconee relocated its corporate headquarters to a new location once the building was completed.

Salaries and employee benefits increased $196 thousand, or 2.1%, when comparing 2022 to 2021. The year-over-year increase is attributed to several factors. Officer and employee salaries increased $366 thousand, or 6.1%, which is primarily attributable to merit pay increases and the hiring of several key employees that will enhance its profitability in the future. SERP benefits expense increased $83 thousand, or 37.7%, which is mainly due to the adoption of additional SERP plan for one key officer of Oconee. Employee group insurance expense increased $62 thousand, or 10.7%, for 2022 which is due to our insurance carrier temporarily reducing our insurance cost for our employees in 2021. Commission expense decreased $395 thousand, or 43.8%, which is mostly attributed to the Bank's mortgage department having a decrease in production of mortgage loans during 2022.

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##### [**Table of Contents**](#toc)
**Average Balances and Yields** 

The table below indicates the relationship between interest income and interest expense and the average amounts of assets and liabilities for the periods indicated. As shown in the table, both average assets and average liabilities for the twelve months ended December 31, 2022 increased compared to the same period in 2021. The increase in average assets was primarily driven by the increase in average investment securities of $40.8 million, or 34.6%, being offset by the decrease in interest-bearing deposits in other banks of $19.7 million, or 26.5%, and the decrease in loans, net of unearned income of $16.0 million, or 5.1%, when comparing 2022 to 2021. The increase in average liabilities was mostly attributed to an increase in the average interest-bearing deposits of $11.5 million, or 3.6%.

The yield on interest-bearing deposits decreased from 0.27% for the year ended December 31, 2021 to 0.21% for the year ended December 31, 2022. The decreases in deposit costs year over year is partially associated to market driven changes impacting our cost of funds attributable to the falling interest rates that occurred in 2021. Starting in the second half of 2022, the market for interest-bearing deposits changed to a rising rate environment and management is periodically reviewing the yields in managing the net interest margin. In March 2020, the Federal Reserve's Federal Open Market Committee lowered interest rates twice for a total reduction of 150 basis points in response to the COVID-19 pandemic, which was the most aggressive action taken by the FOMC since the financial crisis in 2008. From March 2020 and throughout 2021, the Federal Reserve Bank did not raise nor lower the interest rates which kept the interest rates at a low rate. During 2022, the Federal Reserve Bank increased the interest rates seven times for an overall total of 425 basis points.

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##### [**Table of Contents**](#toc)

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  |<br>**Average**<br>**Balance <sub>(1)</sub>** | **Interest**<br>**Income/**<br>**Expense** |<br>**Average**<br>**Rate/Yield** |<br>**Average**<br>**Balance <sub>(1)</sub>** | **Interest**<br>**Income/**<br>**Expense** |<br>**Average**<br>**Rate/Yield** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
|  **Assets** |  |  |  |  |  |  |
|  Interest-earning assets: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net of unearned income | $297833 | $13783 | 4.65% | $313837 | $15122 | 4.82% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans held for sale | 1657 | 77 | 4.65% | 6130 | 140 | 2.28% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities | 158693 | 3249 | 2.10% | 117938 | 1908 | 1.72% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other interest income | 54727 | 743 | 1.34% | 74439 | 102 | 0.12% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-earning assets | 512910 | 17852 | 3.48% | 512344 | 17272 | 3.37% |
|  Noninterest-earning assets | 34710 |  |  | 27578 |  |  |
|  Total assets | $547620 |  |  | $539922 |  |  |
|  **Liabilities and stockholders' equity** |  |  |  |  |  |  |
|  Interest-bearing liabilities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-earning demand and savings | $331689 | $332 | 0.10% | $320191 | $400 | 0.13% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other time | 50368 | 451 | 0.90% | 55043 | 601 | 1.09% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-bearing deposits | $382057 | 783 | 0.21% | $375234 | 1001 | 0.27% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes | 9807 | 645 | 6.58% | 9783 | 645 | 6.59% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other borrowings | 480 | 15 | 3.16% |  |  | 0.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other interest-bearing liabilities | 10287 | 660 | 6.42% | 9783 | 645 | 6.59% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-bearing liabilities | 392344 | 1443 | 0.37% | 385017 | 1646 | 0.43% |
|  Noninterest-bearing liabilities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand deposits | 114179 |  |  | 107902 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | 10080 |  |  | 8178 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stockholders' equity | 31017 |  |  | 38825 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total noninterest-bearing liabilities and stockholders' equity | 155276 |  |  | 154905 |  |  |
|  Total liabilities and stockholders' equity | $547620 |  |  | $539922 |  |  |
|  Interest rate spread |  |  | 3.11% |  |  | 2.94% |
|  Net interest income |  | $16409 |  |  | $15626 |  |
|  Net interest margin |  |  | 3.20% |  |  | 3.05% |

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(1) The average balances reported in the table are computed on a daily average.

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##### [**Table of Contents**](#toc)
**Rate/Volume Analysis** 

The following table sets forth the effects of changing rates and volumes on Oconee's net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionately based on the changes due to rate and the changes due to volume.

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| | | | |
|:---|:---|:---|:---|
|  | **2022 Compared to 2021** | **2022 Compared to 2021** | **2022 Compared to 2021** |
|  | **Increase (decrease)** | **Increase (decrease)** | **Increase (decrease)** |
|  | **due to changes in** | **due to changes in** | **due to changes in** |
|  | **Volume** | **Rate** | **Net Change** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
|  **Interest-earning assets:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net of unearned income | $(1443) | $104 | $(1339) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans held for sale | (208) | 145 | (63) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities | 513 | 828 | 1341 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other interest income | (24) | 665 | 641 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-earning assets | (1162) | 1742 | 580 |
|  **Interest-bearing liabilities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-earning demand and savings | 12 | (80) | (68) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other time | (51) | (99) | (150) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other borrowings |  | 15 | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-bearing liabilities | (39) | (164) | (203) |
|  **Change in net interest income** | $(1123) | $1906 | $783 |

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##### [**Table of Contents**](#toc)
**Acquisition of Elberton Federal Savings & Loan Association**

On December 15, 2022, Oconee and Elberton entered into an amended and restated agreement and plan of merger conversion in which Oconee will acquire Elberton, subject to regulatory approval. The original agreement was announced on June 1, 2021. Elberton will convert to a stock form of organization and will simultaneously merge into Oconee. As part of the transaction, Oconee will offer shares of its common stock to qualifying eligible Elberton account holders and possibly others in a subscription offering and a community offering. See "Description of Merger Conversion and Related Agreements" above for additional information relating to the acquisition.

For the years ended December 31, 2022 and 2021, Oconee incurred $113,252 and $360,224, respectively, in acquisition-related expenses that were recognized in Oconee's consolidated income statements. In addition, Oconee had deferred cost incurred relating to the acquisition of $119,598 and $73,630 as of December 31, 2022 and 2021, respectively. The deferred cost are being accounted on Oconee's consolidated balance sheet and will offset against the proceeds from the offering if the merger is successful. However, if the merger is deemed not successful, then Oconee will recognize the deferred cost immediately as an expense on Oconee's consolidated income statement.

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##### [**Table of Contents**](#toc)

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| |
|:---|
| **OCONEE FINANCIAL CORPORATION** |
| **CONSOLIDATED BALANCE SHEETS** |

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| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2021** |
|  | (Unaudited) | (Audited) |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $51430016 | $85774514 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities available for sale | 159640457 | 162165152 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank stock | 285500 | 247400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans held for sale | 140409 | 1212617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net of unearned income | 300130642 | 302523687 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan loss | (4549357) | (4542292) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net | 295581285 | 297981395 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment, net | 8000576 | 8602518 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | 21669411 | 15158402 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Assets | $536747654 | $571141998 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
|  Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | $494869684 | $519693969 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated debenture, net of capitalized expenses | 9818393 | 9794445 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities | 2976386 | 2320963 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities | 507664463 | 531809377 |
|  Stockholder's Equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Stock | 1795900 | 1795076 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted Stock | (43528) | (38311) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional Paid in Capital | 4176342 | 4159822 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 36764762 | 33268328 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income (loss) | (13610285) | 147706 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Stockholder's Equity | 29083191 | 39332621 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities and Stockholder's Equity | $536747654 | $571141998 |

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##### [**Table of Contents**](#toc)

---

| |
|:---|
| **OCONEE FINANCIAL CORPORATION** |
| **CONSOLIDATED STATEMENTS OF INCOME** |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2022** | **2021** |
|  | (Unaudited) | (Audited) |
|  Interest Income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and fees on loans | $13860357 | $15262317 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and dividends on securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, County & Municipal | 765942 | 685752 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Treasuries & Agencies | 2103601 | 875535 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate | 379271 | 346038 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other interest income | 743302 | 102278 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest income | 17852473 | 17271920 |
|  Interest Expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 783609 | 1001740 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 659916 | 644749 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Interest Expense | 1443525 | 1646489 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income | 16408948 | 15625431 |
|  Provision for loan losses |  | 456000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income after provision for loan losses | 16408948 | 15169431 |
|  Other income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Service charges on deposit accounts | 645856 | 458943 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on sale of assets | 218227 | (268123) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gain on sale of securities | 749 | 172312 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage origination income | 1017698 | 2067991 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | 1074252 | 178608 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commissions on investment sales | 122104 | 187329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1770880 | 1583464 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income | 4849766 | 4380524 |
|  Other expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | 9496173 | 9300150 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Occupancy | 1181164 | 1425137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other operating | 5253020 | 5093205 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total noninterest expense | 15930357 | 15818492 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income tax | 5328357 | 3731463 |
|  Income tax | 1204672 | 731934 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Income | $4123685 | $2999529 |
|  Period-Ending Outstanding Shares | 896824 | 896412 |
|  Weighted Average Shares Outstanding | 896823 | 896260 |
|  Net income per share | $4.60 | $3.35 |

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##### [**Table of Contents**](#toc)

---

| |
|:---|
| **OCONEE FINANCIAL CORPORATION** |
| **CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME** |
| **FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021** |
| **(Unaudited)** |

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---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
|  Net Income | $4123685 | $2999529 |
|  Other comprehensive income (loss), net of tax: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized gains (losses) on derivative financial instruments: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Holding gains (losses) arising during period, net of tax expense of $68,291 and $0, respectively | (201632) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassification adjustment for amortization included in net income, net of tax benefit of $(15361) and $0, respectively | 45353 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized losses on securities available for sale: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Holding losses arising during period, net of tax benefit of $4,595,787 and $394,063, respectively | (13601152) | (1105987) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassification adjustment for gains included in net income, net of tax expense for $189 and $45,266, respectively | (560) | (127046) |
|  Total other comprehensive loss | (13757991) | (1233033) |
|  Comprehensive income (loss) | $(9634306) | $1766496 |

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##### [**Table of Contents**](#toc)

---

| |
|:---|
| **OCONEE FINANCIAL CORPORATION** |
| **CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY** |
| **Years Ended December 31, 2022 and 2021** |
| **(Unaudited)** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |<br>**Common**<br>**Stock** |<br>**Restricted**<br>**Stock** |<br>**Additional**<br>**Paid-In**<br>**Capital** |<br>**Retained**<br>**Earnings** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income (Loss)** |<br>**Total**<br>**Stockholders'**<br>**Equity** |
|  **Balance, December 31, 2020** | $1794250 | $(37976) | $4147114 | $30850978 | $1380739 | $38135105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in net unrealized income (loss) on investment securities available for sale, net of tax |  |  |  |  | (1233033) | (1233033) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of restricted stock | 1500 | (25748) | 24248 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (674) |  | (11540) |  |  | (12214) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense |  | 25413 |  |  |  | 25413 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid ($0.65 per share) |  |  |  | (582179) |  | (582179) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 2999529 |  | 2999529 |
|  **Balance, December 31, 2021** | $1795076 | $(38311) | $4159822 | $33268328 | $147706 | $39332621 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in net unrealized income (loss) on investment securities available for sale and derivatives, net of tax |  |  |  |  | (13757991) | (13757991) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of restricted stock | 1500 | (32212) | 30712 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (676) |  | (14192) |  |  | (14868) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense |  | 26995 |  |  |  | 26995 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid ($0.70 per share) |  |  |  | (627251) |  | (627251) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 4123685 |  | 4123685 |
|  **Balance, December 31, 2022** | $1795900 | $(43528) | $4176342 | $36764762 | $(13610285) | $29083191 |

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##### [**Table of Contents**](#toc)

---

| |
|:---|
| **OCONEE FINANCIAL CORPORATION** |
| **CONSOLIDATED STATEMENTS OF CASH FLOWS** |
| **(Unaudited)** |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2022** | **2021** |
|  **Operating Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $4123685 | $2999529 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, amortization, and accretion | 1454222 | 1064004 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for loan losses |  | 456000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of mortgage loans held for sale | 35784863 | 77974968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Originations of mortgage loans held for sale | (35214655) | (72976028) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of investment securities, net | (749) | (172312) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on sale of assets | (218227) | 268123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | (1074252) | (178608) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock compensation expense | 26995 | 25413 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in bank owned life insurance | (322691) | (251779) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | (1411330) | 55888 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | 584342 | 443654 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | 3732203 | 9708852 |
|  **Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of investment securities available for sale | (30146327) | (129079792) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from calls, maturities and paydowns of investment securities available for sale | 8702469 | 9416103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of investment securities available for sale | 4993302 | 31013443 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net (increase) decrease in Federal Home Loan Bank stock | (38100) | 112300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of derivative financial instrument | (447000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in loans | 3976362 | 21130375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of bank owned life insurance |  | (3500000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of fixed assets | 681500 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of premises and equipment | (332503) | (3842841) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by investing activities | (12610297) | (74750412) |
|  **Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in deposits | (24824285) | 74992037 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (14868) | (12214) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid | (627251) | (582179) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) financing activities | (25466404) | 74397644 |
|  Net increase (decrease) in cash and cash equivalents | (34344498) | 9356084 |
|  Cash and cash equivalents at beginning of year | 85774514 | 76418430 |
|  Cash and cash equivalents at end of period | $51430016 | $85774514 |
|  **Supplemental Disclosures of Cash Flow Information** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid during the period for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest | $1443344 | $1664775 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income taxes | $1393640 | $881000 |

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##### [**Table of Contents**](#toc)
**DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES** 

The following table sets forth certain information as of December 31, 2022 with respect to (i) each of our directors and executive officers, and (ii) our directors and executive officers as a group:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | | | **Common Stock<br>Beneficially Owned on**<br>**December 31, 2022** | **Common Stock<br>Beneficially Owned on**<br>**December 31, 2022** |
| <br>**Name, Address and**<br> **Offices Held with Company<sub> (1)</sub>** | <br>**Principal Occupation**<br> **for the Past Five Years** | <br>**Year of Birth** | <br>**Director<br>Since** | **Number<br>of Shares <sub>(2)</sub>** | **Percentage<br>of Shares<br>Outstanding** |
| T. Neil Stevens<br> President, Chief Executive<br> Officer and Director | President and Chief Executive<br> Officer Oconee Financial<br> Corporation and Oconee State Bank | 1966 | 2016 | 2180 | 0.24% |
| G. Robert Bishop Director | Retired from Georgia Department of Natural Resources Partner Fifteen Properties, LLC Partner Flomich Properties, LLC Partner KBB, LLC | 1946 | 1991 | 9980 | 1.11% |
| Brian J Brodrick Director & Principal Shareholder | Marketing & Communications<br> Partner and Board Member, Jackson Spalding | 1975 | 2016 | 69623 | 7.77% |

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------

(1) – All offices held apply to both Oconee Financial Corporation and Oconee State Bank (the "Bank") unless otherwise indicated. The business address of each of the directors and executive officers is 41 North Main Street, Watkinsville, GA 30677.

---

| | |
|:---|:---|
| (2) – | Except as otherwise noted, may include shares held by or with such person's spouse and minor children; shares held by any other relative of such person who has the same home; shares held by a family trust as to which such person is a trustee and primary beneficiary with sole voting and investment power (or shared power with a spouse); shares held in "street name" for the benefit of such person; or shares held in and Individual Retirement Account or pension plan as to which such person is the sole beneficiary and has pass-through voting rights and investment power.  |

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##### [**Table of Contents**](#toc)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | | | **Common Stock** | **Common Stock** |
|  | | | | **Beneficially Owned on** | **Beneficially Owned on** |
|  | | | | **December 31, 2022** | **December 31, 2022** |
| **Name, Address and** | | | | | |
| **Offices Held with Company<sub> (1)</sub>** | <br>**Principal Occupation**<br>**for the Past Five Years** |<br><br><br>**Year of Birth** |<br><br>**Director**<br>**Since** |<br>**Number**<br>**of Shares <sub>(2)</sub>** | **Percentage**<br>**of Shares**<br>**Outstanding** |
| J. Albert Hale, Sr. | Hale's Dairy - Dairy & Poultry Farmer, Retired | 1953 | 2008 | 2300 | 0.26% |
|  Director & Vice Chairman |  |  |  |  |  |
|  Virginia Wells McGeary | Real Estate Developer & Property Management | 1941 | 1990 | 132135 | 14.75% |
|  Director & Board Chair | President & CEO, Wells & Company Realtors, Inc. |  |  |  |  |
|  Principal Shareholder | Limited Partner, VSC Properties, LLLP |  |  |  |  |
|  | Limited Partner, McRee Properties, LLLP |  |  |  |  |
|  Jonathan R. Murrow | Cardiologist - Piedmonth Heart Institute | 1974 | 2016 | 698 | 0.08% |
|  Director | Professor - Medical College of Georgia |  |  |  |  |
|  | CEO - Infrared RX, Inc. |  |  |  |  |
|  Tony Powell | Residential Construction | 1972 | 2018 | 6165 | 0.69% |
|  Director | President, Powell Homebuilders |  |  |  |  |
|  Laura Whitaker | Social Services | 1985 | 2020 | 10 | 0.00% |
|  Director | Executive Director, Extra Special People, Inc. |  |  |  |  |

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##### [**Table of Contents**](#toc)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | | | **Common Stock**<br>**Beneficially Owned on**<br>**December 31, 2022** | **Common Stock**<br>**Beneficially Owned on**<br>**December 31, 2022** |
| <br>**Name, Address and**<br> **Offices Held with Company<sub> (1)</sub>** | <br>**Principal Occupation for the Past Five Years** | <br>**Year of Birth** | <br>**Director<br>Since** | **Number<br>of Shares <sub>(2)</sub>** | **Percentage<br>of Shares<br>Outstanding** |
| W. Toby Smith Director | Certified Public Accountant; Director of Financial Reporting & Assurance Services, Trinity Accounting Group, PC; Shareholder at Trinity Accounting Group; Member TSR, LLP | 1976 | 2017 | 250 | 0.03% |
| Holly H Stephenson Director & Principal Shareholder | County Clerk, Oconee County Board of Commissioners<br> General Partner, Hardigree Partners | 1970 | 2020 | 71140 <sub></sub><sub>(3)</sub> | 7.94% |
| Tom Wilson<br> Executive VP | Executive Vice President & Chief Credit Officer, Oconee State Bank | 1957 | N/A | 100 | 0.01% |
| Philip A. Bernardi<br> Executive VP | Executive Vice President & Chief Banking Officer, Oconee State Bank | 1983 | N/A | 0 | 0.00% |
| Cristi Donahue<br> Executive VP | Executive Vice President & Chief Administrative Officer, Oconee State Bank | 1975 | N/A | 22 | 0.00% |
| James R. McLemore<br> Executive VP | Executive Vice President & Chief Finance Officer, Oconee State Bank (2019 -) | 1959 | N/A | 158 | 0.02% |
|  | Chief Executive Officer - MidSouth Bancorp, Inc. - Lafayette, LA (2017-2019) Chief Financial Officer - MidSouth Bancorp, Inc. - Lafayette, LA (2009-2017) |  |  |  |  |
| Selena B. Ruth<br> Executive VP  | Executive Vice President & Chief Human Resources Officer, Oconee State Bank (2022-) Atlantic Capital Bank, SVP, Director of Talent Acquisition and Teammate Relations (2021-2022) Atlantic Capital Bank, SVP, Human Resources Manager (2017-2021) | 1971 | N/A | 0 | 0.00% |
| Directors and Executive Officers as a Group (15 persons) |  |  |  | 294761 | 32.89% |

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(3) – Includes shares held by Mrs. Stephenson's minor children, her father's estate and by Hardigree
Properties, LLLP which Mrs. Stephenson is a general partner.

**Security Ownership of Certain Beneficial Owners and Management** 

Management knows of no person who owned beneficially more than 5% of Oconee's outstanding common stock as of December 31, 2022, except for Virginia Wells McGeary, Brian Brodrick and Holly H. Stephenson, each of whom is a member of the Board of Directors. Information concerning the stock ownership of Oconee's executive officers and directors is set forth above under "Directors and Executive Officers."

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##### [**Table of Contents**](#toc)
**Principal Occupations and Other Information Concerning Executive Officers and Directors** 

The following provides information on the principal occupation or employment for each of our executive officers and directors during at least the past five years, as well as certain additional biographical information concerning these individuals:

**T. Neil Stevens** has served as President, Chief Executive Officer and a director for Oconee and the Bank since 2016. He brings more than 33 years of board based banking experience to the team. Over the years, his main focus has been to lead financial institutions to levels of accelerated performance by placing a high emphasis on building a remarkable culture within the organization.

**G. Robert Bishop** has served as a director since 1991 for the Bank and since 1999 for Oconee when it was created. He is retired from the Georgia Department of Natural Resources and is a partner in several local businesses in this area. Mr. Bishop obtained both his Bachelor's degree and Master's degree, in Agricultural Engineering, from the University of Georgia in 1969 and 1972, respectively. With his business experience and his historical knowledge of the Bank, he has been an integral member of the Oconee Board.

**Brian J Brodrick** has served as a director since 2016 for both the Bank and Oconee. He has more than 25 years of strategic communications experience. He is currently a partner and board member of Jackson Spalding, Georgia's leading independent marketing communications agency, in which he has worked for the past 26 years. In addition, he is Mayor of the City of Watkinsville, Georgia.

**J. Albert Hale, Sr.** has served as a director since 2008 for both the Bank and Oconee. He is currently the Vice Chairman of the board. He was a local dairy and poultry farmer and owner of Hale's Dairy, but is now retired. With his demonstrated business experience, leadership and management skills, he has been an excellent addition to the board.

**Virginia Wells McGeary** has served as a director since 1990 for the Bank and since 1999 for Oconee when it was created and is currently the Board Chairman. She has been in the real estate business for 47 years and is currently President and CEO of Wells & Co. Realtors, Inc. She is a graduate of the University of Georgia Terry College of Business in 1982 with a degree in Banking and Finance.

**Jonathan R. Murrow, MD** has served as a director since 2016 for both the Bank and Oconee. He is a Cardiologist at Piedmont Heart Institute in Athens, Georgia and Professor of Medicine at the Medical College of Georgia. He received his undergraduate degree from Harvard College. He earned his medical degree from Emory University School of Medicine in 2001. He completed his internal medicine residency at John Hopkins Hospital in 2004 and cardiovascular fellowship training at Hopkins and at Emory.

**Tony L. Powell** has served as a director since 2018 for both the Bank and Oconee. He has a degree in Landscape Architecture from the University of Georgia. He is the President and founder of Powell Home Builders, Inc., a custom home building company.

**Toby Smith, CPA/CVA** has served as a director since 2017 for both the Bank and Oconee. He is a Certified Public Accountant and is the Director of Financial Reporting & Assurance Services for Trinity Accounting Group, PC in Athens, Georgia. He received his Bachelor of Business Administration from the University of Georgia in 1998. He is a member of the Georgia Society of Certified Public Accountants and the AICPA. He is an alumnus of L.E.A.D. Athens and is active in the Athens area community.

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**Holly H. Stephenson** has served as a director since November 2020 for both the Bank and Oconee. She is a sixth generation native of Oconee County, Georgia and life-long resident. She graduated from University of Georgia's Terry College of Business, where she earned a Bachelor's degree in Insurance and Risk Management. Currently, she is employed by Oconee County Board of Commissioners as the County Clerk. In addition, she is a general partner and treasurer of Hardigree Properties.

**Laura H. Whitaker** has served as a director since 2020 for both the Bank and Oconee. Currently, she is the Executive Director of Extra Special People, Inc. She graduated from University of Georgia with a Bachelor's degree in Collaborative Special Education and a Master's degree in Adapted Curriculum Classic Autism. She is an alumna of L.E.A.D. Athens and Leadership Georgia. She has served as a board member for United Way and as a member for North Oconee Rotary, Oconee Civitan, and the Junior League of Athens.

In addition, the Merger Agreement requires that we appoint Robert Paul, a current Elberton director, as a director of both the Bank and Oconee. Information about Mr. Paul follows:

**Robert Paul** has served on the board of directors of Elberton since 2003. He is a graduate of Furman University and is the Vice President and General Manager of Eagle Granite Co., Inc. He is an alumnus of Leadership Georgia. He has served as President of the Elbert County Chamber of Commerce, on Elberton's City Council, on Elbert Theatre Foundation and Encore Productions, and as President of the Elberton Rotary Club. He serves on the board of the Elberton Granite Association and the EGA Workers' Compensation Board. He currently serves on the advisory board of the University of Georgia Performing Arts Center.

During the past ten years, no director, executive officer, promoter or control person for Oconee has been involved in legal proceedings material to an evaluation of their ability or integrity to serve as a director or executive officer of Oconee, including without limitation those identified in 17 C.F.R. Section (f)(1) through (8).

**Interlocks and Insider Transactions** 

None of the Bank's directors or executive officers have previously served as a board member for any other company.

Certain Oconee's executive officers and directors and the companies with which they are associated have been customers of, and have had banking transactions with Oconee State Bank in the ordinary course of the Bank's business since January 1, 2022 and the Bank expects to continue to have such banking transactions in the future. All loans and commitments to lend included in such transactions were made in the ordinary course of business and were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with other persons not related to the Bank, and in the opinion of the Board of Directors, did not involve more than the normal risk of repayment or present any other unfavorable features. There are no transactions in excess of $120,000 involving Oconee or the Bank in the last two fiscal years, in which any director or executive officer of the company, known shareholder holding an interest in the company of five percent or more or any immediate family member of any of the foregoing persons had a direct or indirect material interest.

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**COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS** 

**Executive Compensation** 

The table below sets forth information concerning the compensation of Oconee's Chief Executive Officer and next two most highly compensated executive officers for the fiscal year ended December 31, 2022:

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and <br>Principal Position** | **Year** | **Salary ($)** | **Bonus ($)** | **Stock<br>Awards (1)** | **Option<br>Awards** | **Non-equity<br>Incentive Plan<br>Compensation** | **Change in<br>Pension<br>Value and<br>Non-Qualified<br>Deferred<br>Compensation<br>Earnings** | **All Other<br>Compensation<br>(2)** | **Total ($)** |
| **(a)** | **(b)** | **(c)** | **(d)** | **(e)** | **(f)** | **(g)** | **(h)** | **(i)** | **(j)** |
|  **T. Neil Stevens,**<br> **President and Chief**<br> **Executive Officer** | 2022 | 300000 |  | 32213 |  | 60300 | 97806 | 19186 | 509505 |
|  **T. Neil Stevens,**<br> **President and Chief**<br> **Executive Officer** | 2021 | 280000 |  | 25748 |  | 75516 | 90027 | 20638 | 491929 |
|  **James R. McLemore,**<br> **Executive Vice**<br> **President and Chief**<br> **Financial Officer** | 2022 | 240000 |  |  |  | 59290 | 150571 | 14471 | 464332 |
|  **James R. McLemore,**<br> **Executive Vice**<br> **President and Chief**<br> **Financial Officer** | 2021 | 218000 |  |  |  | 43680 | 78902 | 12336 | 352918 |
|  **Philip A. Bernardi,**<br> **Executive Vice**<br> **President and Chief**<br> **Banking Officer** | 2022 | 210000 |  |  |  | 29715 | 9791 | 9497 | 259003 |
|  **Philip A. Bernardi,**<br> **Executive Vice**<br> **President and Chief**<br> **Banking Officer** | 2021 | 204000 |  |  |  | 40706 | 9086 | 8893 | 262685 |

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<sup>(1)</sup> Stock awards reported reflect the grant date fair value of restricted stock awards and performance awards under Accounting Standards Codification Topic No. 718, Compensation-Stock Compensation.

<sup>(2)</sup> All other compensation consists of 401(k) matching contributions, club dues reimbursements and company-paid supplemental disability insurance premiums.

The principal components of compensation for Oconee's executive officers are base salary and an incentive cash bonus. Oconee has substantially relied on base salary as its primary component, and base salary is paid to recognize the day-to-day duties and responsibilities of Oconee's executive officers. Individual base salary determinations involve consideration of market competitiveness, incumbent qualifications, performance and service longevity. Within a few executive officers' employment agreements, there is an incentive cash bonus plan if the executive officer meets certain individual and organizational performance measures and will be compensated on a certain percentage of their annual base salary as noted in the employment agreement. Oconee executive officers also receive other compensation and benefits similar to all other officers and employees of Oconee.

Oconee is party to employment agreements with each of Messrs. Stevens, McLemore and Bernardi. Each agreement provides for a base salary, subject to annual adjustments (current salaries are set forth in the above table), has a term of three years and renews for an additional twelve-month period each year.

Mr. Stevens is to receive a base salary of at least $260,000 in his role as President and Chief Executive Officer. Mr. Stevens will also be eligible to participate in Oconee incentive plans and other benefit plans for executive officers. The contract does not provide for guaranteed bonuses. In the event that Mr. Stevens' employment is terminated without cause or for good reason, he is entitled to receive a lump sum payment equal to the sum of one times (1) his then current base salary and (2) the average annual cash bonus paid to Mr. Stevens over the prior three years. If Mr. Stevens elects to continue participation in any group medical, dental, vision and/or prescription drug plan benefits to which Executive and/or Executive's eligible dependents would be entitled under COBRA, then for six months following the date of termination (the "COBRA Reimbursement Period") Oconee shall pay to Mr. Stevens monthly payments following the date of the Executive's Termination of Employment of an amount equal to the excess of (2) the COBRA cost of such coverage over (3) the amount that Mr. Stevens would have had to pay for such coverage had he remained employed during the COBRA Reimbursement Period. Mr. Stevens is to be reimbursed for reasonable and necessary business expenses, including reimbursement for certain regular club membership dues. In addition, under the agreement Mr. Stevens is entitled to receive a restricted stock award of no less than 750 shares, subject to each annual award being equal to at least $22,500. In the event of a merger, acquisition or change-in-control transaction, Mr. Stevens will be entitled to a lump sum payment equal to the sum of two (2) times the sum of (1) his Annual Base Salary at the rate in effect as of the effective date of the Termination of Employment (or, if greater, the rate in effect before any reduction in his annual base salary that gave rise to termination of Executive's employment for Good Reason) and (2) the amount of the Annual Bonus owed to Mr. Stevens for Oconee's most recently completed fiscal year. The benefits upon a change in control are subject to reduction to avoid the imposition of excise taxes under Section 4999 of the Code, provided that such reduction would result in a better after-tax result for Mr. Stevens. Had a change in control occurred as of December 31, 2022, Mr. Stevens would have been entitled to receive a net payment, after the reduction required to ensure that the payments would not constitute an excess parachute payment, of approximately $720,600.

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The terms of Mr. McLemore's employment agreement, as Oconee's Executive Vice President and Chief Financial Officer, are substantially similar to those of Mr. Stevens' employment agreement, except that Mr. McLemore's base salary must be at least $210,000. Upon his termination without cause or for good reason, he will be entitled to a lump sum payment equal to the sum of (1) his then current base salary and (2) the amount of the annual bonus received by Mr. McLemore for Oconee's most recently completed fiscal year. In the event of a merger, acquisition or change-in-control transaction, Mr. McLemore will be entitled to a lump sum payment equal to one and one-half times (1.5) the sum of (1) the annual base salary at the rate in effect as of the effective date of the Termination of Employment (or, if greater, the rate in effect before any reduction in the annual base salary that gave rise to termination of Executive's employment for Good Reason) and (2) the amount of the annual bonus received by Mr. McLemore for Oconee's most recently completed fiscal year. Had a change in control occurred as of December 31, 2022, Mr. McLemore would have been entitled to receive a net payment, after the reduction required to ensure that the payments would not constitute an excess parachute payment, of approximately $456,435 under his employment agreement.

The terms of Mr. Bernardi's employment agreement, as Oconee's Executive Vice President and Chief Banking Officer, are similar to Mr. McLemore's employment agreement, except that Mr. Bernardi's base salary must be at least $195,000. Upon his termination without cause or for good reason, Mr. Bernardi will be entitled to a lump sum payment equal to the sum of one and one-half times (1) his then current base salary and (2) the amount of the annual bonus received by Mr. Bernardi for Oconee's most recently completed fiscal year. In the event of a merger, acquisition or change-in-control transaction, Mr. Bernardi will be entitled to a lump sum payment equal to one and one-half times (1.5) the sum of (1) the annual base salary at the rate in effect as of the effective date of the Termination of Employment (or, if greater, the rate in effect before any reduction in the annual base salary that gave rise to termination of Executive's employment for Good Reason) and (2) the amount of the annual bonus received by Mr. Bernardi for Oconee's most recently completed fiscal year. Had a change in control occurred as of December 31, 2022, Mr. Bernardi would have been entitled to receive a net payment, after the reduction required to ensure that the payments would not constitute an excess parachute payment, of approximately $359,573 under his employment agreement.

**Outstanding Equity Awards at Fiscal Year-End** 

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Number of shares<br>or units of stock<br>that have not vested<br>(#)** | **Market<br>value of shares<br>or units of stock<br>that have not vested<br>(#)** | **Equity incentive plan<br>awards: number of<br>unearned shares,<br>units or other rights<br>that have not vested<br>(#)** | **Equity incentive<br>plan awards:<br>market or<br>payout<br>value of<br>unearned<br>shares, units or<br>other rights that<br>have not vested<br>($)** |
| **(a)** | **(g)** | **(h)** | **(i)** | **(j)** |
| **T. Neil Stevens, <br>President and Chief <br>Executive Officer** | 1126 | 41786 |  |  |
| **James R. McLemore, <br>Executive Vice <br>President and Chief <br>Financial Officer** |  |  |  |  |
| **Philip A. Bernardi, <br>Executive Vice <br>President and Chief <br>Banking Officer** |  |  |  |  |

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In 2017, Oconee adopted a supplemental executive retirement plan for the benefit of its President and Chief Executive Officer, T. Neil Stevens. Benefits in the SERP vest over a four-year service period and, if fully vested, provide a benefit of the greater of $3,000 a month or 15% of his average monthly salary as defined by the plan for a period of 15 years. Oconee expensed $97,806 in 2022 in connection with the SERP.

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In 2018 and 2019, Oconee adopted additional SERP plans for the benefit of certain key officers of the company. Three executive officers are included in this plan. In 2021, this plan was amended to change the vesting of one of the executive officers. Two of the executive officers have plans that vest over a four-year service period and one of the executive officers plan vests over a 10 year service period. If fully vested, the SERP plans will provide a benefit equal to the amount defined by the plan for a period of 15 years. For the three executive officers included within this plan, Oconee expensed $166,148 for 2022.

During 2022, Oconee granted 750 shares of restricted stock which vest over four years from the grant dates to the President and Chief Executive Officer in accordance with his employment agreement. The fair market value of the stock on the grant date was $42.95. Oconee recognized $26,995 of stock-based compensation expense related to the grant during 2022. As of December 31, 2022, there was $43,528 of total unrecognized compensation cost related to the restricted stock grants which is expected to be recognized over the remaining vesting period.

**Directors** 

The table below shows the compensation paid to our non-employee directors for the fiscal year ended December 31, 2022.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name** | **Fees earned or<br>paid in cash<br>($)** | **Stock<br>awards<br>($)** | **Option<br>awards<br>($)** | **Non-equity<br>incentive plan<br>compensation<br>($)** | **Nonqualified<br>deferred<br>compensation<br>earnings<br>($)** | **All other<br>compensation<br>($)** | **Total ($)** |
| **(a)** | **(b)** | **(c)** | **(d)** | **(e)** | **(f)** | **(g)** | **(h)** |
| G. Robert Bishop | 18000 |  |  |  |  |  | 18000 |
|  Brian J. Brodrick | 24750 |  |  |  |  |  | 24750 |
| J. Albert Hale, Sr. | 16350 |  |  |  |  |  | 16350 |
|  Virginia Wells McGeary | 29550 |  |  |  |  |  | 29550 |
|  Jonathan R. Murrow | 16500 |  |  |  |  |  | 16500 |
|  Tony Powell | 24600 |  |  |  |  |  | 24600 |
| W. Toby Smith | 25500 |  |  |  |  |  | 25500 |
|  Holly H. Stephenson | 16050 |  |  |  |  |  | 16050 |
|  Laura Whitaker | 15600 |  |  |  |  |  | 15600 |
| T. Neil Stevens |  |  |  |  |  |  |  |

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Non-employee directors of Oconee receive $1,350 per month, and the Chairman receives $1,600 per month for attendance to the Board of Directors' meetings. In addition, all non-employee directors receive $300 for attendance per Board committee meeting of which they are a member. T. Neil Stevens, Oconee's President and Chief Executive Officer, is not compensated for his service on the boards of Oconee.

**SECURITIES BEING OFFERED** 

The following summary description of the material features of the capital stock of Oconee is qualified in its entirety by reference to the applicable provisions of Georgia law and by Oconee's articles of incorporation and bylaws, each as amended, which are included as <u>Exhibit 2.1</u> and <u>Exhibit 2.2</u> to the Registration Statement, of which this Offering Circular is a part. For further information, please refer to the "Where You Can Find More Information" section of this Offering Circular on page 95.

Your rights as a shareholder of Oconee will be governed by Georgia law and the articles of incorporation and the bylaws of Oconee, each as amended. We urge you to read the applicable provisions of the Georgia Business Corporation Code, Oconee's articles of incorporation and bylaws and federal laws governing bank holding companies carefully and in their entirety. To find out where copies of Oconee's organizational documents can be obtained, see "Where You Can Find More Information."

**Authorized and Outstanding Capital Stock** 

The authorized capital stock of Oconee consists of 1,500,000 shares of common stock, par value $2.00 per share. As of the date hereof, there are [896,497] shares of Oconee Common Stock issued and outstanding held by approximately [673] holders of record. Before execution of the Merger Agreement, there were no options outstanding to purchase shares of Oconee Common Stock and no shares were subject to unvested restricted stock awards. In connection with the Merger Conversion, the Oconee Board approved and adopted the Oconee Financial Corporation 2021 Equity Incentive Plan to enable it to grant to Elberton's directors and officers the equity incentives contemplated by the Merger Agreement. See "DESCRIPTION OF CONVERSION MERGER AND RELATED AGREEMENTS" and "–Oconee 2021 Equity Incentive Plan."

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**Common Stock** 

***General.*** Each share of Oconee Common Stock has the same relative rights as, and is identical in all respects to, each other share of our common stock. Oconee's common stock is traded on the OTCQX marketplace under the symbol "OSBK." The transfer agent for Oconee Common Stock is Broadridge Corporate Issuer Solutions, P.O. Box 1342, Brentwood, New York 11717.

***Voting Rights.*** The holders of Oconee Common Stock are entitled to one vote per share and, in general, a majority of votes cast with respect to a matter is sufficient to authorize action upon routine matters. Directors are elected by a plurality of the votes cast, and shareholders do not have the right to accumulate their votes in the election of directors.

***Dividends.*** Oconee's shareholders are entitled to receive dividends or distributions that the Oconee Board may declare out of funds legally available for those payments. The payment of distributions by Oconee is subject to the restrictions of Georgia law applicable to the declaration of distributions by a corporation. A Georgia corporation generally may not authorize and make distributions if, after giving effect to the distribution, it would be unable to meet its debts as they become due in the usual course of business or if the corporation's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if it were dissolved at that time, to satisfy the preferential rights of shareholders whose rights are superior to the rights of those receiving the distribution.

As a bank holding company, Oconee's ability to pay dividends is affected by the ability of Oconee State Bank, its bank subsidiary, to pay dividends to the holding company. The ability of Oconee State Bank, as well as Oconee, to pay dividends in the future is, and could be further, influenced by bank regulatory requirements and capital guidelines. See "Supervision and Regulation" on beginning on page 86.

***Liquidation Rights.*** In the event of any liquidation, dissolution or winding up of Oconee, the holders of shares of its common stock will be entitled to receive, after payment of all debts and liabilities of Oconee, all remaining assets of Oconee available for distribution in cash or in kind.

***Directors.*** The number of directors serving on the Oconee Board is established by resolution of the Oconee Board from time to time. Currently, the Oconee Board consists of 10 directors. Under the Georgia Business Corporations Code, a director of Oconee may be removed, with or without cause, by shareholders if the number of votes cast to remove such director constitutes a majority of the votes entitled to be cast at an election of directors of the voting group or voting groups by which such director was elected.

***Preemptive Rights; Redemption and Assessment.*** Holders of shares of Oconee Common Stock are entitled to preemptive rights in the same class of shares in proportion to their holdings of shares of such class. However, there are no preemptive rights to (i) shares issued as a dividend, (ii) fractional shares, (iii) shares issued pursuant to employee stock option or purchase plans, (iv) shares issued pursuant to acquisitions of substantially all the assets of a corporation, (v) shares released by waiver from their preemptive rights by the affirmative vote or written consent of the holders of two-thirds of the shares of the class to be issued, and (vi) shares which have been offered to shareholders to satisfy their preemptive rights but not purchased by them within the prescribed time and which are thereafter issued or sold to any other person or persons at the price not less than the price at which they were offered to such shareholders. Oconee Common Stock is not subject to redemption or any sinking fund and the outstanding shares are fully paid and nonassessable.

For more information regarding the rights of holders of Oconee Common Stock, see "Comparative Rights of Shareholders."

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**Liability and Indemnification of Directors and Officers** 

As permitted by the Georgia Business Corporations Code, Oconee's bylaws contain provisions that indemnify its directors and officers for any liability or expense that may be incurred in connection with or resulting from any threatened, pending or completed action, suit or proceeding in which they become involved by reason of them being an officer, director or agent of Oconee. These provisions do not limit or eliminate the rights of Oconee or any stockholder to seek an injunction or any other non-monetary relief in the event of a breach of a director's or officer's fiduciary duty. In addition, these provisions apply only to claims against a director or officer arising out of his role as a director or officer and do not relieve a director or officer from liability if he engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities law.

Oconee has limited its exposure to liability for indemnification of directors and officers by purchasing directors' and officers' liability insurance coverage.

**Oconee 2021 Equity Incentive Plan** 

On February 15, 2021, the Oconee Board approved and adopted the Oconee Financial Corporation 2021 Equity Incentive Plan. A summary of the material terms of the Equity Incentive Plan is below.

*Purpose.* The purpose of the Equity Incentive Plan is to promote our success by linking the personal interests of our employees, officers, consultants, and directors and those of our affiliates to those of our shareholders, and by providing participants with an incentive for outstanding performance. The Equity Incentive Plan is also intended to enhance our ability to motivate, attract and retain the services of employees, officers and directors upon whose judgment, interest, and special effort the successful conduct of our operation is largely dependent.

*Administration.* The Equity Incentive Plan will be administered by the Oconee Board. The Oconee Board will have the authority to: (i) grant awards; (ii) designate participants; (iii) determine the type or types of awards to be granted to each participant and the number, terms and conditions thereof; (iv) establish, adopt or revise any plan, program or policy for the grant of awards as it may deem necessary or advisable, including but not limited to short-term incentive programs; (v) establish, adopt or revise any rules and regulations as it may deem advisable to administer the Equity Incentive Plan; and (vi) make all other decisions and determinations that may be required under the Equity Incentive Plan.

*Eligibility*. The Equity Incentive Plan permits the grant of awards to our employees, officers, non-employee directors and consultants and those of our affiliates.

*Permissible Awards*. The Equity Incentive Plan authorizes the granting of awards in any of the following forms:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• nonstatutory stock options to purchase shares of Oconee common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• stock appreciation rights, or SARs, which give the holder the right to receive the difference (payable in cash or
stock, as specified in the award agreement) between the fair market value per share of Oconee common stock on the date of exercise over the base price of the award;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restricted stock, which is subject to restrictions on transferability and subject to forfeiture on terms set by
the Oconee Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• stock units, which represent the right to receive shares of Oconee common stock (or an equivalent value in cash
or other property, as specified in the award agreement) in the future, based upon the attainment of stated vesting criteria, in the case of restricted stock units;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• performance awards, which are awards payable in cash or stock upon the attainment of specified performance goals;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other stock-based awards, in the discretion of the Oconee Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• dividend equivalent rights, which entitle the participant to payments in cash or property calculated by reference
to the amount of dividends paid on the shares of stock underlying an award, which may be granted with respect to awards other than options or SARs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cash-based awards.

*Authorized Shares*. Subject to adjustment as provided in the Equity Incentive Plan, the aggregate number of shares of Oconee Common Stock reserved and available for issuance pursuant to awards granted under the Equity Incentive Plan is 40,000. Shares subject to awards that are canceled, terminated, forfeited, or settled in cash will again be available for awards under the Equity Incentive Plan. Shares withheld to satisfy exercise prices or tax withholding obligations will not be added back to the pool of shares available for awards under the Equity Incentive Plan. In the event of a nonreciprocal transaction between us and our shareholders that causes the per share value of Oconee common stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering, or large nonrecurring cash dividend), the share authorization limits under the Equity Incentive Plan will be adjusted proportionately, and the Oconee Board must make such adjustments to the Equity Incentive Plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction.

*Treatment of Awards upon a Change in Control*. Unless otherwise provided in an award agreement or any special plan document governing an award, upon the occurrence of a change in control: (i) all outstanding options and SARs that may be exercised will become fully exercisable; (ii) all time-based vesting restrictions on outstanding awards will lapse; and (iii) the payout opportunities attainable under all outstanding performance-based awards will be determined as provided in the applicable award agreement.

*Discretion to Accelerate Awards*. The Oconee Board may in its sole discretion determine that, upon the termination of service of a participant for any reason, all or a portion of such participant's options or SARs will become fully or partially exercisable, that all or a part of the restrictions on all or a portion of the participant's outstanding awards will lapse, and/or that any performance-based criteria with respect to any awards held by that participant will be deemed to be wholly or partially satisfied, in each case, as of such date as the Oconee Board may, in its sole discretion, declare.

*Certain Transactions*. Upon the occurrence or in anticipation of certain corporate events or extraordinary transactions, the Oconee Board may also make discretionary adjustments to awards, including settling awards for cash, providing that awards will become fully vested and exercisable, providing for awards to be assumed or substituted, or modifying performance targets or periods for awards.

*Limitations on Transfer; Beneficiaries*. Awards granted under the Equity Incentive Plan will be exercisable only by the holder thereof during such holder's lifetime, or, if permissible under applicable law, by such holder's guardian or legal representative or by a transferee receiving such Award pursuant to a qualified domestic relations order. No award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a grantee otherwise than by will or by the laws of descent and distribution (or in the case of restricted stock, to the Company) or pursuant to a qualified domestic relations order. Notwithstanding the foregoing, awards may be transferred, without consideration, to a "permitted transferee," which includes any member of the immediate family of such grantee, any trust of which all of the primary beneficiaries are such grantee or members of his or her immediate family, or any partnership (including limited liability companies and similar entities) of which all of the partners or members are such grantee or members of his or her immediate family. Any award exercised by a permitted transferee must be done so in accordance with the terms of the award agreement. A participant may designate a beneficiary to exercise the rights of the participant and to receive any distribution with respect to any award upon the participant's death.

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*Termination and Amendment*. The Equity Incentive Plan will terminate on February 15, 2031, the tenth anniversary of effective date of the Equity Incentive Plan, unless earlier terminated by the Oconee Board. The Oconee Board may, at any time and from time to time, terminate or amend the Equity Incentive Plan, but if an amendment to the Equity Incentive Plan would constitute a material amendment requiring shareholder approval under applicable listing requirements, laws, policies, or regulations, then such amendment will be subject to shareholder approval. No termination or amendment of the Equity Incentive Plan may adversely affect any award previously granted under the Equity Incentive Plan without the written consent of the participant.

**Oconee Common Stock is Not Insured by the FDIC.** 

Oconee's common stock is not a deposit or a savings account and is not insured or guaranteed by the FDIC or any other government agency.

**SUPERVISION AND REGULATION** 

Bank holding companies and banks are extensively regulated under both federal and state laws. The following description briefly addresses certain historic and current provisions of federal and state laws and certain regulations, proposed regulations and the potential impacts on Oconee and its wholly-owned bank subsidiary, Oconee State Bank. To the extent statutory or regulatory provisions or proposals are described in this joint proxy statement/offering circular, the description is qualified in its entirety by reference to the particular statutory or regulatory provisions or proposals.

**Regulation of Oconee Financial Corporation** 

***General.*** As a bank holding company registered under the Bank Holding Company Act of 1956, as amended, Oconee is subject to supervision, regulation and examination by the Federal Reserve. Oconee is also registered under the bank holding company laws of Georgia and is subject to supervision, regulation and examination by the GDBF.

***Permitted Activities.*** A bank holding company is limited to managing or controlling banks, furnishing services to or performing services for its subsidiaries, and engaging in other activities that the Federal Reserve determines by regulation or order to be closely related to banking, managing or controlling banks. In determining whether a particular activity is permissible, the Federal Reserve must consider whether the performance of such an activity reasonably can be expected to produce benefits to the public that outweigh possible adverse effects. Possible benefits include greater convenience, increased competition and gains in efficiency. Possible adverse effects include undue concentration of resources, decreased or unfair competition, conflicts of interest and unsound banking practices. Despite prior approval, the Federal Reserve may order a bank holding company or its subsidiaries to terminate any activity or to terminate ownership or control of any subsidiary when the Federal Reserve has reasonable cause to believe that a serious risk to the financial safety, soundness or stability of any bank subsidiary of that bank holding company may result from such an activity.

***Banking Acquisitions; Changes in Control.*** The BHCA requires, among other things, the prior approval of the Federal Reserve in any case where a bank holding company proposes to (i) acquire direct or indirect ownership or control of more than five percent of the outstanding voting stock of any bank or bank holding company (unless it already owns a majority of such voting shares), (ii) acquire all or substantially all of the assets of another bank or bank holding company, or (iii) merge or consolidate with any other bank holding company. In determining whether to approve a proposed bank acquisition, the Federal Reserve will consider, among other factors, the effect of the acquisition on competition, the public benefits expected to be received from the acquisition, the projected capital ratios and levels on a post-acquisition basis, the acquiring institution's performance under the Community Reinvestment Act of 1977 and its compliance with fair housing and other consumer protection laws.

Subject to certain exceptions, the BHCA and the Change in Bank Control Act, together with the applicable regulations, require Federal Reserve approval (or, depending on the circumstances, no notice of disapproval) prior to any person or company's acquiring "control" of a bank or bank holding company. On January 31, 2020, the Federal Reserve

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approved the issuance of a final rule (which became effective April 1, 2020) that clarifies and codifies the Federal Reserve's standards for determining whether one company has control over another. The final rule establishes four categories of tiered presumptions of non-control that are based on the percentage of voting shares held by the investor (less than 5%, 5-9.9%, 10-14.9% and 15-24.9%) and the presence of other indicia of control. As the percentage of ownership increases, fewer indicia of control are permitted without falling outside of the presumption of non-control. These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants. Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence.

In addition, Georgia law requires prior approval from the GDBF for a bank holding company to acquire direct or indirect ownership or control of any voting shares of any bank if, after such acquisition, the bank holding company will directly or indirectly own or control five percent or more of the voting shares of such bank.

***Source of Strength.*** Federal Reserve policy has historically required bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. The Dodd-Frank Act codified this policy as a statutory requirement. Under this requirement, Oconee is expected to commit resources to support the Bank, including at times when Oconee may not be in a financial position to provide such resources. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to depositors and to certain other indebtedness of such subsidiary banks. In the event of a bank holding company's bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.

***Safety and Soundness.*** There are a number of obligations and restrictions imposed on bank holding companies and their subsidiary banks by law and regulatory policy that are designed to minimize potential loss to the depositors of such depository institutions and the FDIC insurance fund in the event of a depository institution default. For example, under the Federal Deposit Insurance Company Improvement Act of 1991, to avoid receivership of an insured depository institution subsidiary, a bank holding company is required to guarantee the compliance of any subsidiary bank that may become "undercapitalized" with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal bank regulatory agency up to the lesser of (i) an amount equal to 5% of the institution's total assets at the time the institution became undercapitalized or (ii) the amount that is necessary (or would have been necessary) to bring the institution into compliance with all applicable capital standards as of the time the institution fails to comply with such capital restoration plan.

Under the FDIA, the federal bank regulatory agencies have adopted guidelines prescribing safety and soundness standards. These guidelines establish general standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth and compensation, fees and benefits. In general, the guidelines require, among other things, appropriate systems and practices to identify and manage the risk and exposures specified in the guidelines.

***Capital Requirements.*** The Federal Reserve imposes certain capital requirements on bank holding companies under the BHCA, including a minimum leverage ratio and a minimum ratio of "qualifying" capital to risk-weighted assets. Because Oconee's total assets are less than $3.0 billion, it is considered a small bank holding company under the Federal Reserve's capital adequacy regulations and is subject to capital requirements applied on a bank-only basis. The capital requirements imposed on the Bank are described below under "Supervision and Regulation – Regulation of Oconee State Bank – Capital Requirements." Subject to its capital requirements and certain other restrictions, Oconee is able to borrow money to make a capital contribution to the Bank, and such loans may be repaid from dividends paid by the Bank to Oconee.

***Limits on Dividends and Other Payments.*** Oconee is a legal entity, separate and distinct from its subsidiaries. A portion of the revenues of Oconee may result from dividends paid to it by the Bank. There are various legal limitations applicable to the payment of dividends by the Bank to Oconee and to the payment of dividends by Oconee to its shareholders. The Bank is subject to various statutory restrictions on its ability to pay dividends to Oconee.

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Under current regulations, prior approval from the Federal Reserve is required if cash dividends declared in any given year exceed net income for that year, plus retained net profits of the two preceding years. The payment of dividends by the Bank or Oconee may be limited by other factors, such as requirements to maintain capital above regulatory guidelines. Bank regulatory agencies have the authority to prohibit the Bank or Oconee from engaging in an unsafe or unsound practice in conducting their business. The payment of dividends, depending on the financial condition of the Bank, or Oconee, could be deemed to constitute such an unsafe or unsound practice.

Under the FDIA, insured depository institutions such as the Bank are prohibited from making capital distributions, including the payment of dividends, if, after making such distributions, the institution would become "undercapitalized" (as such term is used in the statute). Based on the Bank's current financial condition, Oconee does not expect this provision will have any impact on its ability to receive dividends from the Bank.

**Regulation of Oconee State Bank** 

***General.*** The Bank is supervised and regularly examined by the FDIC and the GDBF. The various laws and regulations administered by the bank regulatory agencies affect corporate practices, such as the payment of dividends, incurrence of debt and acquisition of financial institutions and other companies; they also affect business practices, such as the payment of interest on deposits, the charging of interest on loans, types of business conducted and location of offices. Certain of these laws and regulations are referenced above under "Supervision and Regulation – Regulation of Oconee Financial Corporation."

***Capital Requirements.*** The Federal Reserve monitors the capital adequacy of Oconee on a consolidated basis, and the FDIC and the GDBF monitor the capital adequacy of the Bank. The banking regulators use a combination of risk-based guidelines and a leverage ratio to evaluate capital adequacy. The risk-based capital guidelines applicable to us are based on the Basel Committee's December 2010 final capital framework, known as Basel III, as implemented by the federal banking regulators. The risk-based guidelines are intended to make regulatory capital requirements sensitive to differences in credit and market risk profiles among banks and bank holding companies, to account for off-balance sheet exposure and to minimize disincentives for holding liquid assets.

***Basel III and the Capital Rules.*** In July 2013, the federal banking regulators approved final rules, or the Capital Rules, implementing the Basel Committee's December 2010 final capital framework for strengthening international capital standards, known as Basel III, and various provisions of the Dodd-Frank Act. The Capital Rules substantially revise the risk-based capital requirements applicable to bank holding companies and banks, including us, compared to the previous risk-based capital rules. The Capital Rules revise the components of capital and address other issues affecting the numerator in regulatory capital ratio calculations. The Capital Rules, among other things, (i) include a new capital measure called "Common Equity Tier 1," (ii) specify that Tier 1 capital consists of CET1 and "Additional Tier 1 capital" instruments meeting certain revised requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and (iv) expand the scope of the deductions/adjustments to capital as compared to prior regulations. The Capital Rules also address risk weights and other issues affecting the denominator in regulatory capital ratio calculations, including replacing the existing risk-weighting approach derived from Basel I with a more risk-sensitive approach based, in part, on the standardized approach adopted by the Basel Committee in its 2004 capital accords, known as Basel II. The Capital Rules also implement the requirements of Section 939A of the Dodd-Frank Act to remove references to credit ratings from the federal banking regulators' rules. Subject to a phase-in period for various provisions, the Capital Rules became effective for us beginning on January 1, 2015.

Under the Basel III Capital Rules, the minimum capital ratios are (i) 4.5% CET1 to risk-weighted assets, (ii) 6% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets, (iii) 8% total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets and (iv) 4% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the "leverage ratio").

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The current Capital Rules also include a capital conservation buffer designed to absorb losses during periods of economic stress. The capital conservation buffer is composed entirely of CET1, on top of these minimum risk-weighted asset ratios.

The Capital Rules require us to maintain an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios of (i) 7% CET1 to risk-weighted assets, (ii) 8.5% Tier 1 capital to risk-weighted assets, (iii) 10.5% total capital to risk-weighted assets and (iv) a minimum leverage ratio of 4%. The Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing rights, certain deferred tax assets and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such categories in the aggregate exceed 15% of CET1. Implementation of the deductions and other adjustments to CET1 began on January 1, 2016 and was phased in over a four-year period, until it became fully implemented on January 1, 2019. In addition, the Capital Rules provide for a countercyclical capital buffer applicable only to certain covered institutions. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.

In addition, under the general risk-based Capital Rules, the effects of accumulated other comprehensive income items included in capital were excluded for the purposes of determining regulatory capital ratios. Under the Capital Rules, the effects of certain accumulated other comprehensive income items are not excluded; however, non-advanced approaches banking organizations, including the Bank, were able to make a one-time permanent election to continue to exclude these items.

The Capital Rules also prescribed a new standardized approach for risk weightings that expanded the risk-weighting categories from the current four Basel I-derived categories (0%, 20%, 50% and 100%) to a much larger and more risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0%, for U.S. government and agency securities, to 600%, for certain equity exposures, and resulting in higher risk weights for a variety of asset categories.

Community banks have long raised concerns with bank regulators about the regulatory burden, complexity, and costs associated with certain provisions of the Basel III Rule. In response, Congress provided an "off-ramp" for institutions, like us, with total consolidated assets of less than $10 billion. On May 24, 2018, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act, which instructed the federal banking regulators to establish a single "Community Bank Leverage Ratio" of between 8% and 10%. Under the final rule, a community banking organization is eligible to elect the new framework if it has: less than $10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a CBLR greater than 9%. The bank regulatory agencies temporarily lowered the CBLR to 8% beginning the second quarter of 2020 as a result of the COVID-19 pandemic. Another rule was issued to transition back to the 9% CBLR by increasing the ratio to 8.5% for calendar year 2021 and to 9% thereafter.

With respect to the Bank, the Capital Rules also revised the prompt corrective action regulations pursuant to Section 38 of the FDIA. See "Supervision and Regulation – Regulation of Oconee State Bank – Prompt Corrective Action."

***Deposit Insurance.*** As an FDIC-insured bank, the Bank must pay deposit insurance assessments to the FDIC based on its average total assets minus its average tangible equity. Deposits are insured up to applicable limits by the FDIC and such insurance is backed by the full faith and credit of the United States Government.

As an institution with less than $10 billion in assets, the Bank's assessment rates are based on the level of risk it poses to the FDIC's deposit insurance fund. Pursuant to changes adopted by the FDIC that were effective July 1, 2016, the initial base rate for deposit insurance is between three and 30 basis points. Total base assessment after

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possible adjustments now ranges between 1.5 and 40 basis points. For established smaller institutions, like the Bank, supervisory ratings are used along with (i) an initial base assessment rate, (ii) an unsecured debt adjustment (which can be positive or negative), and (iii) a brokered deposit adjustment, to calculate a total base assessment rate.

Under the Dodd-Frank Act, the limit on FDIC deposit insurance was increased to $250 thousand. The coverage limit is per depositor, per insured depository institution for each account ownership category. The Dodd-Frank Act also set a new minimum DIF reserve ratio at 1.35% of estimated insured deposits. In October 2010, the FDIC adopted a new DIF restoration plan to ensure that the fund reserve ratio reached 1.35% by September 30, 2020, as required by the Dodd-Frank Act. In December 2018, the FDIC announced that the DIF reserve ratio had surpassed this benchmark.

The FDIC adopted a final rule effective June 26, 2020, and applied as of April 1, 2020, to mitigate the effect on deposit insurance assessments of a bank's participation in the Paycheck Protection Program, the Paycheck Protection Program Liquidity Facility and the Money Market Mutual Fund Liquidity Facility in connection with the COVID-19 pandemic.

Under the FDIA, the FDIC may terminate deposit insurance upon a finding that an institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

***Transactions with Affiliates.*** Pursuant to Sections 23A and 23B of the Federal Reserve Act and Regulation W, the authority of the bank to engage in transactions with related parties or "affiliates" or to make loans to insiders is limited. Loan transactions with an affiliate generally must be collateralized and certain transactions between the bank and its affiliates, including the sale of assets, the payment of money or the provision of services, must be on terms and conditions that are substantially the same, or at least as favorable to the bank, as those prevailing for comparable nonaffiliated transactions. In addition, the bank generally may not purchase securities issued or underwritten by affiliates.

Loans to executive officers, directors or to any person who directly or indirectly, or acting through or in concert with one or more persons, owns, controls or has the power to vote more than 10% of any class of voting securities of a bank are subject to Sections 22(g) and 22(h) of the Federal Reserve Act and their corresponding regulations (Regulation O) and Section 13(k) of the Exchange Act relating to the prohibition on personal loans to executives (which exempts financial institutions in compliance with the insider lending restrictions of Section 22(h) of the Federal Reserve Act). Among other things, these loans must be made on terms the same as those prevailing on transactions made to unaffiliated individuals and certain extensions of credit to those persons must first be approved in advance by a disinterested majority of the entire board of directors. Section 22(h) of the Federal Reserve Act prohibits loans to any of those individuals where the aggregate amount exceeds an amount equal to 15% of an institution's unimpaired capital and surplus plus an additional 10% of unimpaired capital and surplus in the case of loans that are fully secured by readily marketable collateral, or when the aggregate amount on all of the extensions of credit outstanding to all of these persons would exceed the bank's unimpaired capital and unimpaired surplus. Section 22(g) of the Federal Reserve Act identifies limited circumstances in which the bank is permitted to extend credit to executive officers.

***Prompt Corrective Action.*** Federal banking regulators are authorized and, under certain circumstances, required to take certain actions against banks that fail to meet their capital requirements. The law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. An institution is "well capitalized" if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater. An institution is "adequately capitalized" if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater. An institution is "undercapitalized" if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio

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of less than 4.5%. An institution is deemed to be "significantly undercapitalized" if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%. An institution is considered to be "critically undercapitalized" if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%.

The federal bank regulatory agencies have additional enforcement authority with respect to undercapitalized depository institutions. "Well capitalized" institutions may generally operate without supervisory restriction. With respect to "adequately capitalized" institutions, such banks cannot normally pay dividends or make any capital contributions that would leave it undercapitalized, they cannot pay a management fee to a controlling person if, after paying the fee, it would be undercapitalized, and they cannot accept, renew or roll over any brokered deposit unless the bank has applied for and been granted a waiver by the FDIC.

Immediately upon becoming "undercapitalized," a depository institution becomes subject to the provisions of Section 38 of the FDIA, which: (i) restrict payment of capital distributions and management fees; (ii) require that the appropriate federal banking agency monitor the condition of the institution and its efforts to restore its capital; (iii) require submission of a capital restoration plan; (iv) restrict the growth of the institution's assets; and (v) require prior approval of certain expansion proposals. The appropriate federal banking agency for an undercapitalized institution also may take any number of discretionary supervisory actions if the agency determines that any of these actions is necessary to resolve the problems of the institution at the least possible long-term cost to the DIF, subject in certain cases to specified procedures. These discretionary supervisory actions include: (i) requiring the institution to raise additional capital; (ii) restricting transactions with affiliates; (iii) requiring divestiture of the institution or the sale of the institution to a willing purchase; and (iv) any other supervisory action that the agency deems appropriate. These and additional mandatory and permissive supervisory actions may be taken with respect to significantly undercapitalized and critically undercapitalized institutions. The bank meets the definition of being "well capitalized" as of December 31, 2022.

***Enforcement.*** The GDBF maintains enforcement authority over the Bank, including the power to issue cease and desist orders and civil money penalties. The FDIC has primary federal enforcement responsibility over non-member state banks and has authority to bring actions against the institution and all institution-affiliated parties, including officers, directors, shareholders, and any attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful actions likely to have an adverse effect on the bank. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors. Civil money penalties cover a wide range of violations and can amount to $25,000 per day, or even $1 million per day in especially egregious cases. In general, regulatory enforcement actions occur with respect to situations involving unsafe or unsound practices or conditions, violations of law or regulation or breaches of fiduciary duty, including self-dealing. Federal and Georgia laws also set forth criminal penalties for certain violations.

***Community Reinvestment Act.*** The Bank is subject to the requirements of the Community Reinvestment Act of 1977, as amended. The CRA imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of the local communities they serve, including low and moderate income neighborhoods. The CRA requires the appropriate federal banking agency, in connection with its examination of a bank, to assess the Bank's record in meeting such credit needs. Furthermore, such assessment is also required of banks that have applied, among other things, to merge or consolidate with or acquire the assets or assume the liabilities of an insured depository institution, or to open or relocate a branch. In the case of a bank holding company applying for approval to acquire a bank or another bank holding company, the record of each subsidiary bank of the applicant bank holding company is subject to assessment in considering the application. Under the CRA, institutions are assigned a rating of "outstanding," "satisfactory," "needs to improve," or "substantial non-compliance." The bank received a "satisfactory" CRA rating in its most recent examination.

***Privacy Legislation.*** Several laws, including the Right to Financial Privacy Act and the Gramm-Leach-Bliley Act of 1999, as amended, and related regulations issued by the federal bank regulatory agencies, provide protections against the transfer and use of customer information by financial institutions. A financial institution must provide to its customers information regarding its policies and procedures with respect to the handling of customers' personal

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information. Each institution must conduct an internal risk assessment of its ability to protect customer information. These privacy provisions generally prohibit a financial institution from providing a customer's personal financial information to unaffiliated parties without prior notice and approval from the customer. Privacy and data security areas are expected to receive increased attention at the federal level, and an increasing number of state laws and regulations have been enacted in recent years to implement privacy and cybersecurity standards and regulations, including data breach notification and data privacy requirements. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs that meet specified requirements. In addition, other nations in which our customers do business, such as the European Union, have adopted similar requirements. This trend of activity is expected to continue to expand, requiring continual monitoring of developments in the states and nations in which our customers are located and ongoing investments in our information systems and compliance capabilities.

***USA Patriot Act of 2001.*** In October 2001, the USA Patriot Act of 2001 was enacted in response to the September 11, 2001 terrorist attacks in New York, Pennsylvania and Northern Virginia. The Patriot Act is intended to strengthen U.S. law enforcement and the intelligence communities' abilities to work cohesively to combat terrorism. The Patriot Act contains anti-money laundering and financial transparency laws, and imposes various regulations, including standards for verifying customer identification at account opening, and rules to promote cooperation among financial institutions, regulators and law enforcement entities to identify persons who may be involved in terrorism or money laundering.

***Consumer Financial Protection.*** The Bank is subject to a number of federal and state consumer protection laws that extensively govern its relationship with its customers. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act, the Right to Financial Privacy Act, the Telephone Consumer Protection Act, the CAN-SPAM Act, the Check Clearing for the 21<sup>st</sup> Century Act, laws governing flood insurance, federal and state laws prohibiting unfair and deceptive business practices, foreclosure laws and various regulations that implement some or all of the foregoing. These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans, collecting loans and providing other services. If the bank fails to comply with these laws and regulations, it may be subject to various penalties. Failure to comply with consumer protection requirements may also result in failure to obtain any required bank regulatory approval for merger or acquisition transactions the Bank may wish to pursue or being prohibited from engaging in such transactions even if approval is not required.

The Dodd-Frank Act created a new, independent federal agency, the Consumer Financial Protection Bureau, which was granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws with respect to certain consumer financial products and services, including the ability to require reimbursements and other payments to customers for alleged legal violations. The CFPB has the authority to impose significant penalties, as well as injunctive relief that prohibits lenders from engaging in allegedly unlawful practices. The CFPB is also authorized to engage in consumer financial education, track consumer complaints, request data and promote the availability of financial services to underserved consumers and communities. Although all institutions are subject to rules adopted by the CFPB and examination by the CFPB in conjunction with examinations by the institution's primary federal regulator, the CFPB has primary examination and enforcement authority over institutions with assets of $10 billion or more. The FDIC has primary responsibility for examination of the Bank and enforcement with respect to various federal consumer protection laws so long as the Bank has total consolidated assets of less than $10 billion, and state authorities are responsible for monitoring our compliance with all state consumer laws. The CFPB also has the authority to require reports from institutions with less than $10 billion in assets, such as the Bank, to support the CFPB in implementing federal consumer protection laws, supporting examination activities, and assessing and detecting risks to consumers and financial markets.

The consumer protection provisions of the Dodd-Frank Act and the examination, supervision and enforcement of those laws and implementing regulations by the CFPB have created a more complex environment for consumer finance regulation. The CFPB has significant authority to implement and enforce federal consumer finance laws, including the Truth in Lending Act, the Equal Credit Opportunity Act and new requirements for financial services products provided for in the Dodd-Frank Act.

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The CFPB has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks including, among other things, the authority to prohibit "unfair, deceptive, or abusive" acts and practices. Abusive acts or practices are defined in the Dodd-Frank Act as those that (1) materially interfere with a consumer's ability to understand a term or condition of a consumer financial product or service, or (2) take unreasonable advantage of a consumer's (a) lack of financial savvy, (b) inability to protect herself or himself in the selection or use of consumer financial products or services, or (c) reasonable reliance on a covered entity to act in the consumer's interests. The review of products and practices to prevent such acts and practices is a continuing focus of the CFPB, and of banking regulators more broadly. The ultimate impact of this heightened scrutiny is uncertain but it could result in changes to pricing, practices, products and procedures. It could also result in increased costs related to regulatory oversight, supervision and examination, additional remediation efforts and possible penalties. The Dodd-Frank Act does not prevent states from adopting stricter consumer protection standards. State regulation of financial products and potential enforcement actions could also adversely affect our business, financial condition or results of operations.

***Commercial Real Estate Guidance***. In December 2015, the federal banking regulators released a statement entitled "Interagency Statement on Prudent Risk Management for Commercial Real Estate Lending" (the "CRE Guidance"). In the CRE Guidance, the federal banking regulators (i) expressed concerns with institutions that ease commercial real estate underwriting standards, (ii) directed financial institutions to maintain underwriting discipline and exercise risk management practices to identify, measure and monitor lending risks, and (iii) indicated that they will continue to pay special attention to commercial real estate lending activities and concentrations going forward. The federal banking regulators previously issued guidance in December 2006, entitled "Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices," which stated that an institution is potentially exposed to significant commercial real estate concentration risk, and should employ enhanced risk management practices, where (1) total commercial real estate loans represent 300% or more of its total capital and (2) the outstanding balance of such institution's commercial real estate loan portfolio has increased by 50% or more during the prior 36 months.

***Cybersecurity.*** In March 2015, federal regulators issued two related statements regarding cybersecurity. One statement indicates that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institution. The other statement indicates that a financial institution's management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the institution's operations after a cyber-attack involving destructive malware. A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyber-attack. If the Bank fails to observe the regulatory guidance, it could be subject to various regulatory sanctions, including financial penalties. To date, the Bank has not experienced a significant compromise, significant data loss or any material financial losses related to cybersecurity attacks, but its systems and those of its customers and third-party service providers are under constant threat and it is possible that the Bank could experience a significant event in the future. Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by the Bank and its customers.

***Effect of Governmental Monetary Policies.*** The Bank's operations are affected not only by general economic conditions but also by the policies of various regulatory authorities. In particular, the Federal Reserve regulates money and credit conditions and interest rates to influence general economic conditions. These policies have a significant impact on overall growth and distribution of loans, investments and deposits; they affect interest rates charged on loans or paid for deposits. Federal Reserve monetary policies have had significant effects on the operating results of commercial banks, including the Bank, in the past and are expected to do so in the future.

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***Future Legislation and Regulation.*** Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states. Federal and state regulatory agencies also periodically propose and adopt changes to their regulations or change the manner in which existing regulations are applied. The substance or impact of pending or future legislation or regulation, or the application thereof, cannot be predicted, although enactment of the proposed legislation could affect the regulatory structure under which we operate and may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital or modify our business strategy, or limit our ability to pursue business opportunities in an efficient manner. Our business, financial condition, results of operations or prospects may be adversely affected, perhaps materially, as a result.

**MARKET FOR COMMON STOCK AND DIVIDENDS** 

Oconee Common Stock is traded on the OTCQX marketplace under the symbol "OSBK." As of the date of this offering memorandum, there are [896,497] shares of Oconee Common Stock outstanding, which were held by 673 holders of record. Such numbers of shareholders do not reflect the number of individuals or institutional investors holding stock in nominee name through banks, brokerage firms and others. The closing price of Oconee Common Stock on May 31, 2021, the last trading day before the public announcement of the signing of the Merger Agreement, and on [•], the latest practicable date before the date of this offering circular, was $37.28 and $[•], respectively.

The following table sets forth the high and low sales prices of Oconee Common Stock during the periods indicated as reported on the OTCQX marketplace. The following data regarding shares is provided for information purposes only and should not be viewed as indicative of the actual or market value of shares of Oconee Common Stock.

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| | | | |
|:---|:---|:---|:---|
|  | **Oconee<br>Common Stock** | **Oconee<br>Common Stock** | **Oconee<br>Common Stock** |
| | **Sales Price** | **Sales Price** | **Dividends<br>Declared<br>Per Share** |
| | **High** | **Low** | |
| **2023** |  |  |  |
|  First Quarter to date<sup>1</sup> | $37.11 | $36.50 | $0.00 |
| **2022** |  |  |  |
|  First Quarter | $44.00 | $41.55 | $0.70 |
|  Second Quarter | $43.00 | $41.05 | $0.00 |
|  Third Quarter | $42.00 | $40.00 | $0.00 |
|  Fourth Quarter  | $41.05 | $37.10 | $0.00 |
| **2021** |  |  |  |
|  First Quarter | $40.00 | $36.50 | $0.65 |
|  Second Quarter | $55.00 | $37.10 | $0.00 |
|  Third Quarter | $46.80 | $41.15 | $0.00 |
|  Fourth Quarter | $44.00 | $41.55 | $0.00 |

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You are advised to obtain current market quotations for Oconee Common Stock. The market price of Oconee Common Stock at the effective date of the Conversion Merger or at the time shares of Oconee Common Stock are booked in the name of Eligible Members after the Conversion Merger is completed may be higher or lower than the market price at the time the Merger Agreement was executed, at the date of mailing of this offering circular or at the time of the Elberton Special Meeting.

------

<sup>1</sup> As of March 10, 2023.

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##### [**Table of Contents**](#toc)
Oconee is a legal entity separate and distinct from its subsidiaries, and its revenue depends primarily on the payment of dividends from the Bank. Therefore, Oconee's principal source of funds with which to pay dividends on its stock and its other separate expenses is the receipt of dividends it receives from the Bank. The Bank is subject to certain regulatory and other legal restrictions on the amount of dividends it is permitted to pay to Oconee.

Oconee and the Bank, as a bank holding company and a Georgia state bank, respectively, will continue to be subject to regulatory restrictions on the payment of dividends. Under Georgia law, without prior approval from the GDBF, a Georgia state bank may only declare dividends out of the retained earnings of the bank. In addition, a Georgia state bank may not declare or pay dividends on its outstanding capital stock without the prior approval of the GDBF if: (1) total classified assets at the most recent examination of the bank exceed 80 percent of Tier 1 Capital plus the allowance for credit losses as reflected at such examination; (2) the aggregate amount of dividends declared or anticipated to be declared in the calendar year exceeds 50 percent of the net income that is attributable to the bank for the previous calendar year; and (3) the ratio of Tier 1 Capital to Adjusted Total Assets is less than 6 percent. Further, a Georgia state bank may not pay dividends payable in shares of any class in respect to shares of any other class unless the bank's articles so provide or unless such payment is authorized by the affirmative vote or the written consent of the holders of a majority of the outstanding shares of the class in which the payment is to be made. In addition, under the current supervisory practices of the Federal Reserve, Oconee should inform and consult with its regulators reasonably in advance of declaring or paying a dividend that exceeds earnings for the period (e.g., quarter) for which the dividend is being paid or that could result in a material adverse change to Oconee's capital structure.

Oconee currently pays a dividend on its common stock on an annual basis, and it anticipates declaring and paying an annual dividend after the completion of the Merger Conversion. Oconee has no current intention to change its dividend strategy, but has and will continue to evaluate that decision on an annual basis. After the Merger Conversion, the final determination of the timing, amount and payment of dividends on Oconee common stock will be at the discretion of its board of directors and will depend upon the earnings of Oconee and its subsidiary, the financial condition of Oconee and other factors, including general economic conditions and applicable governmental regulations and policies.

**LEGAL MATTERS** 

The validity of the Oconee Common Stock to be issued upon completion of the Merger Conversion will be passed upon for Oconee by Alston & Bird LLP. Certain U.S. federal income tax consequences relating to the Merger Conversion will be passed upon for Oconee by Alston & Bird LLP.

**EXPERTS** 

The consolidated financial statements as of December 31, 2019, December 31, 2020 and December 31, 2021 for Oconee, included beginning on page F-1 of this offering circular, have been audited by Mauldin & Jenkins, LLC, Oconee's independent auditors, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The financial statements as of December 31, 2021 and December 31, 2020 for Elberton, included beginning on page G-1 of this offering circular, have been audited by Wipfli, LLP, Elberton's independent auditors, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

**WHERE YOU CAN FIND MORE INFORMATION** 

Oconee does not have a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, and it is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act. Accordingly, Oconee does not file periodic documents and reports with the Securities and Exchange Commission. The historical financial statements of Oconee are included elsewhere in this offering circular and the Offering Statement of which this offering circular is a part was filed electronically with the SEC. You may access the SEC's website at <u>https://www.sec.gov/.</u>

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##### [**Table of Contents**](#toc)
The Bank files quarterly Consolidated Reports of Condition and Income with the FDIC, all of which are available at the FDIC's website at <u>www.fdic.gov</u>. Annual reports of the Bank's financial condition, which include an opinion expressed by an independent or certified public accountant, are delivered to its stockholders not less than once per year.

**DEFINED TERMS** 

Capitalized terms not defined in this Offering Circular have the meaning set forth below:

"85% Price" means a price equal to approximately, but not less than, 85% of the Oconee Market Price.

"Appraised Value" means the estimated pro forma market value of Elberton as determined by RP Financial.

"Associate" means, when used to indicate a relationship with any person, (i) any corporation or organization (other than Elberton, the Bank, Oconee or a majority-owned subsidiary of Oconee) of which such person is an officer, director or partner or is, directly or indirectly, the beneficial owner of ten percent or more of any class of equity securities, (ii) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, provided, however, that such term will not include any tax-qualified employee stock benefit plan of Oconee or the Bank in which such person has a substantial beneficial interest or serves as a trustee in a similar fiduciary capacity, and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person or who is a director or officer of Elberton, the Bank, Oconee or any subsidiary of Oconee.

"Bank" means Oconee State Bank.

"BHCA" means the Bank Holding Company Act of 1956, as amended.

"CBLR" means Community Bank Leverage Ratio.

"CET1" means Common Equity Tier 1 capital.

"CFPB" means the Consumer Financial Protection Bureau.

"Closing Date" means the date on which the Merger Conversion is consummated in accordance with the Merger Agreement and the Plan of Conversion.

"Code" means the Internal Revenue Code of 1986, as amended.

"Community Offering" means Oconee's offering of Oconee Common Stock to Community Offerees as contemplated by this Offering Circular.

"Community Offeree" means each Elberton Resident, each Eligible Oconee Shareholder and members of the general public to which Oconee or its authorized representative provides a copy of this Offering Circular.

"CRA" means Community Reinvestment Act of 1977, as amended.

"DIF" means the FDIC deposit insurance fund.

"Elberton Board" means the board of directors of Elberton.

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##### [**Table of Contents**](#toc)
"Elberton Resident" means each natural person, including any trust of a natural person, residing in Elberton, Georgia or Elbert County, Georgia as of the last day of the month immediately preceding the effectiveness of this Offering Circular.

"Elberton Special Meeting" means the special meeting of the members of Elberton for purposes of considering and voting upon the Plan of Conversion.

"Eligibility Record Date" means the close of business on March 31, 2020.

"Eligible Account Holder" means each person that held deposits of $50 or more in Elberton on March 30, 2020.

"Eligible Member" means each Eligible Account Holder, each Subsequent Eligible Account Holder and each Other Member.

"Eligible Oconee Shareholder" means each shareholder of record of Oconee on the last day of the month immediately preceding the effectiveness of this Offering Circular.

"Estimated Valuation Range" means the 15% valuation range of Elberton as determined by RP Financial before the Offering pursuant to the regulatory conversion guidelines range, as it may be amended from time to time thereafter.

"Equity Incentive Plan" means the Oconee Financial Corporation 2021 Equity Incentive Plan.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Federal Reserve" means the Board of Governors of the Federal Reserve System.

"FDIC" means the Federal Deposit Insurance Corporation.

"FDIA" means the Federal Deposit Insurance Act, as amended.

"FOMC" means the Federal Reserve's Federal Open Market Committee.

"GDBF" means the Georgia Department of Banking and Finance.

"IRS" means the Internal Revenue Service.

"Minimum Investment" means [15] shares of Oconee Common Stock.

"Maximum Investment" means a number of shares equal to 5% of the Oconee Common Stock sold in the Offering

"Merger Agreement" means an Amended and Restated Agreement and Plan of Merger Conversion dated as of December 15, 2022, by and among Oconee, the Bank and Elberton.

"Merger Conversion" means Elberton's conversion from a Federal mutual savings and loan association to a Federal stock savings and loan association and merger with and into the Bank.

"OCC" means Office of the Comptroller of the Currency.

"Oconee Board" means the board of directors of Oconee.

"Oconee Common Stock" means the authorized capital stock of Oconee, par value $2.00 per share.

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##### [**Table of Contents**](#toc)
"Oconee Market Price" means the average daily closing price rounded to the nearest cent (with any amount equal to or greater than $0.005 rounded to the next higher $0.01), of Oconee Common Stock on the OTCQX market for the consecutive period of thirty (30) full trading days ending on and including the trading day immediately preceding the date of this Offering Circular; provided, however, if such price is less than $33.50, then the Oconee Market Price shall be $33.50, and if such price is greater than $41.00, then the Oconee Market Price shall be $41.00.

"Offering" means the Subscription Offering and the Community Offering.

"Offering Circular" means this offering circular of Oconee, dated [•].

"Other Member" means any person who is a member of Elberton as of the date fixed by the board of directors of Elberton in accordance with Elberton's Bylaws and OCC regulations for determining the members eligible to vote at the Elberton Special Meeting.

"Other Subscriber" means any Subscriber that is not an Eligible Member, an Eligible Oconee Shareholder or an Elberton Resident.

"Patriot Act" means the USA Patriot Act of 2001, as amended.

"Performance Trust" means Performance Trust Capital Partners LLC.

"Plan of Conversion" means an Amended and Restated Plan of Merger Conversion dated as of July 15, 2021, adopted by Elberton.

"PPP" means the Small Business Administration's Paycheck Protection Program.

"RP Financial" means RP Financial, LC.

"SBA" means the U.S. Small Business Administration.

"Securities Act" means the Securities Act of 1933, as amended.

"SERP" means supplemental executive retirement plan.

"Stock Order Form" means the form provided along with this Offering Circular that each prospective Subscriber must complete and submit in order to duly subscribe to purchase shares of Oconee Common Stock in the Offering.

"Subsequent Eligible Account Holder" means each person, other than Elberton's directors, officers and their Associates, that held deposits of $50 or more in Elberton on the last day of the calendar quarter preceding approval of the Plan of Conversion by the OCC.

"Subscriber" means each Eligible Member that duly subscribes to purchase shares of Oconee Common Stock in the Subscription Offering and each Community Offeree that duly subscribes to purchase shares of Oconee Common Stock in the Community Offering.

"Subscription Expiration Date" means [**•**] or such other date as determined by Oconee.

"Subscription Offering" means Oconee's offering of Oconee Common Stock to Eligible Members as contemplated by this Offering Circular.

"Supplemental Eligibility Record Date" means the last day of the calendar quarter preceding approval of the Plan of Conversion by the OCC.

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##### [**Table of Contents**](#toc)
"Tax Opinion" means the opinion rendered by Alston & Bird LLP for the benefit of Oconee.

"Treasury Regulations" means regulations promulgated pursuant to the Code.

Until [•], all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED BALANCE SHEETS** 

---

| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2021** |
|  | **(Unaudited)** | **(Audited)** |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $51430016 | $85774514 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities available for sale | 159640457 | 162165152 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank stock | 285500 | 247400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans held for sale | 140409 | 1212617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net of unearned income | 300130642 | 302523687 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan loss | (4549357) | (4542292) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net | 295581285 | 297981395 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment, net | 8000576 | 8602518 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | 21669411 | 15158402 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Assets | $536747654 | $571141998 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
|  Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | $494869684 | $519693969 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated debenture, net of capitalized expenses | 9818393 | 9794445 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities | 2976386 | 2320963 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities | 507664463 | 531809377 |
|  Stockholder's Equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Stock | 1795900 | 1795076 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted Stock | (43528) | (38311) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional Paid in Capital | 4176342 | 4159822 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 36764762 | 33268328 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income (loss) | (13610285) | 147706 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Stockholder's Equity | 29083191 | 39332621 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Liabilities and Stockholder's Equity | $536747654 | $571141998 |

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF INCOME** 

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2022** | **2021** |
|  | (Unaudited) | (Audited) |
|  Interest Income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and fees on loans | $13860357 | $15262317 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and dividends on securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, County & Municipal | 765942 | 685752 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Treasuries & Agencies | 2103601 | 875535 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate | 379271 | 346038 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other interest income | 743302 | 102278 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest income | 17852473 | 17271920 |
|  Interest Expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 783609 | 1001740 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 659916 | 644749 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Interest Expense | 1443525 | 1646489 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income | 16408948 | 15625431 |
|  Provision for loan losses |  | 456000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income after provision for loan losses | 16408948 | 15169431 |
|  Other income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Service charges on deposit accounts | 645856 | 458943 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on sale of assets | 218227 | (268123) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gain on sale of securities | 749 | 172312 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage origination income | 1017698 | 2067991 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | 1074252 | 178608 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commissions on investment sales | 122104 | 187329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1770880 | 1583464 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income | 4849766 | 4380524 |
|  Other expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | 9496173 | 9300150 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Occupancy | 1181164 | 1425137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other operating | 5253020 | 5093205 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total noninterest expense | 15930357 | 15818492 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income tax | 5328357 | 3731463 |
|  Income tax | 1204672 | 731934 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Income | $4123685 | $2999529 |
|  Period-Ending Outstanding Shares | 896824 | 896412 |
|  Weighted Average Shares Outstanding | 896823 | 896260 |
|  Net income per share | $4.60 | $3.35 |

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY** 

**Years Ended December 31, 2022 and 2021** 

**(Unaudited)** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |<br>**Common**<br>**Stock** |<br>**Restricted**<br>**Stock** |<br>**Additional**<br>**Paid-In**<br>**Capital** |<br>**Retained**<br>**Earnings** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income (Loss)** |<br>**Total**<br>**Stockholders'**<br>**Equity** |
|  **Balance, December 31, 2020** | $1794250 | $(37976) | $4147114 | $30850978 | $1380739 | $38135105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in net unrealized income (loss) on investment securities available for sale, net of tax |  |  |  |  | (1233033) | (1233033) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of restricted stock | 1500 | (25748) | 24248 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (674) |  | (11540) |  |  | (12214) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense |  | 25413 |  |  |  | 25413 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid ($0.65 per share) |  |  |  | (582179) |  | (582179) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 2999529 |  | 2999529 |
|  **Balance, December 31, 2021** | $1795076 | $(38311) | $4159822 | $33268328 | $147706 | $39332621 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in net unrealized income (loss) on investment securities available for sale and derivatives, net of tax |  |  |  |  | (13757991) | (13757991) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of restricted stock | 1500 | (32212) | 30712 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (676) |  | (14192) |  |  | (14868) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense |  | 26995 |  |  |  | 26995 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid ($0.70 per share) |  |  |  | (627251) |  | (627251) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 4123685 |  | 4123685 |
|  **Balance, December 31, 2022** | $1795900 | $(43528) | $4176342 | $36764762 | $(13610285) | $29083191 |

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF CASH FLOWS** 

**(Unaudited)** 

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2022** | **2021** |
|  **Operating Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $4123685 | $2999529 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, amortization, and accretion | 1454222 | 1064004 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for loan losses |  | 456000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of mortgage loans held for sale | 35784863 | 77974968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Originations of mortgage loans held for sale | (35214655) | (72976028) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of investment securities, net | (749) | (172312) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on sale of assets | (218227) | 268123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | (1074252) | (178608) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock compensation expense | 26995 | 25413 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in bank owned life insurance | (322691) | (251779) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | (1411330) | 55888 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | 584342 | 443654 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | 3732203 | 9708852 |
|  **Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of investment securities available for sale | (30146327) | (129079792) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from calls, maturities and paydowns of investment securities available for sale | 8702469 | 9416103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of investment securities available for sale | 4993302 | 31013443 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net (increase) decrease in Federal Home Loan Bank stock | (38100) | 112300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of derivative financial instrument | (447000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in loans | 3976362 | 21130375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of bank owned life insurance |  | (3500000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of fixed assets | 681500 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of premises and equipment | (332503) | (3842841) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (12610297) | (74750412) |
|  **Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in deposits | (24824285) | 74992037 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (14868) | (12214) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid | (627251) | (582179) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) financing activities | (25466404) | 74397644 |
|  Net increase (decrease) in cash and cash equivalents | (34344498) | 9356084 |
|  Cash and cash equivalents at beginning of year | 85774514 | 76418430 |
|  Cash and cash equivalents at end of period | $51430016 | $85774514 |
|  **Supplemental Disclosures of Cash Flow Information** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid during the period for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest | $1443344 | $1664775 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income taxes | $1393640 | $881000 |

---

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##### [**Table of Contents**](#toc)
![LOGO](g406793g0208121356635.jpg)

**INDEPENDENT AUDITOR'S REPORT** 

**To the Board of Directors and Stockholders of** 

**Oconee Financial Corporation** 

**Watkinsville, Georgia** 

We have audited the accompanying consolidated financial statements of **Oconee Financial Corporation and subsidiary**, which comprise the consolidated balance sheets as of December 31, 2019 and 2018, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for the years then ended, and the related notes to the financial statements.

**Management's Responsibility for the Consolidated 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 consolidated 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 audits. We conducted our audits 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 from 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 consolidated 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 Oconee Financial Corporation and subsidiary as of December 31, 2019 and 2018, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

![LOGO](g406793g0208121356986.jpg)

Atlanta, Georgia

March 24, 2020

200 GALLERIA PARKWAY S.E., SUITE 1700 • ATLANTA, GA 30339-5946 • 770-955-8600 • 800-277-0080 • FAX 770-980-4489 • www.mjcpa.com *Members of The American Institute of Certified Public Accountants*

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED BALANCE SHEETS** 

**DECEMBER 31, 2019 AND 2018** 

---

| | | |
|:---|:---|:---|
| **Assets** | **2019** | **2018** |
|  Cash and cash equivalents | $**38099324** | $22365042 |
|  Investment securities available for sale | **99228506** | 90802006 |
|  Federal Home Loan Bank stock | **314900** | 319600 |
|  Loans held for sale | **1572800** | 745000 |
|  Loans, net | **248771230** | 221802558 |
|  Premises and equipment, net | **4294867** | 5850891 |
|  Accrued interest receivable and other assets | **7239812** | 7975186 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $**399521439** | $349860283 |

---

**<u>Liabilities and Stockholders' Equity</u>**

---

| | | |
|:---|:---|:---|
|  Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand | $**64120711** | $66696642 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing demand | **195415558** | 151935662 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings | **54266859** | 53611418 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time | **47719446** | 46253251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | **361522574** | 318496973 |
|  Accrued interest payable and other liabilities | **2331769** | 674253 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | **363854343** | 319171226 |
|  Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, par value $2, authorized 1,500,000 shares, 896,880 and 901,364 shares issued, respectively | **1793760** | 1802728 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted stock, 1,138 and 963 shares, respectively | **(36745)** | (30684) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | **4139146** | 4288610 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | **29501154** | 26281797 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income (loss) | **269781** | (1653394) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity | **35667096** | 30689057 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and stockholders' equity | $**399521439** | $349860283 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF INCOME** 

**YEARS ENDED DECEMBER 31, 2019 AND 2018** 

---

| | | |
|:---|:---|:---|
|  | **2019** | 2018 |
|  Interest income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and fees on loans | $**12374536** | $9974208 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and dividends on securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. government agencies | **344340** | 328075 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities | **893288** | 1157265 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, county, and municipal | **476512** | 923627 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **375577** | 316843 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest income | **14464253** | 12700018 |
|  Interest expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing demand deposits | **837006** | 338806 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings deposits | **128866** | 81252 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time deposits | **557382** | 345345 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal funds purchased | **11211** | 1108 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | **1534465** | 766511 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income | **12929788** | 11933507 |
|  Provision for loan losses | **570000** | 240300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income after provision for loan losses | **12359788** | 11693207 |
|  Other income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Service charges | **584527** | 528366 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gain on sale of securities | **7437** | 73255 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale and disposal of fixed assets | **1781545** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage origination income | **518339** | 14331 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | **1004491** | 343378 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous | **1822381** | 1604548 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income | **5718720** | 2563878 |
|  Other expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | **8493647** | 7874617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Occupancy | **1358796** | 1065187 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other operating | **3449193** | 3370466 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | **13301636** | 12310270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income tax | **4776872** | 1946815 |
|  Income tax | **1017506** | 209417 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**3759366** | $1737398 |
|  Net income per share | $**4.18** | $1.93 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME** 

**YEARS ENDED DECEMBER 31, 2019 AND 2018** 

---

| | | |
|:---|:---|:---|
|  | **2019** | **2018** |
|  Net income | $**3759366** | $1737398 |
|  Other comprehensive income (loss), net of tax: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized gains (losses) on securities available for sale: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Holding gains (losses) arising during period, net of tax (expense) benefit of $(658295)and $386,742, respectively | **1928721** | (1131679) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassification adjustment for gains included in net income, net of tax of $1,891 and $18,657, respectively | **(5546)** | (54598) |
|  Total other comprehensive income (loss) | **1923175** | (1186277) |
|  Comprehensive income | $**5682541** | $551121 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY** 

**YEARS ENDED DECEMBER 31, 2019 AND 2018** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common<br>Stock** | **Restricted<br>Stock** | **Additional<br>Paid-In<br>Capital** | **Retained<br>Earnings** | **Accumulated<br>Other<br>Comprehensive<br>Income (Loss)** | **Total<br>Stockholders'<br>Equity** |
|  **Balance, December 31, 2017** | $1801228 | $(16908) | $4264250 | $25084407 | $(467117) | $30665860 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in net unrealized loss on investment securities available for sale, net of tax |  |  |  |  | (1186277) | (1186277) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of restricted stock | 1500 | (25860) | 24360 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense |  | 12084 |  |  |  | 12084 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid ($0.60 per share) |  |  |  | (540008) |  | (540008) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 1737398 |  | 1737398 |
|  **Balance, December 31, 2018** | 1802728 | (30684) | 4288610 | 26281797 | (1653394) | 30689057 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in net unrealized income on investment securities available for sale, net of tax |  |  |  |  | 1923175 | 1923175 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of restricted stock | 1500 | (24218) | 22718 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (10468) |  | (172182) |  |  | (182650) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense |  | 18157 |  |  |  | 18157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid ($0.60 per share) |  |  |  | (540009) |  | (540009) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 3759366 |  | 3759366 |
|  **Balance, December 31, 2019** | $1793760 | $(36745) | $4139146 | $29501154 | $269781 | $35667096 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF CASH FLOWS** 

**YEARS ENDED DECEMBER 31, 2019 AND 2018** 

---

| | | |
|:---|:---|:---|
|  | **2019** | 2018 |
|  **OPERATING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**3759366** | $1737398 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, amortization, and accretion | **882321** | 1059717 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for loan losses | **570000** | 240300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of mortgage loans held for sale | **20853725** | 571420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Originations of mortgage loans held for sale | **(20677034)** | (1316420) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income tax provision (benefit) | **(90657)** | 471165 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of investment securities, net | **(7437)** | (73255) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale and disposal of fixed assets | **(1781545)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | **(1004491)** | (343378) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock compensation expense | **18157** | 12084 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in bank owned life insurance | **(181103)** | (124771) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | **554271** | (476330) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | **507419** | 363214 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | **3402992** | 2121144 |
|  **INVESTING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of investment securities available for sale | **(57507381)** | (20445055) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from calls and maturities of investment securities available for sale | **36618164** | 21556646 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of investment securities available for sale | **14679481** | 26867860 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net (increase) decrease in Federal Home Loan Bank stock | **4700** | (17700) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in loans | **(27538672)** | (54551294) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of premises and equipment | **(595267)** | (579967) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of bank owned life insurance | **—** | (3500000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of fixed assets | **4367323** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | **(29971652)** | (30669510) |
|  **FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in deposits | **43025601** | (5599053) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | **(182650)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid | **(540009)** | (540008) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) financing activities | **42302942** | (6139061) |
|  Net increase (decrease) in cash and cash equivalents | **15734282** | (34687427) |
|  Cash and cash equivalents at beginning of year | **22365042** | 57052469 |
|  Cash and cash equivalents at end of year | $**38099324** | $22365042 |
|  **SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid during the year for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest | $**1480227** | $768763 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income taxes | $**575438** | $100000 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**  |

---

**Organization** 

Oconee Financial Corporation ("OFC") received regulatory approval to operate as a bank holding company on October 13, 1998, and began operations effective January 1, 1999. OFC is primarily regulated by the Federal Reserve Bank and serves as the one-bank holding company for Oconee State Bank.

Oconee State Bank (the "Bank") commenced business in 1960 upon receipt of its banking charter from the Georgia Department of Banking and Finance (the "DBF"). The Bank is primarily regulated by the DBF and the Federal Deposit Insurance Corporation and undergoes periodic examinations by these regulatory agencies. The Bank provides a full range of commercial and consumer banking services primarily in Oconee, Clarke, and Gwinnett counties in Georgia.

**Principles of Consolidation** 

The consolidated financial statements include the financial statements of Oconee Financial Corporation and its wholly owned subsidiary, Oconee State Bank (collectively called the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.

**Basis of Presentation and Accounting Estimates** 

The accounting principles followed by the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America ("GAAP") and with general practices in the banking industry. In preparing the financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ significantly from these estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses, deferred taxes, fair value of financial instruments, and other than temporary impairment on securities.

The Company has evaluated all transactions, events, and circumstances for consideration or disclosure through March 24, 2020, the date these financial statements were available to be issued, and has reflected or disclosed those items within the consolidated financial statements and related footnotes as deemed appropriate. As a result of the spread of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact the Company. The outbreak is disrupting supply chains and affecting production and sales across a range of industries. The extent of COVID-19's impact on the Company's operational and financial performance will depend on certain developments, including the duration and spread of the outbreak and the virus' impact on the Company's customers, employees and vendors. At this point, the extent to which COVID-19 may impact the Company's financial condition or results of operations remains uncertain.

**Cash, Due from Banks and Cash Flows** 

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks. Included in cash and due from banks is interest-bearing deposits at other banks of $33,687,297 and $12,938,117 at December 31, 2019 and 2018, respectively. Net cash flows are reported for Federal Home Loan Bank stock, loans, and deposits.

The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank. The total of those reserve balances was approximately $643,000 and $595,000 at December 31, 2019 and 2018, respectively.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**  |

---

**Investment Securities** 

All securities are classified as available for sale and are recorded at fair value. Unrealized holding gains and losses, net of related tax effect on securities available for sale, are excluded from operations and are reported as a separate component of stockholders' equity until realized. The Company recognizes other than temporary impairment (OTTI) loss in earnings only when the Company (1) intends to sell the debt security; (2) determines that it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis or (3) does not expect to recover the entire amortized cost basis of the security. In all other situations, only the portion of the OTTI losses representing the credit loss is recognized in earnings, with the remaining portion being recognized in other comprehensive income (loss), net of deferred taxes.

Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield. Realized gains and losses for securities classified as available for sale are included in earnings on the trade date and are derived using the specific identification method for determining the cost of securities sold.

**Federal Home Loan Bank Stock** 

The Company is required to maintain an investment in capital stock of the Federal Home Loan Bank of Atlanta (FHLB). Based on redemption provisions of the entity, the stock has no quoted market value and is carried at cost. At its discretion, the FHLB may declare dividends on the stock. Management reviews for impairment based on the ultimate recoverability of the cost basis in this stock.

**Loans Held for Sale** 

Loans held for sale are carried at the lower of cost or market value. At December 31, 2019, the carrying amount of mortgage loans held for sale approximates the market value. Loans held for sale consist of mortgage loans which have commitments to be sold to third party investors upon closing on a best efforts basis.

**Loans and Allowance for Loan Losses** 

Loans are stated at the principal amount outstanding, less net deferred origination fees or costs and the allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The Company analyzes its direct costs associated with the origination of different types of loans. Any fees collected that are greater than the costs calculated by the Company are recognized as income over the life of the loan as opposed to the time of origination.

Impaired loans are measured for impairment based on the present value of expected future cash flows, discounted at the loan's effective interest rate, or at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is impaired when, based on current information and events, it is probable that all principal and interest due according to the contractual terms of the loan will not be collected. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** 

**Loans and Allowance for Loan Losses (Continued)** 

Accrual of interest is discontinued on a loan when management believes, after considering economic conditions and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. Interest previously accrued but not collected is reversed against current period earnings, and interest is recognized on a cash basis or cost recovery method when such loans are placed on nonaccrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Past due status is based on the contractual terms of the loans.

The allowance for loan losses is established through a provision for loan losses charged to earnings. Loans are charged against the allowance for loan losses when management believes the uncollectibility of the principal is confirmed. The allowance represents an amount which, in management's judgment, will be adequate to absorb probable losses on existing loans that may become uncollectible.

Management's judgment in determining the adequacy of the allowance is based on evaluations of the collectability of loans. These evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, current economic conditions that may affect the borrower's ability to pay, overall portfolio quality, and review of specific problem loans. The allowance consists of specific, general, and unallocated components. The specific component relates to loans that are identified as impaired. All significant impaired loans are evaluated individually for impairment, while all other loans considered impaired are evaluated as a pool. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. Management uses an external review program to challenge and corroborate the internal grading system and provide additional analysis in determining the adequacy of the allowance and provisions for estimated loan losses.

While management uses available information to recognize losses on loans, future additions to the, allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on judgments different than those of management.

**Premises and Equipment** 

Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter period of the useful life of the asset or the lease term. When assets are retired or otherwise disposed, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is reflected in operations for the period. The cost of maintenance and repairs which do not improve or extend the useful life of the respective assets is charged to earnings as incurred, whereas significant improvements are capitalized. The ranges of estimated useful lives for premises and equipment are generally as follows:

Buildings and improvements 5-40 years <br> Furniture and equipment 3-10 years

**Advertising Costs** 

Advertising costs are expensed as incurred and totaled $129,633 and $245,423 for the years ended December 31, 2019 and 2018, respectively.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**  |

---

**Other Real Estate Owned** 

Properties acquired through foreclosure are carried at the lower of cost or fair value less estimated costs to dispose. Accounting guidance defines fair value as the amount that is expected to be received in a current sale between a willing buyer and seller other than in a forced or liquidation sale. Fair values at foreclosure are based on appraisals. Losses arising from the acquisition of foreclosed properties are charged against the allowance for loan losses. Subsequent write-downs are provided by a charge to operations in the period in which the need arises. At December 31, 2019 and 2018, there was no other real estate owned.

**Transfers of Financial Assets** 

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

**Stock Compensation Plans** 

Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. That cost is measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees' service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Company's common stock at the date of grant is used for restricted stock awards and stock grants.

**Income Taxes** 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management's judgment.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**  |

---

**Income Taxes (Continued)** 

In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company's assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

In assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.

**Mortgage Banking Income** 

Mortgage origination income represents net gains from the sale of mortgage loans and fees received from borrowers related to the Company's origination of single-family residential mortgage loans.

**Net Income Per Share** 

Net income per common share is based on the weighted average number of common shares outstanding during the year, while the effects of potential common shares outstanding during the period are included in diluted earnings per share. Potential common shares outstanding related to restricted stock totaled 1,138 and 963 shares as of December 31, 2019 and 2018, respectively. As of December 31, 2019 and 2018, these shares did not have a dilutive effect. Net income per share is calculated using the weighted average shares outstanding during the year of 899,883 and 900,014 for 2019 and 2018, respectively.

**Comprehensive Income** 

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with the net income, are components of comprehensive income.

**Adoption of Accounting Standards** 

On January 1, 2019, the Company adopted ASU No. 2016-02 Leases (Topic 842) and subsequent amendments thereto, which requires the Company to recognize most leases on the balance sheet. Adoption of the leasing standard resulted in the recognition of an operating right-of-use asset and an operating lease liability. These amounts were determined based on the present value of remaining lease payments, discounted using the Company's incremental borrowing rate as of the date of adoption. There was no material impact to the timing of expense or income recognition in the Company's statements of income. Disclosures about the Company's leasing activities are presented in Note 4.

On January 1, 2019, the Company adopted ASU 2014-09 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, "ASC 606"), which (1) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (2) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets. The majority of the Company's revenues come from interest income and other sources, including loans, leases, and securities that are outside the scope of ASC 606. The Company's services that fall within the scope of ASC 606 are presented within other income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of ASC 606 include service charges on deposit accounts, gains on sale of fixed assets and other service charges and fees such as ATM and interchange fees and commissions on investment sales. The adoption of ASC 606 did not materially impact the Company's recognition of income in 2019. Further disclosures related to the Company's treatment of ASC 606 are presented in Note 13.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **2. INVESTMENT SECURITIES**  |

---

Investment securities available for sale at December 31, 2019 and 2018 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Amortized<br>Cost** | **Gross<br>Unrealized<br>Gains** | **Gross<br>Unrealized<br>Losses** | **Fair**<br>**Value** |
|  **December 31, 2019:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **U.S. Government-sponsored enterprises (GSEs)** | $**49683736** | $**—** | $**(40578)** | $**49643158** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **GSE residential** | **34401451** | **179658** | **(107353)** | **34473756** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **State, county, and municipal** | **14782167** | **331853** | **(2428)** | **15111592** |
|  | $**98867354** | $**511511** | $**(150359)** | $**99228506** |
|  December 31, 2018: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. Government-sponsored enterprises (GSEs) | $16546714 | $— | $(370740) | $16175974 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. treasuries | 6994506 |  | (5294) | 6989212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSE residential | 44770529 |  | (1498942) | 43271587 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, county, and municipal | 24708684 | 30738 | (374189) | 24365233 |
|  | $93020433 | $30738 | $(2249165) | $90802006 |

---

The amortized cost and fair value of investment securities as of December 31, 2019 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

---

| | | |
|:---|:---|:---|
|  | **Amortized<br>Cost** | **Estimated<br>Fair Value** |
|  Due in one year or less | $47323846 | $47296452 |
|  Due from one to five years | 2638708 | 2633919 |
|  Due from five to ten years | 6797526 | 6874172 |
|  Due after ten years | 7705823 | 7950207 |
|  Mortgage-backed securities | 34401451 | 34473756 |
|  | $98867354 | $99228506 |

---

Gains and losses on sales of securities consist of the following:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2019** | **2018** |
|  Gross gains realized | $**48269** | $247594 |
|  Gross losses realized | **(40832)** | (174339) |
|  Net gain realized | $**7437** | $73255 |

---

Securities with a carrying value of approximately $63,176,000 and $79,980,000 at December 31, 2019 and 2018, respectively, were pledged to secure public deposits and for other purposes as required by law.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

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| | |
|:---|:---|
| **NOTE** | **2. INVESTMENT SECURITIES (Continued)**  |

---

**Temporarily Impaired Securities** 

Unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2019 and 2018, are summarized as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Less Than Twelve Months** | **Less Than Twelve Months** | **Over Twelve Months** | **Over Twelve Months** | |
|  | **Gross<br>Unrealized<br>Losses** | **Fair**<br>**Value** | **Gross<br>Unrealized<br>Losses** | **Fair**<br>**Value** |<br>**Total<br>Unrealized<br>Losses** |
|  **December 31, 2019:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **GSEs** | $**(31242)** | $**46652494** | $**(9336)** | $**2990664** | $**(40578)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **GSE residential** | **(4799)** | **3211230** | **(102554)** | **12279803** | **(107353)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **State, county, municipal** | **(604)** | **529310** | **(1824)** | **1020660** | **(2428)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**(36645)** | $**50393034** | $**(113714)** | $**16291127** | $**(150359)** |
|  December 31, 2018: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSEs | $— | $— | $(370740) | $16175974 | $(370740) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. treasuries | (5294) | 6989212 |  |  | (5294) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSE residential | (9311) | 1371809 | (1489631) | 41899778 | (1498942) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, county, municipal | (56960) | 6840359 | (317229) | 11430561 | (374189) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $(71565) | $15201380 | $(2177600) | $69506313 | $(2249165) |

---

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

The unrealized losses on these debt securities in a continuous loss position for twelve months or more as of December 31, 2019 and 2018 are considered to be temporary because they arose due to changing interest rates and the repayment sources of principal and interest are government backed or are securities of investment grade issuers. Included in the table above as of December 31, 2019 were twenty-eight of twenty-eight securities issued by government sponsored enterprises, twenty-nine of sixty-three mortgage-backed securities, and three of thirty-four securities issued by state and political subdivisions that contained unrealized losses. The total aggregate depreciation from their cost basis at December 31, 2019 and 2018 was 0.22% and 2.59% respectively.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

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| | |
|:---|:---|
| **NOTE 3.** | **LOANS**  |

---

The composition of loans, excluding loans held for sale, is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2019** | 2018 |
|  Real estate-mortgage |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $**40508313** | $37176078 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | **13623287** | 19719954 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **156086856** | 121372643 |
|  Real estate-construction | **3876909** | 3205020 |
|  Commercial, financial and agricultural | **33184670** | 38353587 |
|  Consumer | **4610612** | 4412908 |
|  | **251890647** | 224240190 |
|  Deferred fees and costs, net | **(298364)** | (188383) |
|  Less allowance for loan losses | **(2821053)** | (2249249) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loans | $**248771230** | $221802558 |

---

The Company grants loans and extensions of credit primarily to individuals and a variety of firms and corporations located in certain Georgia counties, primarily Oconee, Clarke, and Gwinnett counties. Although the Company has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market in the Company's primary market area. Included in loans above are $32,996,523 and $28,828,315 of interest only loans at December 31, 2019 and 2018, respectively. For the majority of these loans, interest is due monthly with principal due at maturity.

The loan portfolio was disaggregated into segments and then further disaggregated into classes for certain disclosures. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. There are four loan portfolio segments that include real estate–mortgage, real estate–construction, commercial, financial and agricultural loans, and consumer loans. A class is generally determined based on the initial measurement attribute, risk characteristic of the loan, and an entity's method for monitoring and assessing credit risk. Classes within the real estate-mortgage portfolio segment include 1-4 family residential, hotel, and other. The real estate-construction segment, commercial, financial, and agricultural segment and consumer segment have not been further disaggregated into classes.

The following describe risk characteristics relevant to each of the portfolio segments and classes:

Real Estate-Mortgage – As discussed below, the Company offers various types of real estate mortgage loan products. The majority of loans within this portfolio segment are particularly sensitive to the valuation of real estate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 1-4 family residential loans are repaid by various means such as the
borrower's income, sale of the property, or rental income derived from the property. Residential real estate loans are made based on the appraised value of the underlying collateral, in addition to the borrower's ability to service the
debt. Adverse economic conditions may impact the borrower's financial status and thus affect their ability to repay the debt. In addition, the value of the collateral may be adversely affected by declining real estate values.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

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| | |
|:---|:---|
| **NOTE 3.** | **LOANS (Continued)**  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Hotel loans include loans repaid by the cash flow generated from rent income derived from the properties. The
cash flows of hotels are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn will have an effect on credit quality.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Other real estate mortgage loans include loans secured by rental residences, income-producing investment
properties and owner-occupied real estate used for business purposes. The underlying properties are generally located in the Company's primary market area. The cash flows of the income-producing investment properties are adversely impacted by a
downturn in the economy, which in turn will have an effect on credit quality. In the case of owner-occupied real estate used for business purposes, a weakened economy and resultant decreased consumer and/or business spending will have an adverse
effect on credit quality.

Real Estate-Construction - Loans in this segment primarily include land loans to local contractors and developers for developing the land for sale or for the purpose of making improvements thereon. Repayment is derived from sale of the lots/units including any pre-sold units. Credit risk is affected by market conditions, time to sell at an adequate price, cost overruns and construction delays.

Commercial, Financial and Agricultural - Loans in this segment are made to businesses. Generally, these loans are secured by assets of the business and repayment is expected from the cash flows of the business. A weakened economy and resultant decreased consumer and/or business spending will have an effect on the credit quality in this loan segment.

Consumer Loans - Loans in this segment may be either secured or unsecured and repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan (such as automobile, mobile home, etc.). Therefore, the overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality of this loan segment.

The following tables present the activity in the allowance for loan losses by portfolio segment as of December 31, 2019 and 2018:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Real estate-<br>mortgage** | **Real estate-<br>construction** | **Commercial,<br>financial and<br>agricultural** | **Consumer** | **Unallocated** | **Total** |
|  **December 31, 2019:** |  |  |  |  |  |  |
|  **Allowance for loan losses:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Beginning balance** | $**1173458** | $**13109** | $**282738** | $**30234** | $**749710** | $**2249249** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Provision (reallocation)** | **1112994** | **2713** | **(126333)** | **15956** | **(435330)** | **570000** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Charge-offs** | **—** | **—** | **(10009)** | **(9894)** | **—** | **(19903)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Recoveries** | **—** | **—** | **18430** | **3277** | **—** | **21707** |
|  **Ending balance** | $**2286452** | $**15822** | $**164826** | $**39573** | $**314380** | $**2821053** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – individually evaluated for impairment** | $**909436** | $**—** | $**12272** | $**1425** | $**—** | $**923133** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – collectively evaluated for impairment** | $**1377016** | $**15822** | $**152554** | $**38148** | $**314380** | $**1897920** |
|  **Loans:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance** | $**210218456** | $**3876909** | $**33184670** | $**4610612** |  | $**251890647** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – individually evaluated for impairment** | $**6155629** | $**136346** | $**109705** | $**12737** |  | $**6414417** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – collectively evaluated for impairment** | $**204062827** | $**3740563** | $**33074965** | $**4597875** |  | $**245476230** |

---

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

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| | |
|:---|:---|
| **NOTE 3.** | **LOANS (Continued)**  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Real estate-<br>mortgage** | **Real estate-<br>construction** | **Commercial,<br>financial and<br>agricultural** | **Consumer** | **Unallocated** | **Total** |
|  December 31, 2018: |  |  |  |  |  |  |
|  Allowance for loan losses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beginning balance | $930130 | $13049 | $172237 | $37784 | $851890 | $2005090 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision (reallocation) | 222407 | 60 | 103301 | 16712 | (102180) | 240300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charge-offs |  |  |  | (36300) |  | (36300) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Recoveries | 20921 |  | 7200 | 12038 |  | 40159 |
|  Ending balance | $1173458 | $13109 | $282738 | $30234 | $749710 | $2249249 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – individually evaluated for impairment | $30965 | $— | $75346 | $— | $— | $106311 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – collectively evaluated for impairment | $1142493 | $13109 | $207392 | $30234 | $749710 | $2142938 |
|  Loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance | $178268675 | $3205020 | $38353587 | $4412908 |  | $224240190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – individually evaluated for impairment | $401733 | $153386 | $123591 | $— |  | $678710 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – collectively evaluated for impairment | $177866942 | $3051634 | $38229996 | $4412908 |  | $223561480 |

---

The following tables present loans individually evaluated for impairment by portfolio segment and class as of December 31, 2019 and 2018:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Unpaid<br>Principal<br>Balance** | **Recorded<br>Investment** | **Related<br>Allowance** | **Average<br>Recorded<br>Investment** | **Interest<br>Income<br>Recognized** |
|  **December 31, 2019:** |  |  |  |  |  |
|  **With no related allowance recorded:** |  |  |  |  |  |
|  **Real estate-mortgage:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Other** | $**311820** | $**311820** | $**—** | $**331380** | $**—** |
|  **Real estate-construction** | **923971** | **136346** | **—** | **144866** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total with no related allowance recorded** | **1235791** | **448166** | **—** | **476246** | **—** |
|  **With an allowance recorded:** |  |  |  |  |  |
|  **Real estate-mortgage:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **1-4 family residential** | **38999** | **38999** | **4363** | **44896** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Hotel** | **5804810** | **5804810** | **905073** | **5804810** | **—** |
|  **Commercial, financial and agricultural** | **109705** | **109705** | **12272** | **114705** | **—** |
|  **Consumer** | **12737** | **12737** | **1425** | **12737** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total with an allowance recorded** | **5966251** | **5966251** | **923133** | **5977148** | **—** |
|  **Total impaired loans** | $**7202042** | $**6414417** | $**923133** | $**6453394** | $**—** |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 3.** | **LOANS (Continued)**  |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Unpaid<br>Principal<br>Balance** | **Recorded<br>Investment** | **Related<br>Allowance** | **Average<br>Recorded<br>Investment** | **Interest<br>Income<br>Recognized** |
|  December 31, 2018: |  |  |  |  |  |
|  With no related allowance recorded: |  |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | $350940 | $350940 | $— | $370500 | $— |
|  Real estate-construction | 941011 | 153386 |  | 161906 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total with no related allowance recorded | 1291951 | 504326 |  | 532406 |  |
|  With an allowance recorded: |  |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | 50793 | 50793 | 30965 | 54837 |  |
|  Commercial, financial and agricultural | 123591 | 123591 | 75346 | 124591 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total with an allowance recorded | 174384 | 174384 | 106311 | 179428 |  |
|  Total impaired loans | $1466335 | $678710 | $106311 | $711834 | $— |

---

The following tables present the aging of the recorded investment in past due loans as of December 31, 2019 and 2018 by portfolio segment and class:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **30-89 Days**<br>**Past Due** | **Accruing<br>Greater<br>than 90<br>Days<br>Past Due** | **Accruing<br>Total Past<br>Due** | **Nonaccrual** | **Loans Not**<br>**Past Due** | **Total** |
| **December 31, 2019:** | | | | | | |
|  **Real estate-mortgage:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **1-4 family residential** | $**29646** | $**50673** | $**80319** | $**38999** | $**40388995** | $**40508313** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Hotel** | **—** | **—** | **—** | **5804810** | **7818477** | **13623287** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Other** | **870695** | **—** | **870695** | **311820** | **154904341** | **156086856** |
|  **Real estate-construction** | **—** | **—** | **—** | **136346** | **3740563** | **3876909** |
|  **Commercial, financial and agricultural** | **178496** | **—** | **178496** | **109705** | **32896469** | **33184670** |
|  **Consumer** | **13194** | **—** | **13194** | **12737** | **4584681** | **4610612** |
|  **Total** | $**1092031** | $**50673** | $**1142704** | $**6414417** | $**244333526** | $**251890647** |
|  December 31, 2018: |  |  |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $183789 | $614 | $184403 | $50793 | $36940882 | $37176078 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | 5833891 |  | 5833891 |  | 13886063 | 19719954 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 14373 |  | 14373 | 350940 | 121007330 | 121372643 |
|  Real estate-construction |  |  |  | 153386 | 3051634 | 3205020 |
|  Commercial, financial and agricultural | 395136 |  | 395136 | 123591 | 37834860 | 38353587 |
|  Consumer | 33033 | 12254 | 45287 |  | 4367621 | 4412908 |
|  Total | $6460222 | $12868 | $6473090 | $678710 | $217088390 | $224240190 |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 3.** | **LOANS (Continued)**  |

---

**Troubled Debt Restructurings** 

The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

In assessing whether or not a borrower is experiencing financial difficulties, the Company considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (i) the debtor is currently in payment default on any of its debt; (ii) a payment default is probable in the foreseeable future without the modification; (iii) the debtor has declared or is in the process of declaring bankruptcy; and (iv) the debtor's projected cash flow is sufficient to satisfy contractual payments due under the original terms of the loan without a modification.

The Company considers all aspects of the modification to loan terms to determine whether or not a concession has been granted to the borrower. Key factors considered by the Company include the debtor's ability to access funds at a market rate for debt with similar risk characteristics, the significance of the modification relative to unpaid principal balance or collateral value of the debt, and the significance of a delay in the timing of payments relative to the original contractual terms of the loan. The most common concessions granted by the Company generally include one or more modifications to the terms of the debt, such as (i) a reduction in the interest rate for the remaining life of the debt, (ii) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (iii) a temporary period of interest-only payments, and (iv) a reduction in the contractual payment amount for either a short period or remaining term of the loan. As of December 31, 2019 and 2018, the Company did not have any loans that were considered restructured.

There were no loans modified as a TDR during the years ended December 31, 2019 and 2018.

**Credit Quality Indicators** 

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. All loans are analyzed at origination and assigned a risk category. In addition, on an annual basis, management performs an analysis on loans with an outstanding balance greater than specified limits and non-homogeneous loans, such as commercial and commercial real estate loans. The Company uses the following definitions for risk ratings:

**Special Mention**. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

**Substandard**. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

**Doubtful**. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed as part of the above described process are considered to be pass-rated loans.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 3.** | **LOANS (Continued)**  |

---

**Credit Quality Indicators (Continued)** 

As of December 31, 2019 and 2018, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pass** | **Special<br>Mention** | **Substandard** | **Doubtful** | **Total** |
|  **December 31, 2019:** |  |  |  |  |  |
|  **Real estate-mortgage:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **1-4 family residential** | $**40392389** | $**—** | $**115924** | $**—** | $**40508313** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Hotel** | **6214041** | **—** | **7409246** | **—** | **13623287** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Other** | **155775036** | **—** | **311820** | **—** | **156086856** |
|  **Real estate-construction** | **3740563** |  | **136346** | **—** | **3876909** |
|  **Commercial, financial, and agricultural** | **32797862** |  | **386808** | **—** | **33184670** |
|  **Consumer** | **4588539** |  | **22073** | **—** | **4610612** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**243508430** | $**—** | $**8382217** | $**—** | $**251890647** |
|  December 31, 2018: |  |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $37013223 | $— | $162855 | $— | $37176078 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | 19719954 |  |  |  | 19719954 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 121021703 |  | 350940 |  | 121372643 |
|  Real estate-construction | 3051634 |  | 153386 |  | 3205020 |
|  Commercial, financial, and agricultural | 38229996 |  | 123591 |  | 38353587 |
|  Consumer | 4390574 |  | 22334 |  | 4412908 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $223427084 | $— | $813106 | $— | $224240190 |

---

---

| | |
|:---|:---|
| **NOTE 4.** | **PREMISES AND EQUIPMENT**  |

---

Premises and equipment are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2019** | **2018** |
|  Land | $**963758** | $1302205 |
|  Buildings and improvements | **3557345** | 6840901 |
|  Furniture and equipment | **7698862** | 7412774 |
|  Right of use asset | **863836** |  |
|  | **13083801** | 15555880 |
|  Less accumulated depreciation | **(8720582)** | (9704989) |
|  Less accumulated amortization | **(68352)** |  |
|  | $**4294867** | $5850891 |

---

Depreciation expense was $439,018 and $422,133 for the years ended December 31, 2019 and 2018, respectively.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 4.** | **PREMISES AND EQUIPMENT (Continued)**  |

---

**Leases** 

The Company leases a location under a lease obligation which provided that the Company pay a monthly rental of $5,208 until May 31, 2019, at which time the monthly rental increased to $5,366 and will continue to increase 3% at each anniversary date. The lease expires July 31, 2021. The Company also leases another location under a lease obligation which provided that the Company pay a monthly rental of $4,448 until May 31, 2019, at which time the monthly rental increased to $4,559 and will continue to increase 2.5% at each anniversary date. The lease also calls for monthly reimbursement expenses estimated at $1,483 per month, to be trued up at the end of each year. The lease expires July 31, 2021. The lease agreements contain renewal options for additional years, but the renewal options are not considered in the right-of-use asset due to the uncertainty of renewal. In November 2019, the Company sold its operations center to an unrelated party and leased back the facility under a short-term operating lease with a monthly rental of $25,000 for twenty-four months while a new operations center is constructed. As a result of this sale the Company derecognized the asset, recorded a gain on sale, and recorded the right-of use asset and corresponding lease liability.

The Company has evaluated the leases above and determined them to be operating leases. The right-of-use asset and lease liability were measured and recorded with an assumed discount rate of approximately 2%, the Company's incremental borrowing rate at the date of adoption. The right of use asset, included within premises and equipment on the balance sheet, was $795,484 net of amortization as of December 31, 2019. The Company's lease liability, included within accrued interest payable and other liabilities on the balance sheet, was $795,484 as of December 31, 2019.

Future minimum lease commitments on noncancelable operating leases, excluding any renewal options, are summarized as follows:

---

| | |
|:---|:---|
| 2020 | $438468.0 |
| 2021 | 363263.0 |
|  | $801731.0 |

---

Total rental expense for the years ended December 31, 2019 and 2018 was $186,767 and $78,609, respectively.

---

| | |
|:---|:---|
| **NOTE 5.** | **DEPOSITS**  |

---

The aggregate amounts of certificates of deposit, each with a minimum denomination of $250,000, were approximately $15,996,000 and $10,033,000 at December 31, 2019 and 2018, respectively. The Company had brokered deposits of approximately $5,027,000 and $0 at December 31, 2019 and 2018, respectively.

At December 31, 2019, the scheduled maturities of certificates of deposit are as follows:

---

| | |
|:---|:---|
| 2020 | $29009221.0 |
| 2021 | 6616743.0 |
| 2022 | 7242427.0 |
| 2023 | 2522173.0 |
| 2024 | 2328882.0 |
|  | $47719446.0 |

---

At December 31, 2019 and 2018, the Company had concentrations of deposits with two customers of $69,485,157 and $59,247,752, respectively.

Overdraft demand deposits reclassified to loans totaled $27,613 and $18,910 at December 31, 2019 and 2018, respectively.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 6.** | **INCOME TAXES**  |

---

The components of income tax in the statements of income are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2019** | 2018 |
|  Current income tax expense (benefit) | $**1108163** | $(261748) |
|  Deferred income tax expense (benefit) | **(90657)** | 471165 |
|  Total income tax | $**1017506** | $209417 |

---

The differences between income tax and the amount computed by applying the statutory federal income tax rate to income before income tax are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2019** | 2018 |
|  Income tax at statutory rates | $**1003143** | $408831 |
|  Add (deduct): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax-exempt interest income | **(82498)** | (157758) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State taxes, net of federal effect | **113566** | 6152 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **(16705)** | (47808) |
|  | $**1017506** | $209417 |

---

The following summarizes the sources and expected tax consequences of future taxable deductions (income) which comprise the net deferred tax asset (liability). The net deferred tax liability is a component of accrued interest payable and other liabilities at December 31, 2019. The net deferred tax asset is a component of accrued interest receivable and other assets at December 31, 2018.

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2019** | 2018 |
|  Deferred income tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit carryforwards | $**33492** | $199544 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized losses on investment securities available for sale | **—** | 565033 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | **138706** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **59287** | 25137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total gross deferred income tax assets | **231485** | 789714 |
|  Deferred income tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | **—** | (5504) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized gains on investment securities available for sale | **(91371)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment | **(199151)** | (277499) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total gross deferred income tax liabilities | **(290522)** | (283003) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net deferred income tax asset (liability) | $**(59037)** | $506711 |

---

The federal income tax returns of the Company for 2018, 2017, and 2016 are subject to examination by the IRS, generally for three years after being filed.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 7.** | **RELATED PARTY TRANSACTIONS**  |

---

The Company conducts transactions with directors and executive officers, including companies in which they have beneficial interests, in the normal course of business. It is the policy of the Company that loan transactions with directors and officers are made on substantially the same terms as those prevailing at the time made for comparable loans to other persons. The following is a summary of activity for related party loans:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2019** | 2018 |
|  Beginning balance | $**2952667** | $2882404 |
|  Advances | **1443458** | 585834 |
|  Repayments | **(530919)** | (506565) |
|  Changes in related parties | **—** | (9006) |
|  Ending balance | $**3865206** | $2952667 |

---

---

| | |
|:---|:---|
| **NOTE 8.** | **COMMITMENTS AND CONTINGENCIES**  |

---

**Loan Commitments** <br>

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. In most cases, the Company does require collateral or other security to support financial instruments with credit risk.

---

| | | |
|:---|:---|:---|
|  | **Contractual Amount** | **Contractual Amount** |
|  | **2019** | 2018 |
|  | (in thousands) | (in thousands) |
|  Financial instruments whose contract amounts represent credit risk: |  |  |
|  Commitments to extend credit | $**42176** | $35686 |
|  Standby letters of credit | **3817** | 102 |
|  | $**45993** | $35788 |

---

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation. Collateral held varies, but may include unimproved and improved real estate, certificates of deposit, or personal property.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 8.** | **COMMITMENTS AND CONTINGENCIES (Continued)**  |

---

**Loan Commitments (Continued)** 

Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to businesses in the Company's delineated trade area. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds real estate, equipment, automobiles, and customer deposits as collateral supporting those commitments for which collateral is deemed necessary.

**Available Lines of Credit** 

The Company is approved to borrow from the Federal Reserve Bank discount window program. As of December 31, 2019, the Company has not pledged any loans or securities but would be required to if they wished to borrow using this program. There were no borrowings outstanding under this program at December 31, 2019 or 2018.

The Company had $12,000,000 and $7,500,000 available for the purchase of overnight federal funds from two correspondent financial institutions as of December 31, 2019 and 2018, respectively.

**Contingencies** 

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material effect on the Company's financial statements.

---

| | |
|:---|:---|
| **NOTE 9.** | **PROFIT SHARING PLAN AND STOCK-BASED COMPENSATION**  |

---

**Profit Sharing Plan** 

The Company has a contributory profit sharing plan which is available to substantially all employees subject to certain age and service requirements. Contributions to the plan are determined annually by the Board of Directors. For the years ended December 31, 2019 and 2018, there was $233,005 and $198,178 charged to expense, respectively.

**Deferred Compensation Plan** 

The Company has various deferred compensation plans providing for death and retirement benefits for certain key officers. The estimated amounts to be paid under the compensation plans have been funded through the purchase of life insurance policies on certain officers. In 2019 and 2018, these policies earned $181,103 and $124,771, respectively. In 2019 and 2018, the Company expensed $62,246 and $60,345, respectively, for deferred compensation related to these plans. Accrued deferred compensation of $145,101 and $82,855 is included in accrued interest payable and other liabilities as of December 31, 2019 and 2018, respectively. Cash surrender values of $5,851,927 and $5,670,824 on the insurance policies as of December 31, 2019 and 2018, respectively, are included in accrued interest receivable and other assets.

**Restricted Stock** 

During 2019 and 2018, respectively, the Company granted 750 and 750 shares of restricted stock which vests over four years form the grant dates. The fair market value of the stock on the grant dates was $32.29 and $34.48 per share, respectively. The Company recognized $18,157 and $12,084 of stock-based compensation expense related to these grants during 2019 and 2018, respectively. As of December 31, 2019 and 2018, respectively, there was $36,745 and $30,684 of total unrecognized compensation cost related to these restricted stock grants which is expected to be recognized over the remaining vesting period.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 10.** | **REGULATORY MATTERS**  |

---

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total capital, Tier 1 capital, and common equity Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. In addition, the Bank is subject to an institution-specific capital buffer which must exceed 2.50% to avoid limitations on distributions and discretionary bonus payments. The Bank's capital conservation buffer at December 31, 2019 was 5.0593%. Management believes, as of December 31, 2019 and 2018, that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2019, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's category.

The Bank's actual capital amounts and ratios are presented in the following table:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Actual** | **Actual** | **Minimum<br>Capital<br>Requirement** | **Minimum<br>Capital<br>Requirement** | **Minimum**<br>**To Be Well<br>Capitalized Under<br>Prompt Corrective<br>Action Provisions** | **Minimum**<br>**To Be Well<br>Capitalized Under<br>Prompt Corrective<br>Action Provisions** |
|  | **Amount** | **Ratio** | **Amount** | **Ratio** | **Amount** | **Ratio** |
|  | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** |
|  **As of December 31, 2019:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Capital to Risk Weighted Assets** | $**38092** | **13.06%** | $**23335** | **8.00%** | $**29168** | **10.00%** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Tier 1 Capital to Risk Weighted Assets** | $**35271** | **12.09%** | $**17501** | **6.00%** | $**23335** | **8.00%** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Common Equity Tier 1 Capital to Risk Weighted Assets** | $**35271** | **12.09%** | $**13126** | **4.50%** | $**18959** | **6.50%** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Tier 1 Capital to Average Assets** | $**35271** | **9.35%** | $**15087** | **4.00%** | $**18859** | **5.00%** |
|  As of December 31, 2018: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Capital to Risk Weighted Assets | $34498 | 13.27% | $20803 | 8.00% | $26004 | 10.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 Capital to Risk Weighted Assets | $32249 | 12.40% | $15602 | 6.00% | $20803 | 8.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Equity Tier 1 Capital to Risk Weighted Assets | $32249 | 12.40% | $11702 | 4.50% | $16903 | 6.50% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 Capital to Average Assets | $32249 | 9.41% | $13708 | 4.00% | $17135 | 5.00% |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 11.** | **STOCKHOLDERS' EQUITY**  |

---

Dividends paid by the Bank are the primary source of funds available to the Company for payment of dividends to its stockholders and for other working capital needs. Banking regulations limit the amount of dividends that may be paid without prior approval of the regulatory authorities. These restrictions are based on the level of regulatory classified assets, the prior year's net earnings, the ratio of equity capital to total assets, and other specific regulatory restrictions. At December 31, 2019, approximately $1,916,000 of retained earnings was available for dividend declaration without regulatory approval.

---

| | |
|:---|:---|
| **NOTE 12.** | **FAIR VALUE DISCLOSURES**  |

---

**Fair Value Measurements** 

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans and foreclosed property.

**Fair Value Hierarchy** 

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 - Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 - Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Generated from model-based techniques that use at least one significant assumption based on unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls, is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 12.** | **FAIR VALUE DISCLOSURES (Continued)**  |

---

**Fair Value Hierarchy (Continued)** 

The following methods and assumptions were used by the Company in estimating fair value for assets and liabilities measured at fair value on either a recurring or nonrecurring basis:

<u>Securities Available for Sale</u>: Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets, and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds, and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Impaired Loans: Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures its impairment. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At December 31, 2019 and 2018, substantially all of the impaired loans were evaluated based on the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price, the Company records the impaired loan as nonrecurring Level 2. When an appraised value is used, or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3. The tables below present the Company's assets measured at fair value on a recurring basis as of December 31, 2019 and 2018, aggregated by the level in the fair value hierarchy within which those measurements fall.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Balance at<br>December 31, 2019** | **Level 1** | **Level 2** | **Level 3** |
|  | **(In thousands)** | | | |
|  **Securities available for sale** | $**99229** | $**—** | $**99229** | $**—** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Balance at<br>December 31, 2018 | Level 1 | Level 2 | Level 3 |
|  | (In thousands) | | | |
|  Securities available for sale | $90802 | $— | $90802 | $— |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 12.** | **FAIR VALUE DISCLOSURES (Continued)**  |

---

**Fair Value Hierarchy (Continued)** 

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis. These include assets that are measured at the lower of cost or fair value. The tables below present the Company's assets measured at fair value on a nonrecurring basis as of December 31, 2019 and 2018, aggregated by the level in the fair value hierarchy within which those measurements fall.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Balance at<br>December 31, 2019** | **Level 1** | **Level 2** | **Level 3** | **Total Losses** |
|  | **(In thousands)** | |  | | |
|  **Impaired loans** | $**4900** | $**—** | $— | $**4900** | $**905** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Balance at<br>December 31, 2018 | Level 1 | Level 2 | Level 3 | Total Losses |
|  | (In thousands) | | | | |
|  Impaired loans | $68 | $— | $— | $68 | $72 |

---

**Fair Value of Financial Instruments** 

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

**Cash and Cash Equivalents**: The carrying amounts of cash and short-term instruments approximate fair values based on the short-term nature of the assets.

**Investment Securities Available for Sale**: Securities available for sale are carried at fair value using the methods and assumptions described above.

**Federal Home Loan Bank Stock:** The carrying amount of Federal Home Loan Bank stock with no readily determinable fair value approximates fair value.

**Loans and Loans Held for Sale:** For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair value for fixed rate loans are estimated using discounted cash flow analyses, using market interest rates for comparable loans. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. Loans held for sale are carried at the lower of cost or market value and the carrying amount approximates the market value.

**Deposits**: The fair values disclosed for demand deposits (for example, interest and noninterest checking, savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits.

**Accrued Interest**: The carrying amounts of accrued interest approximate fair value.

**Off-Balance Sheet Credit-Related Instruments**: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 12.** | **FAIR VALUE DISCLOSURES (Continued)**  |

---

**Fair Value of Financial Instruments (Continued)** 

The carrying amount and estimated fair value of the Company's financial instruments at December 31, 2019 were as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Carrying<br>Amount** | **Fair**<br>**Value** |
|  Financial assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $**38099** | $**38099** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities available for sale | **99229** | **99229** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank stock | **315** | **315** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans held for sale | **1573** | **1573** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans | **248771** | **247388** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable | **877** | **877** |
|  Financial liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | **361523** | **361725** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable | **109** | **109** |

---

---

| | |
|:---|:---|
| **NOTE 13.** | **REVENUE FROM CONTRACTS WITH CUSTOMERS**  |

---

Substantially all of the Company's revenue from contracts with customers in the scope of ASC 606 is recognized within service charges, gain on sale and disposal of fixed assets and miscellaneous on the statements of income. The following table presents the Company's sources of revenue from contracts with customers for the years ended December 31, 2019 and 2018.

---

| | | |
|:---|:---|:---|
|  | **2019** | 2018 |
|  Service charges | $**584527** | $528366 |
|  Gain on sale and disposal of fixed assets | **1781545** |  |
|  Miscellaneous | **1822381** | 1604548 |
|  | $**4188453** | $2132914 |

---

Service charges: Revenue from service charges relates primarily to deposit accounts and is earned through cash management, overdraft, non-sufficient funds, and other deposit-related services. Revenue is recognized for these services either over time, corresponding with deposit accounts' monthly cycle, or at a point in time for transaction-related services and fees. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers' accounts.

Gain on sales and disposal of fixed assets: The Company records a gain or loss from the sale of assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of assets to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 13.** | **REVENUE FROM CONTRACTS WITH CUSTOMERS (Continued)**  |

---

Miscellaneous: Miscellaneous primarily includes revenues generated from commissions on investment sales, ATM fees, and interchange fees from consumer credit and debit cards. Commissions on investment sales and ATM fees are recognized concurrently with the delivery of service on a daily basis as transactions occur. Interchange rates are generally set by the credit card associations and based on purchase volumes and other factors. Interchange fees and merchant discounts are recognized concurrently with the delivery of service on a daily basis as transactions occur. Payment is typically received immediately or in the following month.

---

| | |
|:---|:---|
| **NOTE 14.** | **OCONEE FINANCIAL CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION**  |

---

**CONDENSED BALANCE SHEETS** 

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2019** | 2018 |
|  **Assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | $**75787** | $31193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in subsidiary | **35541000** | 30607824 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | **50309** | 50040 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $**35667096** | $30689057 |
|  **Liabilities and Stockholders' Equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stockholders' equity | $**35667096** | $30689057 |

---

**CONDENSED STATEMENTS OF INCOME** 

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2019** | 2018 |
|  Other income | $**9420** | $9420 |
|  Dividend income | **840008** | 540008 |
|  | **849428** | 549428 |
|  Other expenses | **101177** | 32538 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income tax benefits and equity in undistributed income of subsidiary | **748251** | 516890 |
|  Income tax benefits | **(19269)** | (4855) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before equity in undistributed income of subsidiary | **767520** | 521745 |
|  Equity in undistributed income of subsidiary | **2991846** | 1215653 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**3759366** | $1737398 |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 14.** | **OCONEE FINANCIAL CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION (Continued)**  |

---

**CONDENSED STATEMENTS OF CASH FLOWS** 

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2019** | 2018 |
|  **OPERATING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**3759366** | $1737398 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity in undistributed income of subsidiary | **(2991846)** | (1215653) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | **(267)** | (4855) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | **767253** | 516890 |
|  **FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid | **(540009)** | (540008) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | **(182650)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in financing activities | **(722659)** | (540008) |
|  Net increase (decrease) in cash | **44594** | (23118) |
|  Cash at beginning of year | **31193** | 54311 |
|  Cash at end of year | $**75787** | $31193 |

---

------

##### [**Table of Contents**](#toc)
![LOGO](g406793g0208121356635.jpg)

**INDEPENDENT AUDITOR'S REPORT** 

**To the Board of Directors and Stockholders of** 

**Oconee Financial Corporation** 

**Watkinsville, Georgia** 

We have audited the accompanying consolidated financial statements of **Oconee Financial Corporation and subsidiary**, which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for the years then ended, and the related notes to the financial statements.

**Management's Responsibility for the Consolidated 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 consolidated 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 audits. We conducted our audits 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 from 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 consolidated 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 Oconee Financial Corporation and subsidiary as of December 31, 2020 and 2019, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

![LOGO](g406793g0208121356986.jpg)

Atlanta, Georgia

April 12, 2021

200 GALLERIA PARKWAY S.E., SUITE 1700 • ATLANTA, GA 30339-5946 • 770-955-8600 • 800-277-0080 • FAX 770-980-4489 • www.mjcpa.com

*Members of The American Institute of Certified Public Accountants* 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED BALANCE SHEETS** 

**DECEMBER 31, 2020 AND 2019** 

---

| | | |
|:---|:---|:---|
|  | **2020** | **2019** |
|  **<u>Assets</u>** |  |  |
|  Cash and cash equivalents | $**76418430** | $38099324 |
|  Investment securities available for sale | **75548813** | 99228506 |
|  Federal Home Loan Bank stock | **359700** | 314900 |
|  Loans held for sale | **6408720** | 1572800 |
|  Loans, net | **319567770** | 248771230 |
|  Premises and equipment, net | **5103036** | 4294867 |
|  Accrued interest receivable and other assets | **11129233** | 7239812 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $**494535702** | $399521439 |
|  **<u>Liabilities and Stockholders' Equity</u>** |  |  |
|  Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand | $**94875020** | $64120711 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing demand | **228117684** | 195415558 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings | **69503387** | 54266859 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time | **52205841** | 47719446 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | **444701932** | 361522574 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | **1928168** | 2331769 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes | **9770497** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | **456400597** | 363854343 |
|  Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, par value $2, authorized 1,500,000 shares, 897,125 and 896,880 shares issued, respectively | **1794250** | 1793760 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted stock, 1,126 and 1,138 shares, respectively | **(37976)** | (36745) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | **4147114** | 4139146 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | **30850978** | 29501154 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income | **1380739** | 269781 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity | **38135105** | 35667096 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and stockholders' equity | $**494535702** | $399521439 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF INCOME** 

**YEARS ENDED DECEMBER 31, 2020 AND 2019** 

---

| | | |
|:---|:---|:---|
|  | **2020** | 2019 |
|  Interest income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and fees on loans | $**14570416** | $12374536 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and dividends on securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. government agencies | **152663** | 344340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities | **651728** | 893288 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, county, and municipal | **407768** | 476512 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **261967** | 375577 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest income | **16044542** | 14464253 |
|  Interest expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing demand deposits | **784332** | 837006 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings deposits | **114737** | 128866 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time deposits | **698716** | 557382 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other borrowed funds | **330277** | 11211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | **1928062** | 1534465 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income | **14116480** | 12929788 |
|  Provision for loan losses | **1250000** | 570000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income after provision for loan losses | **12866480** | 12359788 |
|  Other income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Service charges | **453798** | 584527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gain on sale of securities | **182860** | 7437 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on sale and disposal of fixed assets | **(17655)** | 1781545 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage origination income | **1919163** | 518339 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | **481006** | 1004491 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous | **1917817** | 1822381 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income | 4936989 | 5718720 |
|  Other expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | **10085635** | 8493647 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Occupancy | **1204014** | 1358796 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other operating | **4257956** | 3449193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | **15547605** | 13301636 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income tax | **2255864** | 4776872 |
|  Income tax | **367072** | 1017506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**1888792** | $3759366 |
|  Net income per share | $**2.11** | $4.18 |

---

**See Notes to Consolidated Financial Statements.** 

------

##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME** 

**YEARS ENDED DECEMBER 31, 2020 AND 2019** 

---

| | | |
|:---|:---|:---|
|  | **2020** | 2019 |
|  Net income | $**1888792** | $3759366 |
|  Other comprehensive income, net of tax: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized gains on securities available for sale: Holding gains arising during period, net of tax expense of $(434483) and $(658295), respectively | **1246555** | 1928721 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassification adjustment for gains included in net income, net of tax of $47,263 and $1,891, respectively | **(135597)** | (5546) |
|  Total other comprehensive income | **1110958** | 1923175 |
|  Comprehensive income | $**2999750** | $5682541 |

---

**See Notes to Consolidated Financial Statements.** 

------

##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY** 

**YEARS ENDED DECEMBER 31, 2020 AND 2019** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common<br>Stock** | **Restricted<br>Stock** | **Additional<br>Paid-In<br>Capital** | **Retained<br>Earnings** | **Accumulated<br>Other<br>Comprehensive<br>Income (Loss)** | **Total<br>Stockholders'<br>Equity** |
|  **Balance, December 31, 2018** | $1802728 | $(30684) | $4288610 | $26281797 | $(1653394) | $30689057 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in net unrealized income on investment securities available for sale, net of tax |  |  |  |  | 1923175 | 1923175 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of restricted stock | 1500 | (24218) | 22718 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (10468) |  | (172182) |  |  | (182650) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense |  | 18157 |  |  |  | 18157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid ($0.60 per share) |  |  |  | (540009) |  | (540009) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 3759366 |  | 3759366 |
|  **Balance, December 31, 2019** | 1793760 | (36745) | 4139146 | 29501154 | 269781 | 35667096 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in net unrealized income on investment securities available for sale, net of tax |  |  |  |  | 1110958 | 1110958 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of restricted stock | 1500 | (25824) | 24324 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (1010) |  | (16356) |  |  | (17366) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense |  | 24593 |  |  |  | 24593 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid ($.60 per share) |  |  |  | (538968) |  | (538968) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 1888792 |  | 1888792 |
|  **Balance, December 31, 2020** | $1794250 | $(37976) | $4147114 | $30850978 | $1380739 | $38135105 |

---

**See Notes to Consolidated Financial Statements.** 

------

##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF CASH FLOWS** 

**YEARS ENDED DECEMBER 31, 2020 AND 2019** 

---

| | | |
|:---|:---|:---|
|  | **2020** | **2019** |
|  **OPERATING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**1888792** | $3759366 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, amortization, and accretion | **1080616** | 882321 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for loan losses | **1250000** | 570000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of mortgage loans held for sale | **73118697** | 20853725 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Originations of mortgage loans held for sale | **(77954617)** | (20677034) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income tax benefit | **(384727)** | (90657) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of investment securities, net | **(182860)** | (7437) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on sale and disposal of fixed assets | **17655** | (1781545) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | **(481006)** | (1004491) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock compensation expense | **24593** | 18157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in bank owned life insurance | **(227499)** | (181103) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | **(891415)** | 554271 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | **(426601)** | 507419 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) operating activities | **(3168372)** | 3402992 |
|  **INVESTING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of investment securities available for sale | **(63502517)** | (57507381) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from calls and maturities of investment securities available for sale | **80934018** | 36618164 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of investment securities available for sale | **7638313** | 14679481 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net (increase) decrease in Federal Home Loan Bank stock | **(44800)** | 4700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in loans | **(71565534)** | (27538672) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of premises and equipment | **(1615523)** | (595267) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of bank owned life insurance | **(2750000)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of fixed assets | **—** | 4367323 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | **(50906043)** | (29971652) |
|  **FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in deposits | **83179358** | 43025601 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | **(17366)** | (182650) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of subordinated notes, net of cost | **9770497** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid | **(538968)** | (540009) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | **92393521** | 42302942 |
|  Net increase in cash and cash equivalents | **38319106** | 15734282 |
|  Cash and cash equivalents at beginning of year | **38099324** | 22365042 |
|  Cash and cash equivalents at end of year | $**76418430** | $38099324 |
|  **SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid during the year for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest | $**1941945** | $1480227 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income taxes | $**555000** | $575438 |

---

**See Notes to Consolidated Financial Statements.** 

------

##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

**Organization** 

Oconee Financial Corporation ("OFC") received regulatory approval to operate as a bank holding company on October 13, 1998, and began operations effective January 1, 1999. OFC is primarily regulated by the Federal Reserve Bank and serves as the one-bank holding company for Oconee State Bank.

Oconee State Bank (the "Bank") commenced business in 1960 upon receipt of its banking charter from the Georgia Department of Banking and Finance (the "DBF"). The Bank is primarily regulated by the DBF and the Federal Deposit Insurance Corporation and undergoes periodic examinations by these regulatory agencies. The Bank provides a full range of commercial and consumer banking services primarily in Oconee, Clarke, and Gwinnett counties in Georgia.

**Principles of Consolidation** 

The consolidated financial statements include the financial statements of Oconee Financial Corporation and its wholly owned subsidiary, Oconee State Bank (collectively called the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.

**Basis of Presentation and Accounting Estimates** 

The accounting principles followed by the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America ("GAAP") and with general practices in the banking industry. In preparing the financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ significantly from these estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses, deferred taxes, fair value of financial instruments, and other than temporary impairment on securities.

The Company has evaluated all transactions, events, and circumstances for consideration or disclosure through April 12, 2021, the date these financial statements were available to be issued, and has reflected or disclosed those items within the consolidated financial statements and related footnotes as deemed appropriate.

**COVID-19 Coronavirus** 

As a result of the continued spread of the COVID-19 coronavirus, economic uncertainties remain which could negatively impact the Company. The outbreak is disrupting supply chains and affecting production and sales across a range of industries. The extent of COVID-19's impact on the Company's operational and financial performance will depend on certain developments, including the duration and spread of the outbreak and the virus' impact on the Company's customers, employees and vendors. At this point, the extent to which COVID-19 may impact the Company's financial condition or results of operations remains uncertain.

**Cash, Due from Banks and Cash Flows** 

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks. Included in cash and due from banks is interest-bearing deposits at other banks of $73,178,173 and $33,687,297 at December 31, 2020 and 2019, respectively. Net cash flows are reported for Federal Home Loan Bank stock, loans, and deposits.

The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank. The total of those reserve balances was approximately $0 and $643,000 at December 31, 2020 and 2019, respectively.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**  |

---

**Investment Securities** 

All securities are classified as available for sale and are recorded at fair value. Unrealized holding gains and losses, net of related tax effect on securities available for sale, are excluded from operations and are reported as a separate component of stockholders' equity until realized. The Company recognizes other than temporary impairment (OTTI) loss in earnings only when the Company (1) intends to sell the debt security; (2) determines that it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis or (3) does not expect to recover the entire amortized cost basis of the security. In all other situations, only the portion of the OTTI losses representing the credit loss is recognized in earnings, with the remaining portion being recognized in other comprehensive income, net of deferred taxes.

Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield. Realized gains and losses for securities classified as available for sale are included in earnings on the trade date and are derived using the specific identification method for determining the cost of securities sold.

**Federal Home Loan Bank Stock** 

The Company is required to maintain an investment in capital stock of the Federal Home Loan Bank of Atlanta (FHLB). Based on redemption provisions of the entity, the stock has no quoted market value and is carried at cost. At its discretion, the FHLB may declare dividends on the stock. Management reviews for impairment based on the ultimate recoverability of the cost basis in this stock.

**Loans Held for Sale** 

Loans held for sale are carried at the lower of cost or market value. At December 31, 2020, the carrying amount of mortgage loans held for sale approximates the market value. Loans held for sale consist of mortgage loans which have commitments to be sold to third party investors upon closing on a best efforts basis.

**Loans and Allowance for Loan Losses** 

Loans are stated at the principal amount outstanding, less net deferred origination fees or costs and the allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The Company analyzes its direct costs associated with the origination of different types of loans. Any fees collected that are greater than the costs calculated by the Company are recognized as income over the life of the loan as opposed to the time of origination.

Impaired loans are measured for impairment based on the present value of expected future cash flows, discounted at the loan's effective interest rate, or at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is impaired when, based on current information and events, it is probable that all principal and interest due according to the contractual terms of the loan will not be collected. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** 

**Loans and Allowance for Loan Losses (Continued)** 

Accrual of interest is discontinued on a loan when management believes, after considering economic conditions and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. Interest previously accrued but not collected is reversed against current period earnings, and interest is recognized on a cash basis or cost recovery method when such loans are placed on nonaccrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Past due status is based on the contractual terms of the loans.

The allowance for loan losses is established through a provision for loan losses charged to earnings. Loans are charged against the allowance for loan losses when management believes the uncollectibility of the principal is confirmed. The allowance represents an amount which, in management's judgment, will be adequate to absorb probable losses on existing loans that may become uncollectible.

Management's judgment in determining the adequacy of the allowance is based on evaluations of the collectability of loans. These evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, current economic conditions that may affect the borrower's ability to pay, overall portfolio quality, and review of specific problem loans. The allowance consists of specific, general, and unallocated components. The specific component relates to loans that are identified as impaired. All significant impaired loans are evaluated individually for impairment, while all other loans considered impaired are evaluated as a pool. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. Management uses an external review program to challenge and corroborate the internal grading system and provide additional analysis in determining the adequacy of the allowance and provisions for estimated loan losses.

While management uses available information to recognize losses on loans, future additions to the, allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on judgments different than those of management.

**Premises and Equipment** 

Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter period of the useful life of the asset or the lease term. When assets are retired or otherwise disposed, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is reflected in operations for the period. The cost of maintenance and repairs which do not improve or extend the useful life of the respective assets is charged to earnings as incurred, whereas significant improvements are capitalized. The ranges of estimated useful lives for premises and equipment are generally as follows:

Buildings and improvements 5-40 years <br> Furniture and equipment 3-10 years

**Advertising Costs** 

Advertising costs are expensed as incurred and totaled $182,368 and $129,633 for the years ended December 31, 2020 and 2019, respectively.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** 

**Other Real Estate Owned** 

Properties acquired through foreclosure are carried at the lower of cost or fair value less estimated costs to dispose. Accounting guidance defines fair value as the amount that is expected to be received in a current sale between a willing buyer and seller other than in a forced or liquidation sale. Fair values at foreclosure are based on appraisals. Losses arising from the acquisition of foreclosed properties are charged against the allowance for loan losses. Subsequent write-downs are provided by a charge to operations in the period in which the need arises. At December 31, 2020 and 2019, there was no other real estate owned.

**Transfers of Financial Assets** 

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

**Stock Compensation Plans** 

Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. That cost is measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees' service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Company's common stock at the date of grant is used for restricted stock awards and stock grants.

**Income Taxes** 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management's judgment.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** 

**Income Taxes (Continued)** 

In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company's assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

In assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.

**Mortgage Banking Income** 

Mortgage origination income represents net gains from the sale of mortgage loans and fees received from borrowers related to the Company's origination of single-family residential mortgage loans.

**Net Income Per Share** 

Net income per common share is based on the weighted average number of common shares outstanding during the year, while the effects of potential common shares outstanding during the period are included in diluted earnings per share. Potential common shares outstanding related to restricted stock totaled 1,126 and 1,138 shares as of December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, these shares did not have a dilutive effect. Net income per share is calculated using the weighted average shares outstanding during the year of 896,163 and 899,883 for 2020 and 2019, respectively.

**Comprehensive Income** 

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with the net income, are components of comprehensive income.

**Revenue Recognition** 

The Company accounts for revenue in accordance with applicable revenue recognition accounting guidance, including ASU 2014-09 Revenue from Contracts with Customers (ASC Topic 606) and all subsequent amendments to the ASU (collectively, "ASC 606"), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as other real estate owned. The majority of the Company's revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit, and investment securities, as these activities are subject to other GAAP discussed elsewhere within the disclosures. The Company's services that fall within the scope of ASC 606 are presented within other income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of ASC 606 primarily include service charges on deposits, gains on sale of fixed assets, and other service charges and fees such as ATM and interchange fees and commissions on investment sales. Refer to Note 13 for further discussion on the Company's accounting policies for revenue sources within the scope of ASC 606.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** 

**U.S. Small Business Administration Paycheck Protection Program (PPP)** 

The Company is participating in the Paycheck Protection Program, which is a loan program that originated from the CARES Act and was subsequently expanded by the Paycheck Protection Program and Health Care Enhancement Act ("PPPHCEA Act"). The PPP provides loans of up to $10 million to small businesses who were affected by economic conditions as a result of COVID-19 to provide cash-flow assistance to employers who maintain their payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19 emergency. PPP loans carry an interest rate of one percent, and a maturity of two or five years.

Under this program, the Company provided approximately $56 million in funding to 638 customers. As compensation for originating the loans, the Company received lender processing fees from the SBA totaling approximately $2,300,000. The processing fees per loan range from 1% to 5%, based on the size of the loan, and are being recognized as interest income over approximately a twenty four-month period based on management's estimate that payoff or forgiveness would occur during this period.

These PPP loans are fully guaranteed by the SBA and are not included in the Company's loan loss allowance calculation. If the borrower meets certain criteria and uses the proceeds toward certain eligible expenses in accordance with the requirements of the PPP, the borrower's obligation to repay the loan can be forgiven up to the full principal amount of the loan and any accrued interest. Upon borrower forgiveness, the SBA pays the Company for the principal and accrued interest owed on the loan. If the full principal of the loan is not forgiven, the loan will operate according to the original loan terms with the SBA guaranty remaining.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 2. INVESTMENT SECURITIES** 

Investment securities available for sale at December 31, 2020 and 2019 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Amortized<br>Cost** | **Gross<br>Unrealized<br>Gains** | **Gross<br>Unrealized<br>Losses** | **Fair Value** |
|  **December 31, 2020:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Corporate securities** | $**5000000** | $**10116** | $**(3200)** | $**5006916** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **GSE residential** | **34097749** | **934616** | **(43852)** | **34988513** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **State, county, and municipal** | **34591733** | **961923** | **(272)** | **35553384** |
|  | $**73689482** | $**1906655** | $**(47324)** | $**75548813** |
|  December 31, 2019: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. Government-sponsored enterprises (GSEs) | $49683736 | $— | $(40578) | $49643158 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSE residential | 34401451 | 179658 | (107353) | 34473756 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, county, and municipal | 14782167 | 331853 | (2428) | 15111592 |
|  | $98867354 | $511511 | $(150359) | $99228506 |

---

The amortized cost and fair value of investment securities as of December 31, 2020 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

---

| | | |
|:---|:---|:---|
|  | **Amortized<br>Cost** | **Estimated<br>Fair Value** |
|  Due from one to five years | $1391443 | $1398516 |
|  Due from five to ten years | 8530772 | 8645577 |
|  Due after ten years | 29669518 | 30516207 |
|  Mortgage-backed securities | 34097749 | 34988513 |
|  | $73689482 | $75548813 |

---

Gains and losses on sales of securities consist of the following:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2020** | **2019** |
|  Gross gains realized | $182860 | $48269 |
|  Gross losses realized |  | (40832) |
|  Net gain realized | $182860 | $7437 |

---

Securities with a carrying value of approximately $7,248,000 and $63,176,000 at December 31, 2020 and 2019, respectively, were pledged to secure public deposits and for other purposes as required by law.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

NOTE 2. INVESTMENT SECURITIES (Continued)

**Temporarily Impaired Securities** 

Unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2020 and 2019, are summarized as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Less Than Twelve Months** | **Less Than Twelve Months** | **Over Twelve Months** | **Over Twelve Months** | |
|  | **Gross<br>Unrealized<br>Losses** | **Fair Value** | **Gross<br>Unrealized<br>Losses** | **Fair Value** |<br>**Total<br>Unrealized<br>Losses** |
|  **December 31, 2020:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Corporate Securities** | $**(3200)** | $**1996800** | $**—** | $**—** | $**(3200)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **GSE residential** | **(43852)** | **1049288** | **—** | **—** | **(43852)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **State, county, municipal** | **(272)** | **1146577** | **—** | **—** | **(272)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**(47324)** | $**4192665** | $**—** | $**—** | $**(47324)** |
|  December 31, 2019: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSEs | $(31242) | $46652494 | $(9336) | $2990664 | $(40578) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSE residential | (4799) | 3211230 | (102554) | 12279803 | (107353) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, county, municipal | (604) | 529310 | (1824) | 1020660 | (2428) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $(36645) | $50393034 | $(113714) | $16291127 | $(150359) |

---

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

The unrealized losses on these debt securities in a continuous loss position for twelve months or more as of December 31, 2020 and 2019 are considered to be temporary because they arose due to changing interest rates and the repayment sources of principal and interest are government backed or are securities of investment grade issuers. Included in the table above as of December 31, 2020 were three of seven securities issued by corporate entities, one of fifty-seven mortgage-backed securities, and one of forty-five securities issued by state and political subdivisions that contained unrealized losses. Included in the table above as of December 31, 2019 were twenty-eight of twenty-eight securities issued by government sponsored enterprises, twenty-nine of sixty-three mortgage-backed securities, and three of thirty-four securities issued by state and political subdivisions that contained unrealized losses. The total aggregate depreciation from their cost basis at December 31, 2020 and 2019 was 1.12% and 0.22% respectively.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **3. LOANS**  |

---

The composition of loans, excluding loans held for sale, is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2020** | 2019 |
|  Real estate-mortgage |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $**46464181** | $40508313 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | **13408617** | 13623287 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **168155312** | 156086856 |
|  Real estate-construction | **925513** | 3876909 |
|  Commercial, financial and agricultural | **36959255** | 33184670 |
|  Consumer | **4376649** | 4610612 |
|  Total (Non SBA PPP Loans) | **270289527** | 251890647 |
|  SBA Paycheck Protection Program Loans | **55237208** |  |
|  Deferred fees and costs, net | **(1901874)** | (298364) |
|  Less allowance for loan losses | **(4057091)** | (2821053) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loans | $**319567770** | $248771230 |

---

As discussed in Note 1, the Company originated a substantial amount of SBA PPP loans in 2020. SBA PPP loans outstanding at December 31, 2020 totaled $55,237,208. These loans are 100% guaranteed by the SBA and are all considered pass rated loans. Therefore, SBA PPP loans are not presented in the following tables throughout the remainder of Note 3.

The Company grants loans and extensions of credit primarily to individuals and a variety of firms and corporations located in certain Georgia counties, primarily Oconee, Clarke, and Gwinnett counties. Although the Company has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market in the Company's primary market area. Included in loans above are $35,875,384 and $32,996,523 of interest only loans at December 31, 2020 and 2019, respectively. For the majority of these loans, interest is due monthly with principal due at maturity.

The loan portfolio was disaggregated into segments and then further disaggregated into classes for certain disclosures. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. There are four loan portfolio segments that include real estate–mortgage, real estate–construction, commercial, financial and agricultural loans, and consumer loans. A class is generally determined based on the initial measurement attribute, risk characteristic of the loan, and an entity's method for monitoring and assessing credit risk. Classes within the real estate-mortgage portfolio segment include 1-4 family residential, hotel, and other. The real estate-construction segment, commercial, financial, and agricultural segment and consumer segment have not been further disaggregated into classes.

The following describe risk characteristics relevant to each of the portfolio segments and classes:

Real Estate-Mortgage—As discussed below, the Company offers various types of real estate mortgage loan products. The majority of loans within this portfolio segment are particularly sensitive to the valuation of real estate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 1-4 family residential loans are repaid by various means such as the
borrower's income, sale of the property, or rental income derived from the property. Residential real estate loans are made based on the appraised value of the underlying collateral, in addition to the borrower's ability to service the
debt. Adverse economic conditions may impact the borrower's financial status and thus affect their ability to repay the debt. In addition, the value of the collateral may be adversely affected by declining real estate values.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **3. LOANS (Continued)**  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Hotel loans include loans repaid by the cash flow generated from rent income derived from the properties. The
cash flows of hotels are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn will have an effect on credit quality.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Other real estate mortgage loans include loans secured by rental residences, income-producing investment
properties and owner-occupied real estate used for business purposes. The underlying properties are generally located in the Company's primary market area. The cash flows of the income-producing investment properties are adversely impacted by a
downturn in the economy, which in turn will have an effect on credit quality. In the case of owner-occupied real estate used for business purposes, a weakened economy and resultant decreased consumer and/or business spending will have an adverse
effect on credit quality.

Real Estate-Construction—Loans in this segment primarily include land loans to local contractors and developers for developing the land for sale or for the purpose of making improvements thereon. Repayment is derived from sale of the lots/units including any pre-sold units. Credit risk is affected by market conditions, time to sell at an adequate price, cost overruns and construction delays.

Commercial, Financial and Agricultural—Loans in this segment are made to businesses. Generally, these loans are secured by assets of the business and repayment is expected from the cash flows of the business. A weakened economy and resultant decreased consumer and/or business spending will have an effect on the credit quality in this loan segment.

Consumer Loans—Loans in this segment may be either secured or unsecured and repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan (such as automobile, mobile home, etc.). Therefore, the overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality of this loan segment.

The following tables present the activity in the allowance for loan losses by portfolio segment as of December 31, 2020 and 2019:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Real estate-<br>mortgage** | **Real estate-<br>construction** | **Commercial,<br>financial and<br>agricultural** | **Consumer** | **Unallocated** | **Total** |
|  **December 31, 2020:** |  |  |  |  |  |  |
|  **Allowance for loan losses:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Beginning balance** | $**2286452** | $**15822** | $**164826** | $**39573** | $**314380** | $**2821053** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Provision (reallocation)** | **47283** | **(10433)** | **(15541)** | **373520** | **855171** | **1250000** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Charge-offs** | **—** | **—** | **—** | **(374771)** | **—** | **(374771)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Recoveries** | **314625** | **—** | **36676** | **9508** | **—** | **360809** |
|  **Ending balance** | $**2648360** | $**5389** | $**185961** | $**47830** | $**1169551** | $**4057091** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – individually evaluated for impairment** | $**878256** | $**—** | $**—** | $**1764** | $**—** | $**880020** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – collectively evaluated for impairment** | $**1770104** | $**5389** | $**185961** | $**46066** | $**<br>1169551** | $**3177071** |
|  **Loans:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance** | $**228028110** | $**925513** | $**36959255** | $**4376649** |  | $**270289527** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – individually evaluated for impairment** | $**6040553** | $**—** | $**—** | $**12137** |  | $**6052690** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – collectively evaluated for impairment** | $**221987557** | $**925513** | $**36959255** | $**4364512** |  | $**264236837** |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3. LOANS (Continued)** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Real estate-<br>mortgage** | **Real estate-<br>construction** | **Commercial,<br>financial and<br>agricultural** | **Consumer** | **Unallocated** | **Total** |
|  December 31, 2019: |  |  |  |  |  |  |
|  Allowance for loan losses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beginning balance | $1173458 | $13109 | $282738 | $30234 | $749710 | $2249249 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision (reallocation) | 1112994 | 2713 | (126333) | 15956 | (435330) | 570000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charge-offs |  |  | (10009) | (9894) |  | (19903) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Recoveries |  |  | 18430 | 3277 |  | 21707 |
|  Ending balance | $2286452 | $15822 | $164826 | $39573 | $314380 | $2821053 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – individually evaluated for impairment | $909436 | $— | $12272 | $1425 | $— | $923133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – collectively evaluated for impairment | $1377016 | $15822 | $152554 | $38148 | $314380 | $1897920 |
|  Loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance | $210218456 | $3876909 | $33184670 | $4610612 |  | $251890647 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – individually evaluated for impairment | $6155629 | $136346 | $109705 | $12737 |  | $6414417 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – collectively evaluated for impairment | $204062827 | $3740563 | $33074965 | $4597875 |  | $245476230 |

---

The following tables present loans individually evaluated for impairment by portfolio segment and class as of December 31, 2020 and 2019:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Unpaid<br>Principal<br>Balance** | **Recorded<br>Investment** | **Related<br>Allowance** | **Average<br>Recorded<br>Investment** | **Interest<br>Income<br>Recognized** |
|  **December 31, 2020:** |  |  |  |  |  |
|  **With an allowance recorded:** |  |  |  |  |  |
|  **Real estate-mortgage:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **1-4 family residential** | $**213939** | $**213939** | $**31105** | $**225477** | $**—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Hotel** | **5734810** | **5734810** | **833803** | **5769810** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Other** | **91804** | **91804** | **13348** | **95304** | **—** |
|  **Consumer** | **12137** | **12137** | **1764** | **12437** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total with an allowance recorded** | **6052690** | **6052690** | **880020** | **6103028** | **—** |
|  **Total impaired loans** | $**6052690** | $**6052690** | $**880020** | $**6103028** | $**—** |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **3. LOANS (Continued)**  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Unpaid<br>Principal<br>Balance** | **Recorded<br>Investment** | **Related<br>Allowance** |  | **Average<br>Recorded<br>Investment** | **Interest<br>Income<br>Recognized** |
|  December 31, 2019: |  |  |  |  |  |  |
|  With no related allowance recorded: |  |  |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | $311820 | $311820 |  | $— | $331380 | $— |
|  Real estate-construction | 923971 | 136346 |  |  | 144866 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total with no related allowance recorded | 1235791 | 448166 |  |  | 476246 |  |
|  With an allowance recorded: |  |  |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | 38999 | 38999 | 4363 | 4363 | 44896 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | 5804810 | 5804810 | 905073 | 905073 | 5804810 |  |
|  Commercial, financial and agricultural | 109705 | 109705 | 12272 | 12272 | 114705 |  |
|  Consumer | 12737 | 12737 | 1425 | 1425 | 12737 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total with an allowance recorded | 5966251 | 5966251 | 923133 | 923133 | 5977148 |  |
|  Total impaired loans | $7202042 | $6414417 | $923133 | $923133 | $6453394 | $— |

---

The following tables present the aging of the recorded investment in past due loans as of December 31, 2020 and 2019 by portfolio segment and class:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **30-89 Days<br>Past Due** | **Accruing<br>Greater<br>than 90<br>Days Past<br>Due** | **Accruing<br>Total Past<br>Due** | **Nonaccrual** | **Loans Not**<br>**Past Due** | **Total** |
|  **December 31, 2020:** |  |  |  |  |  |  |
|  **Real estate-mortgage:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **1-4 family residential** | $**131724** | $**—** | $**131724** | $**213939** | $**46118518** | $**46464181** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Hotel** | **—** | **—** | **—** | **5734810** | **7673807** | **13408617** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Other** | **—** | **—** | **—** | **91804** | **168063508** | **168155312** |
|  **Real estate-construction** | **—** | **—** | **—** | **—** | **925513** | **925513** |
|  **Commercial, financial and agricultural** | **200332** | **—** | **200332** | **—** | **36758923** | **36959255** |
|  **Consumer** | **16309** | **—** | **16309** | **12137** | **4348203** | **4376649** |
|  **Total** | $**348365** | $**—** | $**348365** | $**6052690** | $**263888472** | $**270289527** |
|  December 31, 2019: |  |  |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $29646 | $50673 | $80319 | $38999 | $40388995 | $40508313 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel |  |  |  | 5804810 | 7818477 | 13623287 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 870695 |  | 870695 | 311820 | 154904341 | 156086856 |
|  Real estate-construction |  |  |  | 136346 | 3740563 | 3876909 |
|  Commercial, financial and agricultural | 178496 |  | 178496 | 109705 | 32896469 | 33184670 |
|  Consumer | 13194 |  | 13194 | 12737 | 4584681 | 4610612 |
|  Total | $1092031 | $50673 | $1142704 | $6414417 | $244333526 | $251890647 |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **3. LOANS (Continued)**  |

---

**Troubled Debt Restructurings**

The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

In assessing whether or not a borrower is experiencing financial difficulties, the Company considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (i) the debtor is currently in payment default on any of its debt; (ii) a payment default is probable in the foreseeable future without the modification; (iii) the debtor has declared or is in the process of declaring bankruptcy; and (iv) the debtor's projected cash flow is sufficient to satisfy contractual payments due under the original terms of the loan without a modification.

The Company considers all aspects of the modification to loan terms to determine whether or not a concession has been granted to the borrower. Key factors considered by the Company include the debtor's ability to access funds at a market rate for debt with similar risk characteristics, the significance of the modification relative to unpaid principal balance or collateral value of the debt, and the significance of a delay in the timing of payments relative to the original contractual terms of the loan. The most common concessions granted by the Company generally include one or more modifications to the terms of the debt, such as (i) a reduction in the interest rate for the remaining life of the debt, (ii) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (iii) a temporary period of interest-only payments, and (iv) a reduction in the contractual payment amount for either a short period or remaining term of the loan. As of December 31, 2020 and 2019, the Company did not have any loans that were considered restructured.

There were no loans modified as a TDR during the years ended December 31, 2020 and 2019.

The Company is also working with borrowers impacted by COVID-19 and providing loan modifications, generally in the form of short-term principal deferrals. These modifications are excluded from troubled debt restructuring classification under Section 4013 of the CARES Act or under applicable interagency guidance of the federal banking regulators. As of December 31, 2020, the Company had seven loans operating under modified terms totaling $7,897,918.

**Credit Quality Indicators** 

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. All loans are analyzed at origination and assigned a risk category. In addition, on an annual basis, management performs an analysis on loans with an outstanding balance greater than specified limits and non-homogeneous loans, such as commercial and commercial real estate loans. The Company uses the following definitions for risk ratings:

**Special Mention**. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

**Substandard**. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

**Doubtful**. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed as part of the above described process are considered to be pass-rated loans.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **3. LOANS (Continued) Credit Quality Indicators (Continued)**  |

---

As of December 31, 2020 and 2019, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pass** | **Special<br>Mention** | **Substandard** | **Doubtful** | **Total** |
|  **December 31, 2020:** |  |  |  |  |  |
|  **Real estate-mortgage:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **1-4 family residential** | $**46167239** | $**—** | $**296942** | $**—** | $**46464181** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Hotel** | **6110441** | **—** | **7298176** | **—** | **13408617** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Other** | **168063507** | **—** | **91805** | **—** | **168155312** |
|  **Real estate-construction** | **925513** | **—** | **—** | **—** | **925513** |
|  **Commercial, financial, and agricultural** | **36538123** | **—** | **421132** | **—** | **36959255** |
|  **Consumer** | **4356368** | **—** | **20281** | **—** | **4376649** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**262161191** | $**—** | $**8128336** | $**—** | $**270289527** |
|  December 31, 2019: |  |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $40392389 | $— | $115924 | $— | $40508313 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | 6214041 |  | 7409246 |  | 13623287 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 155775036 |  | 311820 |  | 156086856 |
|  Real estate-construction | 3740563 |  | 136346 |  | 3876909 |
|  Commercial, financial, and agricultural | 32797862 |  | 386808 |  | 33184670 |
|  Consumer | 4588539 |  | 22073 |  | 4610612 |
|  Total | $243508430 | $— | $8382217 | $— | $251890647 |

---

---

| | |
|:---|:---|
| **NOTE** | **4. PREMISES AND EQUIPMENT**  |

---

Premises and equipment are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2020** | **2019** |
|  Land | $**963758** | $963758 |
|  Buildings and improvements | **3527043** | 3557345 |
|  Furniture and equipment | **7513117** | 7698862 |
|  Construction in process | **1408448** |  |
|  Right of use asset | **863836** | 863836 |
|  | **14276202** | 13083801 |
|  Less accumulated depreciation | **(8676739)** | (8720582) |
|  Less accumulated amortization | **(496427)** | (68352) |
|  | $**5103036** | $4294867 |

---

Depreciation expense was $361,624 and $439,018 for the years ended December 31, 2020 and 2019, respectively.

During 2020 the Bank began construction on a new operations facility. Estimated cost to complete the project as of December 31, 2020 was approximately $3,142,000.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4. PREMISES AND EQUIPMENT (Continued)** 

**Leases**

The Company leases a location under a lease obligation which provided that the Company pay a monthly rental of $5,208 until May 31, 2019, at which time the monthly rental increased to $5,366 and will continue to increase 3% at each anniversary date. The lease expires July 31, 2021. The Company also leases another location under a lease obligation which provided that the Company pay a monthly rental of $4,448 until May 31, 2019, at which time the monthly rental increased to $4,559 and will continue to increase 2.5% at each anniversary date. The lease also calls for monthly reimbursement expenses estimated at $1,483 per month, to be trued up at the end of each year. The lease expires July 31, 2021. The lease agreements contain renewal options for additional years, but the renewal options are not considered in the right-of-use asset due to the uncertainty of renewal. In November 2019, the Company sold its operations center to an unrelated party and leased back the facility under a short-term operating lease with a monthly rental of $25,000 for twenty-four months while a new operations center is constructed. As a result of this sale the Company derecognized the asset, recorded a gain on sale, and recorded the right-of use asset and corresponding lease liability.

The Company has evaluated the leases above and determined them to be operating leases. The right-of- use asset and lease liability were measured and recorded with an assumed discount rate of approximately 2%, the Company's incremental borrowing rate at the date of adoption. The right of use asset, included within premises and equipment on the balance sheet, was $367,409 and $795,484 net of amortization as of December 31, 2020 and 2019, respectively. The Company's lease liability, included within accrued interest payable and other liabilities on the balance sheet, was $367,409 and $795,484 as of December 31, 2020 and 2019, respectively.

Future minimum lease commitments on noncancelable operating leases, excluding any renewal options, are summarized as follows:

---

| | |
|:---|:---|
| 2021 | $337385.0 |

---

Total rental expense for the years ended December 31, 2020 and 2019 was $424,310 and $186,767, respectively.

**NOTE 5. DEPOSITS** 

The aggregate amounts of certificates of deposit, each with a minimum denomination of $250,000, were approximately $15,462,000 and $15,996,000 at December 31, 2020 and 2019, respectively. The Company had brokered deposits of approximately $0 and $5,027,000 at December 31, 2020 and 2019, respectively.

At December 31, 2020, the scheduled maturities of certificates of deposit are as follows:

---

| | |
|:---|:---|
| 2021 | $25985699.0 |
| 2022 | 12793726.0 |
| 2023 | 4100485.0 |
| 2024 | 2461088.0 |
| 2025 | 6864843.0 |
|  | $52205841.0 |

---

At December 31, 2020 and 2019, the Company had concentrations of deposits with one customer and two customers of $39,718,972 and $69,485,157, respectively. Overdraft demand deposits reclassified to loans totaled $9,691 and $27,613 at December 31, 2020 and 2019, respectively.

The Company had ICS deposits through Promontory/IntraFI Network of $77,706,000 and $25,395,000 at December 31, 2020 and 2019, respectively. The Company's ICS reciprocal deposits consist of SCM deposits which are fully insured through this program.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 6. INCOME TAXES** 

The components of income tax in the statements of income are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2020** | 2019 |
|  Current income tax expense | $**751799** | $1108163 |
|  Deferred income tax benefit | **(384727)** | (90657) |
|  Total income tax | $**367072** | $1017506 |

---

The differences between income tax and the amount computed by applying the statutory federal income tax rate to income before income tax are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2020** | 2019 |
|  Income tax at statutory rates | $**473731** | $1003143 |
|  Add (deduct): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax-exempt interest income | (71652) | (82498) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State taxes, net of federal effect | (1366) | 113566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (33641) | (16705) |
|  | $**367072** | $1017506 |

---

The following summarizes the sources and expected tax consequences of future taxable deductions (income) which comprise the net deferred tax liability. The net deferred tax liability is a component of accrued interest payable and other liabilities at December 31, 2020 and 2019.

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2020** | 2019 |
|  Deferred income tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit carryforwards | $**1** | $33492 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | **454956** | 138706 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **122293** | 59287 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total gross deferred income tax assets | **577250** | 231485 |
|  Deferred income tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized gains on investment securities available for sale | **(478592)** | (91371) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment | **(152008)** | (199151) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total gross deferred income tax liabilities | **(630600)** | (290522) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net deferred income tax liability | $**(53350)** | $(59037) |

---

The federal income tax returns of the Company for 2019, 2018, and 2017 are subject to examination by the IRS, generally for three years after being filed.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 7. RELATED PARTY TRANSACTIONS** 

The Company conducts transactions with directors and executive officers, including companies in which they have beneficial interests, in the normal course of business. It is the policy of the Company that loan transactions with directors and officers are made on substantially the same terms as those prevailing at the time made for comparable loans to other persons. The following is a summary of activity for related party loans:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2020** | 2019 |
|  Beginning balance | $**3865206** | $2952667 |
|  Advances | **1287681** | 1443458 |
|  Repayments | **(1382433)** | (530919) |
|  Changes in related parties | **(2484)** |  |
|  Ending balance | $**3767970** | $3865206 |

---

**NOTE 8. COMMITMENTS AND CONTINGENCIES** 

**Loan Commitments**

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. In most cases, the Company does require collateral or other security to support financial instruments with credit risk.

---

| | | |
|:---|:---|:---|
|  | **Contractual Amount** | **Contractual Amount** |
|  | **2020** | 2019 |
|  | (in thousands) | (in thousands) |
|  Financial instruments whose contract amounts represent credit risk: |  |  |
|  Commitments to extend credit | $**41855** | $42176 |
|  Standby letters of credit | **1165** | 3817 |
|  | $**43020** | $45993 |

---

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation. Collateral held varies, but may include unimproved and improved real estate, certificates of deposit, or personal property.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 8. COMMITMENTS AND CONTINGENCIES (Continued)** 

**Loan Commitments (Continued)**

Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to businesses in the Company's delineated trade area. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds real estate, equipment, automobiles, and customer deposits as collateral supporting those commitments for which collateral is deemed necessary.

**Subordinated Notes Payable** 

On August 7, 2020, the Company issued subordinated notes payable for $10,000,000. The notes mature on August 7, 2030, with interest payments due on March 28, June 28, September 28, and December 28 of each year at a fixed rate of 6.00% until August 7, 2025. Subsequent to August 7, 2025, and until maturity, interest payments are due on the same payment schedule but at a variable rate of three-month SOFR plus five hundred ninety-six basis points resetting each quarter. The notes can be redeemed by the Company, in whole or in part, on or after the fifth anniversary of the note agreements. Debt issuance costs of $239,163 were incurred and capitalized by the Company and are being amortized into interest expense over the life of the notes on a straight line basis. The net carrying value of the subordinated notes payable was $9,770,497 at December 31, 2020.

**Available Lines of Credit** 

The Company is approved to borrow from the Federal Reserve Bank discount window program. As of December 31, 2020, the Company has not pledged any loans or securities but would be required to if they wished to borrow using this program. There were no borrowings outstanding under this program at December 31, 2020 and 2019.

The Company is approved to borrow from the Federal Home Loan Bank of Atlanta. As of December 31, 2020, the Company had pledged loans totaling approximately $47,398,000 and had an available credit line of approximately $117,339,000. There were no borrowings outstanding under this line at December 31, 2020 and 2019.

The Company had $12,000,000 available for the purchase of overnight federal funds from two correspondent financial institutions as of December 31, 2020 and 2019. There were no amounts outstanding under these lines as of December 31, 2020 and 2019.

**Contingencies** 

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material effect on the Company's financial statements.

**NOTE 9. PROFIT SHARING PLAN AND STOCK-BASED COMPENSATION** 

**Profit Sharing Plan**

The Company has a contributory profit sharing plan which is available to substantially all employees subject to certain age and service requirements. Contributions to the plan are determined annually by the Board of Directors. For the years ended December 31, 2020 and 2019, there was $255,401 and $233,005 charged to expense, respectively.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 9. PROFIT SHARING PLAN AND STOCK-BASED COMPENSATION (Continued)** 

**Deferred Compensation Plan**

The Company has various deferred compensation plans providing for death and retirement benefits for certain key officers. The estimated amounts to be paid under the compensation plans have been funded through the purchase of life insurance policies on certain officers. In 2020 and 2019, these policies earned $227,499 and $181,103, respectively. In 2020 and 2019, the Company expensed $179,831 and $62,246, respectively, for deferred compensation related to these plans.

Accrued deferred compensation of $319,941 and $145,101 is included in accrued interest payable and other liabilities as of December 31, 2020 and 2019, respectively. Cash surrender values of $8,829,426 and $5,851,927 on the insurance policies as of December 31, 2020 and 2019, respectively, are included in accrued interest receivable and other assets.

**Restricted Stock** 

During 2020 and 2019, respectively, the Company granted 750 and 750 shares of restricted stock which vest over four years from the grant dates. The fair market value of the stock on the grant dates was $34.43 and $32.29 per share, respectively. The Company recognized $24,593 and $18,157 of stock-based compensation expense related to these grants during 2020 and 2019, respectively. As of December 31, 2020 and 2019, respectively, there was $37,976 and $36,745 of total unrecognized compensation cost related to these restricted stock grants which is expected to be recognized over the remaining vesting period.

**NOTE 10. REGULATORY MATTERS** 

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total capital, Tier 1 capital, and common equity Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. In addition, the Bank is subject to an institution-specific capital buffer which must exceed 2.50% to avoid limitations on distributions and discretionary bonus payments. The Bank's capital conservation buffer at December 31, 2020 was 6.7718%. Management believes, as of December 31, 2020 and 2019, that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2020, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's category.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 10. REGULATORY MATTERS (Continued)** 

The Bank's actual capital amounts and ratios are presented in the following table:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Actual** | **Actual** | **Minimum<br>Capital<br>Requirement** | **Minimum<br>Capital<br>Requirement** | **Minimum**<br>**To Be Well<br>Capitalized Under<br>Prompt Corrective<br>Action Provisions** | **Minimum**<br>**To Be Well<br>Capitalized Under<br>Prompt Corrective<br>Action Provisions** |
|  | **Amount** | **Ratio** | **Amount** | **Ratio** | **Amount** | **Ratio** |
|  | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** |
|  **As of December 31, 2020:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Capital to Risk Weighted Assets** | $**46547** | **14.77%** | $**25209** | **8.00%** | $**31511** | **10.00%** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Tier 1 Capital to Risk Weighted Assets** | $**42608** | **13.52%** | $**18906** | **6.00%** | $**25209** | **8.00%** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Common Equity Tier 1 Capital to** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Risk Weighted Assets** | $**42608** | **13.52%** | $**14180** | **4.50%** | $**20482** | **6.50%** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Tier 1 Capital to Average Assets** | $**42608** | **8.55%** | $**19933** | **4.00%** | $**24917** | **5.00%** |
|  As of December 31, 2019: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Capital to Risk Weighted Assets | $38092 | 13.06% | $23335 | 8.00% | $29168 | 10.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 Capital to Risk Weighted Assets | $35271 | 12.09% | $17501 | 6.00% | $23335 | 8.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Equity Tier 1 Capital to |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Risk Weighted Assets | $35271 | 12.09% | $13126 | 4.50% | $18959 | 6.50% |
|  Tier 1 Capital to Average Assets | $35271 | 9.35% | $15087 | 4.00% | $18859 | 5.00% |

---

**NOTE 11. STOCKHOLDERS' EQUITY** 

Dividends paid by the Bank are the primary source of funds available to the Company for payment of dividends to its stockholders and for other working capital needs. Banking regulations limit the amount of dividends that may be paid without prior approval of the regulatory authorities. These restrictions are based on the level of regulatory classified assets, the prior year's net earnings, the ratio of equity capital to total assets, and other specific regulatory restrictions. At December 31, 2020, approximately $1,073,000 of retained earnings was available for dividend declaration without regulatory approval.

**NOTE 12. FAIR VALUE DISCLOSURES** 

**Fair Value Measurements**

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 12. FAIR VALUE DISCLOSURES (Continued)** 

**Fair Value Measurements (Continued)**

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans and foreclosed property.

**Fair Value Hierarchy** 

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: Level 1—Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2—Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3—Generated from model-based techniques that use at least one significant assumption based on unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls, is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following methods and assumptions were used by the Company in estimating fair value for assets and liabilities measured at fair value on either a recurring or nonrecurring basis:

<u>Securities Available for Sale</u>: Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets, and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds, and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

<u>Impaired Loans</u>: Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures its impairment. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At December 31, 2020 and 2019, substantially all of the impaired loans were evaluated based on the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price, the Company records the impaired loan as nonrecurring Level 2. When an appraised value is used, or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 12. FAIR VALUE DISCLOSURES (Continued)** 

**Fair Value Hierarchy (Continued)**

The tables below present the Company's assets measured at fair value on a recurring basis as of December 31, 2020 and 2019, aggregated by the level in the fair value hierarchy within which those measurements fall.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Balance at<br>December 31, 2020** | **Level 1** | **Level 2** | **Level 3** |
|  | **(In thousands)** | | | |
|  **Securities available for sale** | $**75549** | $**—** | $**75549** | $**—** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Balance at<br>December 31, 2019 | Level 1 | Level 2 | Level 3 |
|  | (In thousands) | | | |
|  Securities available for sale | $99229 | $— | $99229 | $— |

---

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis. These include assets that are measured at the lower of cost or fair value. The tables below present the Company's assets measured at fair value on a nonrecurring basis as of December 31, 2020 and 2019, aggregated by the level in the fair value hierarchy within which those measurements fall.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Balance at<br>December 31, 2020** | **Level 1** | **Level 2** | **Level 3** | **Total Gains<br>(Losses)** |
|  | **(In thousands)** | | | | |
|  **Impaired loans** | $**5173** | $**—** | $**—** | $**5173** | $**31** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Balance at<br>December 31, 2019 | Level 1 | Level 2 | Level 3 | Total Losses |
|  | (In thousands) | | | | |
|  Impaired loans | $4900 | $— | $— | $4900 | $(905) |

---

**Fair Value of Financial Instruments** 

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: **Cash and Cash Equivalents**: The carrying amounts of cash and short-term instruments approximate fair values based on the short-term nature of the assets.

**Investment Securities Available for Sale**: Securities available for sale are carried at fair value using the methods and assumptions described above.

**Federal Home Loan Bank Stock:** The carrying amount of Federal Home Loan Bank stock with no readily determinable fair value approximates fair value.

**Loans and Loans Held for Sale:** For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair value for fixed rate loans are estimated using discounted cash flow analyses, using market interest rates for comparable loans. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. Loans held for sale are carried at the lower of cost or market value and the carrying amount approximates the market value.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE** | **12. FAIR VALUE DISCLOSURES (Continued)**  |

---

**Fair Value of Financial Instruments (Continued)**

**Deposits**: The fair values disclosed for demand deposits (for example, interest and noninterest checking, savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits.

**Subordinated notes:** The carrying amount of subordinated notes approximates fair value based on interest rates for comparable instruments with similar maturities.

**Accrued Interest**: The carrying amounts of accrued interest approximate fair value.

**Off-Balance Sheet Credit-Related Instruments**: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing.

The carrying amount and estimated fair value of the Company's financial instruments at December 31, 2020 and 2019 were as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Carrying<br>Amount** | **Fair Value** |
|  **December 31, 2020** |  |  |
|  Financial assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $**76418** | $**76418** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities available for sale | **75549** | **75549** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank stock | **360** | **360** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans held for sale | **6409** | **6409** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans | **319568** | **315289** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable | **1401** | **1401** |
|  Financial liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | **444702** | **444956** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes | **9770** | **9770** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable | **95** | **95** |
|  | **Carrying<br>Amount** | **Fair Value** |
|  **December 31, 2019** |  |  |
|  Financial assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $38099 | $38099 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities available for sale | 99229 | 99229 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank stock | 315 | 315 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans held for sale | 1573 | 1573 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans | 248771 | 247388 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable | 877 | 877 |
|  Financial liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 361523 | 361725 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable | 109 | 109 |

---

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 13. REVENUE FROM CONTRACTS WITH CUSTOMERS** 

Substantially all of the Company's revenue from contracts with customers in the scope of ASC 606 is recognized within service charges, gain on sale and disposal of fixed assets and miscellaneous on the statements of income. The following table presents the Company's sources of revenue from contracts with customers for the years ended December 31, 2020 and 2019.

---

| | | |
|:---|:---|:---|
|  | **2020** | 2019 |
|  Service charges | $**453798** | $584527 |
|  Gain (loss) on sale and disposal of fixed assets | **(17655)** | 1781545 |
|  Miscellaneous | **1917817** | 1822381 |
|  | $**2353960** | $4188453 |

---

Service charges: Revenue from service charges relates primarily to deposit accounts and is earned through cash management, overdraft, non-sufficient funds, and other deposit-related services. Revenue is recognized for these services either over time, corresponding with deposit accounts' monthly cycle, or at a point in time for transaction-related services and fees. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers' accounts.

Gain on sales and disposal of fixed assets: The Company records a gain or loss from the sale of assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of assets to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer.

Miscellaneous: Miscellaneous primarily includes revenues generated from commissions on investment sales, ATM fees, and interchange fees from consumer credit and debit cards. Commissions on investment sales and ATM fees are recognized concurrently with the delivery of service on a daily basis as transactions occur. Interchange rates are generally set by the credit card associations and based on purchase volumes and other factors. Interchange fees and merchant discounts are recognized concurrently with the delivery of service on a daily basis as transactions occur. Payment is typically received immediately or in the following month.

**NOTE 14. OCONEE FINANCIAL CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION** 

**CONDENSED BALANCE SHEETS** 

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2020** | 2019 |
|  **Assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | $**3584937** | $75787 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in subsidiary | **44133006** | 35541000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | **187659** | 50309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $**47905602** | $35667096 |
|  **Liabilities and Stockholders' Equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes | $**9770497** | $**—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stockholders' equity | **38135105** | 35667096 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and stockholders' equity | $**47905602** | $35667096 |

---

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 14. OCONEE FINANCIAL CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION (Continued)** 

**CONDENSED STATEMENTS OF INCOME** 

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2020** | 2019 |
|  Other income | $**12000** | $9420 |
|  Dividend income | **688968** | 840008 |
|  | **700968** | 849428 |
|  Other expenses | **336847** | 101177 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income tax benefits and equity in undistributed income of subsidiary | **364121** | 748251 |
|  Income tax benefits | **(68218)** | (19269) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before equity in undistributed income of subsidiary | **432339** | 767520 |
|  Equity in undistributed income of subsidiary | **1456453** | 2991846 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**1888792** | $3759366 |

---

**CONDENSED STATEMENTS OF CASH FLOWS** 

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2020** | 2019 |
|  **OPERATING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**1888792** | $3759366 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity in undistributed income of subsidiary | **(1456453)** | (2991846) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | **(137352)** | (267) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | **294987** | 767253 |
|  **INVESTING ACTIVITIES** |  |  |
|  Investment in subsidiary bank | **(6000000)** |  |
|  Net cash used in investing activities | **(6000000)** |  |
|  **FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid | **(538968)** | (540009) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | **(17366)** | (182650) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of subordinated notes, net of cost | **9770497** |  |
|  Net cash provided by (used in) financing activities | **9214163** | (722659) |
|  Net increase in cash | **3509150** | 44594 |
|  Cash at beginning of year | **75787** | 31193 |
|  Cash at end of year | $**3584937** | $75787 |

---

------

##### [**Table of Contents**](#toc)
![LOGO](g406793g0208121356635.jpg)

**INDEPENDENT AUDITOR'S REPORT** 

**To the Board of Directors and Stockholders of** 

**Oconee Financial Corporation** 

**Watkinsville, Georgia** 

**Opinion** 

We have audited the accompanying consolidated financial statements of **Oconee Financial Corporation and Subsidiary**, which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Oconee Financial Corporation and Subsidiary as of December 31, 2021 and 2020, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

**Basis for Opinion** 

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Oconee Financial Corporation and Subsidiary and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

**Responsibilities of Management for the Financial Statements** 

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

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Oconee Financial Corporation and Subsidiary's ability to continue as a going concern within one year after the date that the consolidated financial statements are available to be issued.

**Auditor's Responsibilities for the Audit of the Financial Statements** 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

200 GALLERIA PARKWAY S.E., SUITE 1700 • ATLANTA, GA 30339-5946 • 770-955-8600 • 800-277-0080 • FAX 770-980-4489 • www.mjcpa.com

*Members of The American Institute of Certified Public Accountants* 

------

##### [**Table of Contents**](#toc)
In performing an audit in accordance with generally accepted auditing standards, we:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Exercise professional judgment and maintain professional skepticism throughout the audit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Obtain an understanding of internal control relevant to the audit 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 Oconee Financial Corporation and Subsidiary's internal control. Accordingly, no such opinion is expressed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise
substantial doubt about Oconee Financial Corporation and Subsidiary's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

![LOGO](g406793g0208121356986.jpg)

Atlanta, Georgia

March 31, 2022

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED BALANCE SHEETS** 

**DECEMBER 31, 2021 AND 2020** 

---

| | | |
|:---|:---|:---|
| **<u>Assets</u>** | **2021** | 2020 |
|  Cash and cash equivalents | $**85774514** | $76418430 |
|  Investment securities available for sale | **162165152** | 75548813 |
|  Federal Home Loan Bank stock | **247400** | 359700 |
|  Loans held for sale | **1212617** | 6408720 |
|  Loans, net | **297981395** | 319567770 |
|  Premises and equipment, net | **8602518** | 5103036 |
|  Accrued interest receivable and other assets | **15158402** | 11129233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $**571141998** | $494535702 |
| **<u>Liabilities and Stockholders' Equity</u>** |  |  |
|  Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand | $**107488534** | $94875020 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing demand | **271897678** | 228117684 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings | **86196269** | 69503387 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time | **54111488** | 52205841 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | **519693969** | 444701932 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | **2320963** | 1928168 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes | **9794445** | 9770497 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | **531809377** | 456400597 |
|  Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, par value $2, authorized 1,500,000 shares, 897,538 and 897,125 shares issued, respectively | **1795076** | 1794250 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted stock, 1,126 and 1,126 shares, respectively | **(38311)** | (37976) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | **4159822** | 4147114 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | **33268328** | 30850978 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income | **147706** | 1380739 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity | **39332621** | 38135105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and stockholders' equity | $**571141998** | $494535702 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF INCOME** 

**YEARS ENDED DECEMBER 31, 2021 AND 2020** 

---

| | | |
|:---|:---|:---|
|  | **2021** | 2020 |
|  Interest income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and fees on loans | $**15262317** | $14570416 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and dividends on securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. Treasury securities | **283584** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. government agencies | **31842** | 152663 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities | **560109** | 651728 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, county, and municipal | **685752** | 407768 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate | **346038** | 58594 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **102278** | 203373 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest income | **17271920** | 16044542 |
|  Interest expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing demand deposits | **333261** | 784332 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings deposits | **66985** | 114737 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time deposits | **601494** | 698716 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other borrowed funds | **644749** | 330277 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | **1646489** | 1928062 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income | **15625431** | 14116480 |
|  Provision for loan losses | **456000** | 1250000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income after provision for loan losses | **15169431** | 12866480 |
|  Other income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Service charges | **458943** | 453798 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gain on sale of securities | **172312** | 182860 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage origination income | **2067991** | 1919163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | **178608** | 481006 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous | **1770793** | 1917817 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income | **4648647** | 4954644 |
|  Other expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | **9300150** | 10085635 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Occupancy | **1425137** | 1204014 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on sale and disposal of fixed assets | **268123** | 17655 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other operating | **5093205** | 4257956 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | **16086615** | 15565260 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before income tax | **3731463** | 2255864 |
|  Income tax | **731934** | 367072 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**2999529** | $1888792 |
|  Net income per share | $**3.35** | $2.11 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME** 

**YEARS ENDED DECEMBER 31, 2021 AND 2020** 

---

| | | |
|:---|:---|:---|
|  | **2021** | 2020 |
|  Net income | $**2999529** | $1888792 |
|  Other comprehensive income (loss), net of tax: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized gains (losses) on securities available for sale: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Holding gains (losses) arising during period, net of tax (expense) benefit of $394,063 and $(434483), respectively | **(1105987)** | 1246555 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassification adjustment for gains included in net income, net of tax of $45,266 and $47,263, respectively | **(127046)** | (135597) |
|  Total other comprehensive income (loss) | **(1233033)** | 1110958 |
|  Comprehensive income | $**1766496** | $2999750 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY** 

**YEARS ENDED DECEMBER 31, 2021 AND 2020** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common<br>Stock** | **Restricted<br>Stock** | **Additional<br>Paid-In<br>Capital** | **Retained<br>Earnings** | **Accumulated<br>Other<br>Comprehensive<br>Income** | **Total<br>Stockholders'<br>Equity** |
|  **Balance, December 31, 2019** | $1793760 | $(36745) | $4139146 | $29501154 | $269781 | $35667096 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in net unrealized gain on investment securities available for sale, net of tax |  |  |  |  | 1110958 | 1110958 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of restricted stock | 1500 | (25824) | 24324 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (1010) |  | (16356) |  |  | (17366) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense |  | 24593 |  |  |  | 24593 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid ($0.60 per share) |  |  |  | (538968) |  | (538968) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 1888792 |  | 1888792 |
|  **Balance, December 31, 2020** | 1794250 | (37976) | 4147114 | 30850978 | 1380739 | 38135105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in net unrealized gain on investment securities available for sale, net of tax |  |  |  |  | (1233033) | (1233033) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of restricted stock | 1500 | (25748) | 24248 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | (674) |  | (11540) |  |  | (12214) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense |  | 25413 |  |  |  | 25413 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid ($0.65 per share) |  |  |  | (582179) |  | (582179) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 2999529 |  | 2999529 |
|  **Balance, December 31, 2021** | $1795076 | $(38311) | $4159822 | $33268328 | $147706 | $39332621 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**CONSOLIDATED STATEMENTS OF CASH FLOWS** 

**YEARS ENDED DECEMBER 31, 2021 AND 2020** 

---

| | | |
|:---|:---|:---|
|  | **2021** | 2020 |
|  **OPERATING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**2999529** | $1888792 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by<br>(used in) operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, amortization, and accretion | **1064004** | 1080616 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for loan losses | **456000** | 1250000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of mortgage loans held for sale | **77974968** | 73118697 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Originations of mortgage loans held for sale | **(72976028)** | (77954617) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income tax benefit | **(39206)** | (384727) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of investment securities, net | **(172312)** | (182860) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on sale and disposal of fixed assets | **268123** | 17655 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans | **(178608)** | (481006) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock compensation expense | **25413** | 24593 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in bank owned life insurance | **(251779)** | (227499) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | **95094** | (891415) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | **443654** | (426601) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) operating activities | **9708852** | (3168372) |
|  **INVESTING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of investment securities available for sale | **(129079792)** | (63502517) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from calls and maturities of investment securities available for sale | **9416103** | 80934018 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of investment securities available for sale | **31013443** | 7638313 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net (increase) decrease in Federal Home Loan Bank stock | **112300** | (44800) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in loans | **21130375** | (71565534) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of premises and equipment | **(3842841)** | (1615523) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of bank owned life insurance | **(3500000)** | (2750000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capital improvements on other real estate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | **(74750412)** | (50906043) |
|  **FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in deposits | **74992037** | 83179358 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | **(12214)** | (17366) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of subordinated notes, net of cost | **—** | 9770497 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid | **(582179)** | (538968) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | **74397644** | 92393521 |
|  Net increase in cash and cash equivalents | **9356084** | 38319106 |
|  Cash and cash equivalents at beginning of year | **76418430** | 38099324 |
|  Cash and cash equivalents at end of year | $**85774514** | $76418430 |
|  **SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid during the year for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest | $**1664775** | $1941945 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income taxes | $**881000** | $555000 |

---

**See Notes to Consolidated Financial Statements.** 

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##### [**Table of Contents**](#toc)
**OCONEE FINANCIAL CORPORATION** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

**Organization** 

Oconee Financial Corporation ("OFC") received regulatory approval to operate as a bank holding company on October 13, 1998, and began operations effective January 1, 1999. OFC is primarily regulated by the Federal Reserve Bank and serves as the one-bank holding company for Oconee State Bank.

Oconee State Bank (the "Bank") commenced business in 1960 upon receipt of its banking charter from the Georgia Department of Banking and Finance (the "DBF"). The Bank is primarily regulated by the DBF and the Federal Deposit Insurance Corporation and undergoes periodic examinations by these regulatory agencies. The Bank provides a full range of commercial and consumer banking services primarily in Oconee, Clarke, and Gwinnett counties in Georgia.

**Principles of Consolidation** 

The consolidated financial statements include the financial statements of Oconee Financial Corporation and its wholly owned subsidiary, Oconee State Bank (collectively called the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.

**Basis of Presentation and Accounting Estimates** 

The accounting principles followed by the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America ("GAAP") and with general practices in the banking industry. In preparing the financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ significantly from these estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses, deferred taxes, fair value of financial instruments, and other than temporary impairment on securities.

The Company has evaluated all transactions, events, and circumstances for consideration or disclosure through March 31, 2022, the date these financial statements were available to be issued, and has reflected or disclosed those items within the consolidated financial statements and related footnotes as deemed appropriate.

**Cash, Due from Banks and Cash Flows** 

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks. Included in cash and due from banks is interest-bearing deposits at other banks of $82,657,523 and $73,178,173 at December 31, 2021 and 2020, respectively. Net cash flows are reported for Federal Home Loan Bank stock, loans, and deposits.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** 

**Investment Securities** 

All securities are classified as available for sale and are recorded at fair value. Unrealized holding gains and losses, net of related tax effect on securities available for sale, are excluded from operations and are reported as a separate component of stockholders' equity until realized. The Company recognizes other than temporary impairment (OTTI) loss in earnings only when the Company (1) intends to sell the debt security; (2) determines that it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis or (3) does not expect to recover the entire amortized cost basis of the security. In all other situations, only the portion of the OTTI losses representing the credit loss is recognized in earnings, with the remaining portion being recognized in other comprehensive income (loss), net of deferred taxes.

Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield. Realized gains and losses for securities classified as available for sale are included in earnings on the trade date and are derived using the specific identification method for determining the cost of securities sold.

**Federal Home Loan Bank Stock** 

The Company is required to maintain an investment in capital stock of the Federal Home Loan Bank of Atlanta (FHLB). Based on redemption provisions of the entity, the stock has no quoted market value and is carried at cost. At its discretion, the FHLB may declare dividends on the stock. Management reviews for impairment based on the ultimate recoverability of the cost basis in this stock.

**Loans Held for Sale** 

Loans held for sale are carried at the lower of cost or market value. At December 31, 2021, the carrying amount of mortgage loans held for sale approximates the market value. Loans held for sale consist of mortgage loans which have commitments to be sold to third party investors upon closing on a best efforts basis.

**Loans and Allowance for Loan Losses** 

Loans are stated at the principal amount outstanding, less net deferred origination fees or costs and the allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The Company analyzes its direct costs associated with the origination of different types of loans. Any fees collected that are greater than the costs calculated by the Company are recognized as income over the life of the loan as opposed to the time of origination.

Impaired loans are measured for impairment based on the present value of expected future cash flows, discounted at the loan's effective interest rate, or at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is impaired when, based on current information and events, it is probable that all principal and interest due according to the contractual terms of the loan will not be collected. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** 

**Loans and Allowance for Loan Losses (Continued)** 

Accrual of interest is discontinued on a loan when management believes, after considering economic conditions and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. Interest previously accrued but not collected is reversed against current period earnings, and interest is recognized on a cash basis or cost recovery method when such loans are placed on nonaccrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Past due status is based on the contractual terms of the loans.

The allowance for loan losses is established through a provision for loan losses charged to earnings. Loans are charged against the allowance for loan losses when management believes the uncollectibility of the principal is confirmed. The allowance represents an amount which, in management's judgment, will be adequate to absorb probable losses on existing loans that may become uncollectible.

Management's judgment in determining the adequacy of the allowance is based on evaluations of the collectability of loans. These evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, current economic conditions that may affect the borrower's ability to pay, overall portfolio quality, and review of specific problem loans. The allowance consists of specific, general, and unallocated components. The specific component relates to loans that are identified as impaired. All significant impaired loans are evaluated individually for impairment, while all other loans considered impaired are evaluated as a pool. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. Management uses an external review program to challenge and corroborate the internal grading system and provide additional analysis in determining the adequacy of the allowance and provisions for estimated loan losses.

While management uses available information to recognize losses on loans, future additions to the, allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on judgments different than those of management.

**Premises and Equipment** 

Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter period of the useful life of the asset or the lease term. When assets are retired or otherwise disposed, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is reflected in operations for the period. The cost of maintenance and repairs which do not improve or extend the useful life of the respective assets is charged to earnings as incurred, whereas significant improvements are capitalized. The ranges of estimated useful lives for premises and equipment are generally as follows:

Buildings and improvements 5-40 years <br> Furniture and equipment 3-10 years

**Advertising Costs** 

Advertising costs are expensed as incurred and totaled $154,839 and $182,368 for the years ended December 31, 2021 and 2020, respectively.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** 

**Other Real Estate Owned** 

Properties acquired through foreclosure are carried at the lower of cost or fair value less estimated costs to dispose. Accounting guidance defines fair value as the amount that is expected to be received in a current sale between a willing buyer and seller other than in a forced or liquidation sale. Fair values at foreclosure are based on appraisals. Losses arising from the acquisition of foreclosed properties are charged against the allowance for loan losses. Subsequent write-downs are provided by a charge to operations in the period in which the need arises. At December 31, 2021 and 2020, there was no other real estate owned.

**Transfers of Financial Assets** 

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

**Stock Compensation Plans** 

Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. That cost is measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees' service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Company's common stock at the date of grant is used for restricted stock awards and stock grants.

**Income Taxes** 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management's judgment.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** 

**Income Taxes (Continued)** 

In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company's assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

In assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.

**Mortgage Origination Income** 

Mortgage origination income represents net gains from the sale of mortgage loans and fees received from borrowers related to the Company's origination of single-family residential mortgage loans.

**Net Income Per Share** 

Net income per common share is based on the weighted average number of common shares outstanding during the year, while the effects of potential common shares outstanding during the period are included in diluted earnings per share. Potential common shares outstanding related to restricted stock totaled 1,126 and 1,126 shares as of December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, these shares did not have a dilutive effect. Net income per share is calculated using the weighted average shares outstanding during the year of 896,260 and 896,163 for 2021 and 2020, respectively.

**Comprehensive Income** 

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with the net income, are components of comprehensive income.

**Revenue Recognition** 

The Company accounts for revenue in accordance with applicable revenue recognition accounting guidance, including ASU 2014-09 Revenue from Contracts with Customers (ASC Topic 606) and all subsequent amendments to the ASU (collectively, "ASC 606"), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as other real estate owned. The majority of the Company's revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit, and investment securities, as these activities are subject to other GAAP discussed elsewhere within the disclosures. The Company's services that fall within the scope of ASC 606 are presented within other income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of ASC 606 primarily include service charges on deposits, gains on sale of fixed assets, and other service charges and fees such as ATM and interchange fees and commissions on investment sales. Refer to Note 15 for further discussion on the Company's accounting policies for revenue sources within the scope of ASC 606.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** 

**U.S. Small Business Administration Paycheck Protection Program (PPP)** 

The Company is participating in the Paycheck Protection Program, which is a loan program that originated from the CARES Act and was subsequently expanded by the Paycheck Protection Program and Health Care Enhancement Act ("PPPHCEA Act"). The PPP provides loans of up to $10 million to small businesses who were affected by economic conditions as a result of COVID-19 to provide cash-flow assistance to employers who maintain their payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19 emergency. PPP loans carry an interest rate of one percent, and a maturity of two or five years.

Under this program, the Company provided approximately $56 million in funding to 638 customers during 2020. As compensation for originating the loans, the Company received lender processing fees from the SBA totaling approximately $2,300,000. The processing fees per loan range from 1% to 5%, based on the size of the loan, and are being recognized as interest income over approximately a twenty four-month period based on management's estimate that payoff or forgiveness would occur during this period. As of December 31, 2021, the Company has received $55.1 million from SBA for loans forgiven from this program and has recognized $2,285,000 of the lender processing fees into interest income.

On December 27, 2020, the Consolidated Appropriations Act ("CAA") was signed into law, and authorized the SBA to reopen the PPP for first draw loans, as well as guarantee second draw PPP loans of up to $2 million for certain eligible borrowers that previously received a PPP loan. These loans carry a fixed rate of one percent and a term of five years, if not forgiven, in whole or in part. The SBA pays the originating bank a processing fee based on the size of the loan. For loans up to $50,000, the fee is the lesser of 50% of the loan amount or $2,500. For loans greater than $50,000, the fees per loan range from 3% to 5%, based on the size of the loan.

Under this program, the Company provided approximately $18 million in funding to 232 customers during 2021. As compensation for originating the loans, the Company received lender processing fees from the SBA totaling approximately $1,000,000. The processing fees are being recognized as interest income over a sixty-month period based on management's estimate that payoff or forgiveness would occur during this period. As of December 31, 2021, the Company has received approximately $14.6 million from SBA for loans forgiven from this program and has recognized $857,000 of the lender processing fees into interest income.

These PPP loans are fully guaranteed by the SBA and are not included in the Company's loan loss allowance calculation. If the borrower meets certain criteria and uses the proceeds toward certain eligible expenses in accordance with the requirements of the PPP, the borrower's obligation to repay the loan can be forgiven up to the full principal amount of the loan and any accrued interest. Upon borrower forgiveness, the SBA pays the Company for the principal and accrued interest owed on the loan. If the full principal of the loan is not forgiven, the loan will operate according to the original loan terms with the SBA guaranty remaining.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 2. INVESTMENT SECURITIES** 

Investment securities available for sale at December 31, 2021 and 2020 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Amortized**<br>**Cost** | **Gross**<br>**Unrealized**<br>**Gains** | **Gross**<br>**Unrealized**<br>**Losses** | **Fair**<br>**Value** |
|  **December 31, 2021:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **U.S. Treasury** | $**36773033** | $**26217** | $**(151594)** | $**36647656** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **U.S. agency** | **3047477** | **11148** | **—** | **3058625** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Corporate securities** | **8000000** | **128349** | **(52566)** | **8075783** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **GSE residential** | 76151885 | 366011 | (458982) | 76058914 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **State, county, and municipal** | **38005787** | **629614** | **(311227)** | **38324174** |
|  | $**161978182** | $**1161339** | $**(974369)** | $**162165152** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31, 2020: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate securities | $5000000 | $10116 | $(3200) | $5006916 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSE residential | 34097749 | 934616 | (43852) | 34988513 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, county, and municipal | 34591733 | 961923 | (272) | 35553384 |
|  | $73689482 | $1906655 | $(47324) | $75548813 |

---

The amortized cost and fair value of investment securities as of December 31, 2021 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

---

| | | |
|:---|:---|:---|
|  | **Amortized**<br>**Cost** | **Estimated**<br>**Fair Value** |
|  Due in one year or less | $— | $— |
|  Due from one to five years | 6686861 | 6707964 |
|  Due from five to ten years | 57686756 | 57636803 |
|  Due after ten years | 21452680 | 21761471 |
|  Mortgage-backed securities | 76151885 | 76058914 |
|  | $161978182 | $162165152 |

---

Gains and losses on sales of securities consist of the following:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2021** | **2020** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gross gains realized | $375899 | $182860 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gross losses realized | (203587) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net gain realized | $172312 | $182860 |

---

Securities with a carrying value of approximately $12,019,000 and $7,248,000 at December 31, 2021 and 2020, respectively, were pledged to secure public deposits and for other purposes as required by law.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 2. INVESTMENT SECURITIES (Continued)** 

**Temporarily Impaired Securities** 

Unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2021 and 2020, are summarized as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Less Than Twelve Months** | **Less Than Twelve Months** | **Over Twelve Months** | **Over Twelve Months** | **Over Twelve Months** |
|  | **Gross**<br>**Unrealized**<br>**Losses** | **Fair**<br>**Value** | **Gross**<br>**Unrealized**<br>**Losses** | **Fair**<br>**Value** | **Total<br>Unrealized**<br>**Losses** |
|  **December 31, 2021:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **U.S. Treasury** | $**(151594)** | $**26298052** | $**—** | $**—** | $**(151594)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Corporate securities** | **(30776)** | **1969224** | **(21790)** | **728210** | **(52566)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **GSE residential** | **(404133)** | **55566813** | **(54849)** | **1030247** | **(458982)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **State, county, municipal** | **(286455)** | **16340015** | **(24772)** | **1000090** | **(311227)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**(872958)** | $**100174104** | $**(101411)** | $**2758547** | $**(974369)** |
|  December 31, 2020: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate securities | $(3200) | $1996800 | $— | $— | $(3200) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GSE residential | (43852) | 1049288 |  |  | (43852) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State, county, municipal | (272) | 1146577 |  |  | (272) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $(47324) | $4192665 | $— | $— | $(47324) |

---

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

The unrealized losses on these debt securities in a continuous loss position for twelve months or more as of December 31, 2021 and 2020 are considered to be temporary because they arose due to changing interest rates and the repayment sources of principal and interest are government backed or are securities of investment grade issuers. Included in the table above as of December 31, 2021 were seven of nine securities issued by U.S. Treasury, four of twelve securities issued by corporate entities, twenty-three of fifty-four mortgage-backed securities, and fifteen of forty-two securities issued by state and political subdivisions that contained unrealized losses. Included in the table above as of December 31, 2020 were three of seven securities issued by corporate entities, one of fifty-seven mortgage-backed securities, and one of forty-five securities issued by state and political subdivisions that contained unrealized losses. The total aggregate depreciation from their cost basis at December 31, 2021 and 2020 was 0.94% and 1.12% respectively.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3. LOANS** 

The composition of loans, excluding loans held for sale, is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | 2020 |
|  Real estate-mortgage 1-4 family residential | $46572968 | $46464181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | **12787653** | 13408617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **205964869** | 168155312 |
|  Real estate-construction | **1957699** | 925513 |
|  Commercial, financial and agricultural | **29834071** | 36959255 |
|  Consumer | **2451087** | 4376649 |
|  Total (Non SBA PPP Loans) | **299568347** | 270289527 |
|  SBA Paycheck Protection Program Loans | **3736307** | 55237208 |
|  Deferred fees and costs, net | **(780967)** | (1901874) |
|  Less allowance for loan losses | **(4542292)** | (4057091) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loans | $**297981395** | $319567770 |

---

As discussed in Note 1, the Company originated a substantial amount of SBA PPP loans in 2021 and 2020. SBA PPP loans outstanding at December 31, 2021 and 2020 totaled $3,736,307 and $55,237,208, respectively. These loans are 100% guaranteed by the SBA and are all considered pass rated loans. Therefore, SBA PPP loans are not presented in the following tables throughout the remainder of Note 3.

The Company grants loans and extensions of credit primarily to individuals and a variety of firms and corporations located in certain Georgia counties, primarily Oconee, Clarke, and Gwinnett counties. Although the Company has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market in the Company's primary market area. Included in loans above are $36,405,257 and $35,875,384 of interest only loans at December 31, 2021 and 2020, respectively. For the majority of these loans, interest is due monthly with principal due at maturity.

The loan portfolio was disaggregated into segments and then further disaggregated into classes for certain disclosures. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. There are four loan portfolio segments that include real estate–mortgage, real estate–construction, commercial, financial and agricultural loans, and consumer loans. A class is generally determined based on the initial measurement attribute, risk characteristic of the loan, and an entity's method for monitoring and assessing credit risk. Classes within the real estate-mortgage portfolio segment include 1-4 family residential, hotel, and other. The real estate-construction segment, commercial, financial, and agricultural segment and consumer segment have not been further disaggregated into classes.

The following describe risk characteristics relevant to each of the portfolio segments and classes:

Real Estate-Mortgage—As discussed below, the Company offers various types of real estate mortgage loan products. The majority of loans within this portfolio segment are particularly sensitive to the valuation of real estate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 1-4 family residential loans are repaid by various means such as the
borrower's income, sale of the property, or rental income derived from the property. Residential real estate loans are made based on the appraised value of the underlying collateral, in addition to the borrower's ability to service the
debt. Adverse economic conditions may impact the borrower's financial status and thus affect their ability to repay the debt. In addition, the value of the collateral may be adversely affected by declining real estate values.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3. LOANS (Continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Hotel loans include loans repaid by the cash flow generated from rent income derived from the properties. The
cash flows of hotels are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn will have an effect on credit quality.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Other real estate mortgage loans include loans secured by rental residences, income-producing investment
properties and owner-occupied real estate used for business purposes. The underlying properties are generally located in the Company's primary market area. The cash flows of the income-producing investment properties are adversely impacted by a
downturn in the economy, which in turn will have an effect on credit quality. In the case of owner-occupied real estate used for business purposes, a weakened economy and resultant decreased consumer and/or business spending will have an adverse
effect on credit quality.

Real Estate-Construction—Loans in this segment primarily include land loans to local contractors and developers for developing the land for sale or for the purpose of making improvements thereon. Repayment is derived from sale of the lots/units including any pre-sold units. Credit risk is affected by market conditions, time to sell at an adequate price, cost overruns and construction delays.

Commercial, Financial and Agricultural—Loans in this segment are made to businesses. Generally, these loans are secured by assets of the business and repayment is expected from the cash flows of the business. A weakened economy and resultant decreased consumer and/or business spending will have an effect on the credit quality in this loan segment.

Consumer Loans—Loans in this segment may be either secured or unsecured and repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan (such as automobile, mobile home, etc.). Therefore, the overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality of this loan segment.

The following tables present the activity in the allowance for loan losses by portfolio segment as of December 31, 2021 and 2020:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Real estate-**<br>**mortgage** | **Real estate-**<br>**construction** | **Commercial,**<br>**financial and**<br>**agricultural** | **Consumer** | **Unallocated** | **Total** |
|  **December 31, 2021:** |  |  |  |  |  |  |
|  **Allowance for loan losses:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Beginning balance** | $**2648360** | $**5389** | $**185961** | $**47830** | $**1169551** | $**4057091** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Provision (reallocation)** | **42165** | **4399** | **(40655)** | **(62165)** | **512256** | **456000** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Charge-offs** | **(4637)** | **—** | **(231)** | **(10012)** | **—** | **(14880)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Recoveries** | **—** | **—** | **—** | **44081** | **—** | **44081** |
|  **Ending balance** | $**2685888** | $**9788** | $**145075** | $**19734** | $**1681807** | $**4542292** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – individually evaluated for impairment** | $**544795** | $**—** | $**—** | $**—** | $**—** | $**544795** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – collectively evaluated for impairment** | $**2141093** | $**9788** | $**145075** | $**19734** | $**1681807** | $**3997497** |
|  **Loans:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance** | $**265325490** | $**1957699** | $**29834071** | $**2451087** |  | $**299568347** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – individually evaluated for impairment** | $**5628892** | $**—** | $**—** | $**—** |  | $**5628892** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Ending balance – collectively evaluated for impairment** | $**259696598** | $**1957699** | $**29834071** | $**2451087** |  | $**293939455** |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3. LOANS (Continued)** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Real estate-**<br>**mortgage** | **Real estate-**<br>**construction** | **Commercial,**<br>**financial and**<br>**agricultural** | **Consumer** | **Unallocated** | **Total** |
|  December 31, 2020: |  |  |  |  |  |  |
|  Allowance for loan losses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beginning balance | $2286452 | $15822 | $164826 | $39573 | $314380 | $2821053 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision (reallocation) | 47283 | (10433) | (15541) | 373520 | 855171 | 1250000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charge-offs |  |  |  | (374771) |  | (374771) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Recoveries | 314625 |  | 36676 | 9508 |  | 360809 |
|  Ending balance | $2648360 | $5389 | $185961 | $47830 | $1169551 | $4057091 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – individually evaluated for impairment | $878256 | $— | $— | $1764 | $— | $880020 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – collectively evaluated for impairment | $1770104 | $5389 | $185961 | $46066 | $1169551 | $3177071 |
|  Loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance | $228028110 | $925513 | $36959255 | $4376649 |  | $270289527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – individually evaluated for impairment | $6040553 | $— | $— | $12137 |  | $6052690 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending balance – collectively evaluated for impairment | $221987557 | $925513 | $36959255 | $4364512 |  | $264236837 |

---

The following tables present loans individually evaluated for impairment by portfolio segment and class as of December 31, 2021 and 2020:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Unpaid<br>Principal<br>Balance** | **Recorded<br>Investment** | **Related<br>Allowance** | **Average<br>Recorded<br>Investment** | **Interest<br>Income<br>Recognized** |
|  **December 31, 2021:** |  |  |  |  |  |
|  **With an allowance recorded:** |  |  |  |  |  |
|  **Real estate-mortgage:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **1-4 family residential** | $**179081** | $**179081** | $**17332** | $**194113** | $**—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Hotel** | **5449811** | **5449811** | **527463** | **5592310** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total with an allowance recorded** | **5628892** | **5628892** | **544795** | **5786423** | **—** |
|  **Total impaired loans** | $**5628892** | $**5628892** | $**544795** | $**5786423** | $**—** |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3. LOANS (Continued)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Unpaid<br>Principal<br>Balance** | **Recorded<br>Investment** | **Related<br>Allowance** | **Average<br>Recorded<br>Investment** | **Interest<br>Income<br>Recognized** |
|  December 31, 2020: |  |  |  |  |  |
|  With an allowance recorded: |  |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $213939 | $213939 | $31105 | $225477 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | 5734810 | 5734810 | 833803 | 5769810 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 91804 | 91804 | 13348 | 95304 |  |
|  Consumer | 12137 | 12137 | 1764 | 12437 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total with an allowance recorded | 6052690 | 6052690 | 880020 | 6103028 |  |
|  Total impaired loans | $6052690 | $6052690 | $880020 | $6103028 | $— |

---

The following tables present the aging of the recorded investment in past due loans as of December 31, 2021 and 2020 by portfolio segment and class:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **30-89 Days**<br>**Past Due** | **Accruing**<br>**Greater**<br>**than 90**<br>**Days**<br>**Past Due** | **Accruing**<br>**Total**<br>**Past Due** | **Nonaccrual** | **Loans Not**<br>**Past Due** | **Total** |
|  **December 31, 2021:** |  |  |  |  |  |  |
|  **Real estate-mortgage:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **1-4 family residential** | $**26328** | $**—** | $**26328** | $**179081** | $**46367559** | $**46572968** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Hotel** | **—** | **—** | **—** | **5449811** | **7337842** | **12787653** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Other** | **—** | **—** | **—** | **—** | **205964869** | **205964869** |
|  **Real estate-construction** | **—** | **—** | **—** | **—** | **1957699** | **1957699** |
| &nbsp;&nbsp; **Commercial, financial**<br> **and agricultural** | **289437** | **—** | **289437** | **—** | **29544634** | **29834071** |
|  **Consumer** | **5173** | **—** | **5173** | **—** | **2445914** | **2451087** |
|  **Total** | $**320938** | $**—** | $**320938** | $**5628892** | $**293618517** | $**299568347** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  December 31, 2020: |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $131724 | $213939 | $46118518.0 | $46464181.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel |  | 5734810 | 7673807.0 | 13408617.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | 91804 | 168063508.0 | 168155312.0 |
|  Real estate-construction |  |  | 925513.0 | 925513.0 |
|  Commercial, financial<br> and agricultural | 200332 |  | 36758923.0 | 36959255.0 |
|  Consumer | 16309 | 12137 | 4348203.0 | 4376649.0 |
|  Total | $348365 | $6052690 | $263888472.0 | $270289527.0 |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3. LOANS (Continued)** 

**Troubled Debt Restructurings** 

The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

In assessing whether or not a borrower is experiencing financial difficulties, the Company considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (i) the debtor is currently in payment default on any of its debt; (ii) a payment default is probable in the foreseeable future without the modification; (iii) the debtor has declared or is in the process of declaring bankruptcy; and (iv) the debtor's projected cash flow is sufficient to satisfy contractual payments due under the original terms of the loan without a modification.

The Company considers all aspects of the modification to loan terms to determine whether or not a concession has been granted to the borrower. Key factors considered by the Company include the debtor's ability to access funds at a market rate for debt with similar risk characteristics, the significance of the modification relative to unpaid principal balance or collateral value of the debt, and the significance of a delay in the timing of payments relative to the original contractual terms of the loan. The most common concessions granted by the Company generally include one or more modifications to the terms of the debt, such as (i) a reduction in the interest rate for the remaining life of the debt, (ii) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (iii) a temporary period of interest-only payments, and (iv) a reduction in the contractual payment amount for either a short period or remaining term of the loan. As of December 31, 2021 and 2020, the Company did not have any loans that were considered restructured.

There were no loans modified as a TDR during the years ended December 31, 2021 and 2020.

The Company is also working with borrowers impacted by COVID-19 and providing loan modifications, generally in the form of short-term principal deferrals. These modifications are excluded from troubled debt restructuring classification under Section 4013 of the CARES Act or under applicable interagency guidance of the federal banking regulators. As of December 31, 2021, the Company had no loans operating under modified terms. As of December 31, 2020, the Company had seven loans operating under modified terms totaling $7,897,918.

**Credit Quality Indicators** 

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. All loans are analyzed at origination and assigned a risk category. In addition, on an annual basis, management performs an analysis on loans with an outstanding balance greater than specified limits and non-homogeneous loans, such as commercial and commercial real estate loans. The Company uses the following definitions for risk ratings:

**Special Mention**. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

**Substandard**. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

**Doubtful**. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3. LOANS (Continued)** 

**Credit Quality Indicators (Continued)** 

Loans not meeting the criteria above that are analyzed as part of the above described process are considered to be pass-rated loans.

As of December 31, 2021 and 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pass** | **Special<br>Mention** | **Substandard** | **Doubtful** | **Total** |
|  **December 31, 2021:** |  |  |  |  |  |
|  **Real estate-mortgage:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **1-4 family residential** | $**46323217** | $— | $**249751** | $— | $**46572968** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Hotel** | **5819353** |  | **6968300** |  | **12787653** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Other** | **205964869** |  | **—** |  | **205964869** |
|  **Real estate-construction** | **1957699** |  | **—** |  | **1957699** |
| &nbsp;&nbsp; **Commercial, financial,**<br> **and agricultural** | **29753827** |  | **80244** |  | **29834071** |
|  **Consumer** | **2451087** |  | **—** |  | **2451087** |
| &nbsp;&nbsp; **Total** | $**292270052** | $— | $**7298295** | $— | $**299568347** |
|  December 31, 2020: |  |  |  |  |  |
|  Real estate-mortgage: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1-4 family residential | $46167239 | $— | $296942 | $— | $46464181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hotel | 6110441 |  | 7298176 |  | 13408617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 168063507 |  | 91805 |  | 168155312 |
|  Real estate-construction | 925513 |  |  |  | 925513 |
|  Commercial, financial,<br> and agricultural | 36538123 |  | 421132 |  | 36959255 |
|  Consumer | 4356368 |  | 20281 |  | 4376649 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $262161191 | $— | $8128336 | $— | $270289527 |

---

**NOTE 4. PREMISES AND EQUIPMENT** 

Premises and equipment are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | 2020 |
|  Land | $**963758** | $963758 |
|  Buildings and improvements | **7586892** | 3527043 |
|  Furniture and equipment | **3320657** | 7513117 |
|  Construction in process | **137945** | 1408448 |
|  Right of use asset | **805146** | 863836 |
|  | **12814398** | 14276202 |
|  Less accumulated depreciation | **(4174948)** | (8676739) |
|  Less accumulated amortization | **(36932)** | (496427) |
|  | $**8602518** | $5103036 |

---

Depreciation expense was $476,040 and $361,624 for the years ended December 31, 2021 and 2020, respectively.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4. PREMISES AND EQUIPMENT (Continued)** 

**Leases**

The Company leases a location under a lease obligation which provided that the Company pay a monthly rental of $7,903 until September 30, 2022, at which time the monthly rental increases to $8,099 and will continue to increase 2.5% at each anniversary date. The lease expires April 30, 2028. The lease also contains an abatement of $56,056 which will be applied to the first 26 months of the lease. The Company has evaluated the lease and determined it to be an operating lease. The right-of-use asset and lease liability were measured and recorded with an assumed discount rate of approximately 1.5%, the Company's incremental borrowing rate at the date of adoption, over the life of the initial terms of the lease. The lease agreement contain renewal options for additional years, but the renewal options are not considered in the right-of-use asset due to the uncertainty of renewal.

The Company also leases another location under a lease obligation which provided that the Company pay a monthly rental of $5,039 until August 31, 2022, at which time the monthly rental increases to $5,167 and will continue to increase 2.5% at each anniversary date. The lease also calls for monthly reimbursement expenses estimated at $1,483 per month, to be trued up at the end of each year. The lease expires August 31, 2024. The Company has evaluated the lease and determined it to be an operating lease. The right-of-use asset and lease liability were measured and recorded with an assumed discount rate of approximately 0.59%, the Company's incremental borrowing rate at the date of adoption, over the life of the terms of the lease.

In November 2019, the Company sold its operations center to an unrelated party and leased back the facility under a short-term operating lease with a monthly rental of $25,000 for twenty-four months while a new operations center was being constructed. As a result of this sale, the Company derecognized the asset, recorded a gain on sale, and recorded the right-of-use asset and corresponding liability. During 2021, the new operations center was completed.

The right of use asset for both leases, included within premises and equipment on the balance sheet, was $768,214 and $367,409 net of amortization as of December 31, 2021 and 2020, respectively. The Company's lease liability, included within accrued interest payable and other liabilities on the balance sheet, was $768,214 and $367,409 as of December 31, 2021 and 2020, respectively.

Future minimum lease commitments on noncancelable operating leases, excluding any renewal options, are summarized as follows:

---

| | |
|:---|:---|
| 2022 | $132683 |
| 2023 | 133899 |
| 2024 | 142622 |
| 2025 | 102740 |
| 2026 | 105315 |
|  Thereafter | 144616 |
|  | $761875 |

---

Total rental expense for the years ended December 31, 2021 and 2020 was $433,213 and $424,310, respectively.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 5. DEPOSITS** 

The aggregate amounts of certificates of deposit, each with a minimum denomination of $250,000, were approximately $16,940,000 and $15,462,000 at December 31, 2021 and 2020, respectively. The Company had no brokered deposits at December 31, 2021 and 2020.

At December 31, 2021, the scheduled maturities of certificates of deposit are as follows:

---

| | |
|:---|:---|
| 2022 | $30808869.0 |
| 2023 | 8304421.0 |
| 2024 | 2649775.0 |
| 2025 | 7635556.0 |
| 2026 | 4712867.0 |
|  | $54111488.0 |

---

At December 31, 2021 and 2020, the Company had concentrations of deposits with two customers of $64,844,556 and one customer of $39,718,972, respectively. Overdraft demand deposits reclassified to loans totaled $13,497 and $9,691 at December 31, 2021 and 2020, respectively.

The Company had Insured Cash Sweep (ICS) deposits through Promontory/IntraFI Network of $74,913,000 and $77,706,000 at December 31, 2021 and 2020, respectively. The Company's ICS reciprocal deposits consist of state, county and municipal deposits which are fully insured through this program.

**NOTE 6. INCOME TAXES** 

The components of income tax in the statements of income are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | 2020 |
| Current income tax expense | $**<br>771140** | $751799 |
| Deferred income tax benefit | **(39206)** | (384727) |
| Total income tax | $**731934** | $367072 |

---

The differences between income tax and the amount computed by applying the statutory federal income tax rate to income before income tax are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | 2020 |
|  Income tax at statutory rates | $**783607** | $473731 |
|  Add (deduct): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax-exempt interest income | **(86034)** | (71652) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State taxes, net of federal effect | **66257** | (1366) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **(31896)** | (33641) |
|  | $**731934** | $367072 |

---

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 6. INCOME TAXES (Continued)** 

The following summarizes the sources and expected tax consequences of future taxable deductions (income) which comprise the net deferred tax asset (liability). The net deferred tax asset is a component of accrued interest receivable and other assets at December 31, 2021. The net deferred tax (liability) is a component of accrued interest payable and other liabilities at December 31, 2020.

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | 2020 |
|  Deferred income tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit carryforwards | $**—** | $1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | **570324** | 454956 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **193964** | 122293 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total gross deferred income tax assets | **764288** | 577250 |
|  Deferred income tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized gains on investment securities available for sale | **(39264)** | (478592) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment | **(313571)** | (152008) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total gross deferred income tax liabilities | **(352835)** | (630600) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net deferred income tax asset (liability) | $**411453** | $(53350) |

---

The federal income tax returns of the Company for 2020, 2019, and 2018 are subject to examination by the IRS, generally for three years after being filed.

**NOTE 7. RELATED PARTY TRANSACTIONS** 

The Company conducts transactions with directors and executive officers, including companies in which they have beneficial interests, in the normal course of business. It is the policy of the Company that loan transactions with directors and officers are made on substantially the same terms as those prevailing at the time made for comparable loans to other persons. The following is a summary of activity for related party loans:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | 2020 |
|  Beginning balance | $**3767970** | $3865206 |
|  Advances | **125047** | 1287681 |
|  Repayments | **(324745)** | (1382433) |
|  Changes in related parties | **—** | (2484) |
|  Ending balance | $**3568272** | $3767970 |

---

**NOTE 8. SUBORDINATED NOTES** 

On August 7, 2020, the Company issued subordinated notes payable for $10,000,000. The notes mature on August 7, 2030, with interest payments due on March 28, June 28, September 28, and December 28 of each year at a fixed rate of 6.00% until August 7, 2025. Subsequent to August 7, 2025, and until maturity, interest payments are due on the same payment schedule but at a variable rate of three-month SOFR plus five hundred ninety-six basis points resetting each quarter. The notes can be redeemed by the Company, in whole or in part, on or after the fifth anniversary of the note agreements. Debt issuance costs of $239,163 were incurred and capitalized by the Company and are being amortized into interest expense over the life of the notes on a straight line basis. The net carrying values of the subordinated notes payable were $9,794,445 and $9,770,497 at December 31, 2021 and 2020.

------

##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 9. AVAILABLE LINES OF CREDIT** 

The Company is approved to borrow from the Federal Reserve Bank discount window program. As of December 31, 2021, the Company has not pledged any loans or securities but would be required to if they wished to borrow using this program. There were no borrowings outstanding under this program at December 31, 2021 and 2020.

The Company is approved to borrow from the Federal Home Loan Bank of Atlanta. As of December 31, 2021, the Company had pledged loans totaling approximately $82,950,000 and had an available credit line of approximately $142,740,000. There were no borrowings outstanding under this line at December 31, 2021 and 2020.

The Company had $12,000,000 available for the purchase of overnight federal funds from two correspondent financial institutions as of December 31, 2021 and 2020. There were no amounts outstanding under these lines as of December 31, 2021 and 2020.

**NOTE 10. COMMITMENTS AND CONTINGENCIES** 

**Loan Commitments** 

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. In most cases, the Company does require collateral or other security to support financial instruments with credit risk.

---

| | | |
|:---|:---|:---|
|  | **Contractual Amount** | **Contractual Amount** |
|  | **2021** | 2020 |
|  | (in thousands) | (in thousands) |
|  Financial instruments whose contract<br>amounts represent credit risk: |  |  |
|  Commitments to extend credit | $**41886** | $41855 |
|  Standby letters of credit | **1074** | 1165 |
|  | $**42960** | $43020 |

---

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation. Collateral held varies, but may include unimproved and improved real estate, certificates of deposit, or personal property.

Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to businesses in the Company's delineated trade area. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds real estate, equipment, automobiles, and customer deposits as collateral supporting those commitments for which collateral is deemed necessary.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 10. COMMITMENTS AND CONTINGENCIES (Continued)** 

**Contingencies** 

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material effect on the Company's financial statements.

**NOTE 11. PROFIT SHARING PLAN AND STOCK-BASED COMPENSATION** 

**Profit Sharing Plan** 

The Company has a contributory profit sharing plan which is available to substantially all employees subject to certain age and service requirements. Contributions to the plan are determined annually by the Board of Directors. For the years ended December 31, 2021 and 2020, there was $243,441 and $255,401 charged to expense, respectively.

**Deferred Compensation Plan** 

The Company has various deferred compensation plans providing for death and retirement benefits for certain key officers. The estimated amounts to be paid under the compensation plans have been funded through the purchase of life insurance policies on certain officers. In 2021 and 2020, these policies earned $251,779 and $227,499, respectively. In 2021 and 2020, the Company expensed $221,576 and $179,831, respectively, for deferred compensation related to these plans.

Accrued deferred compensation of $541,517 and $319,941 is included in accrued interest payable and other liabilities as of December 31, 2021 and 2020, respectively. Cash surrender values of $12,581,204 and $8,829,426 on the insurance policies as of December 31, 2021 and 2020, respectively, are included in accrued interest receivable and other assets.

**Restricted Stock** 

During 2021 and 2020, respectively, the Company granted 750 and 750 shares of restricted stock which vest over four years from the grant dates. The fair market value of the stock on the grant dates was $34.33 and $34.43 per share, respectively. The Company recognized $25,413 and $24,593 of stock-based compensation expense related to these grants during 2021 and 2020, respectively. As of December 31, 2021 and 2020, respectively, there was $38,311 and $37,976 of total unrecognized compensation cost related to these restricted stock grants which is expected to be recognized over the remaining vesting period.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 12. REGULATORY MATTERS** 

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total capital, Tier 1 capital, and common equity Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. In addition, the Bank is subject to an institution-specific capital buffer which must exceed 2.50% to avoid limitations on distributions and discretionary bonus payments. The Bank's capital conservation buffer at December 31, 2021 was 6.1300%. Management believes, as of December 31, 2021 and 2020, that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2021, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's category.

The Bank's actual capital amounts and ratios are presented in the following table:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Actual** | **Actual** | **Minimum**<br>**Capital<br>Requirement** | **Minimum**<br>**Capital<br>Requirement** | **Minimum**<br>**To Be Well<br>Capitalized Under<br>Prompt Corrective<br>Action Provisions** | **Minimum**<br>**To Be Well<br>Capitalized Under<br>Prompt Corrective<br>Action Provisions** |
|  | **Amount** | **Ratio** | **Amount** | **Ratio** | **Amount** | **Ratio** |
|  | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** | **(Dollars in Thousands)** |
|  **As of December 31, 2021:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Capital to Risk Weighted Assets** | $**50004** | **14.13%** | $**28311** | **8.00%** | $**35389** | **10.00%** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Tier 1 Capital to Risk Weighted Assets** | $**45579** | **12.88%** | $**21233** | **6.00%** | $**28311** | **8.00%** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Common Equity Tier 1 Capital to**<br> **Risk Weighted Assets** | $**45579** | **12.88%** | $**15925** | **4.50%** | $**23003** | **6.50%** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Tier 1 Capital to Average Assets** | $**45579** | **8.09%** | $**22531** | **4.00%** | $**28164** | **5.00%** |
|  As of December 31, 2020: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Capital to Risk Weighted Assets | $46547 | 14.77% | $25209 | 8.00% | $31511 | 10.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 Capital to Risk Weighted Assets | $42608 | 13.52% | $18906 | 6.00% | $25209 | 8.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Equity Tier 1 Capital to<br> Risk Weighted Assets | $42608 | 13.52% | $14180 | 4.50% | $20482 | 6.50% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tier 1 Capital to Average Assets | $42608 | 8.55% | $19933 | 4.00% | $24917 | 5.00% |

---

**NOTE 13. STOCKHOLDERS' EQUITY** 

Dividends paid by the Bank are the primary source of funds available to the Company for payment of dividends to its stockholders and for other working capital needs. Banking regulations limit the amount of dividends that may be paid without prior approval of the regulatory authorities. These restrictions are based on the level of regulatory classified assets, the prior year's net earnings, the ratio of equity capital to total assets, and other specific regulatory restrictions. At December 31, 2021, approximately $1,776,000 of retained earnings was available for dividend declaration without regulatory approval.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 14. FAIR VALUE DISCLOSURES** 

**Fair Value Measurements** 

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans and foreclosed property.

**Fair Value Hierarchy** 

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1—Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2—Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3—Generated from model-based techniques that use at least one significant assumption based on unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls, is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 14. FAIR VALUE DISCLOSURES (Continued)** 

**Fair Value Hierarchy (Continued)**

The following methods and assumptions were used by the Company in estimating fair value for assets and liabilities measured at fair value on either a recurring or nonrecurring basis:

<u>Securities Available for Sale</u>: Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, or in active over-the-counter markets, and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds, and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

<u>Impaired Loans</u>: Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures its impairment. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At December 31, 2021 and 2020, substantially all of the impaired loans were evaluated based on the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price, the Company records the impaired loan as nonrecurring Level 2. When an appraised value is used, or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3.

The tables below present the Company's assets measured at fair value on a recurring basis as of December 31, 2021 and 2020, aggregated by the level in the fair value hierarchy within which those measurements fall.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Balance at<br>December 31, 2021** | **Level 1** | **Level 2** | **Level 3** |
|  | **(In thousands)** | | | |
|  **Securities available for sale** | $**162165** | $**—** | $**162165** | $**—** |
|  | Balance at<br>December 31, 2020 | Level 1 | Level 2 | Level 3 |
|  | (In thousands) |  |  |  |
|  Securities available for sale | $75549 | $— | $75549 | $— |

---

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 14. FAIR VALUE DISCLOSURES (Continued)** 

**Fair Value Hierarchy (Continued)**

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis. These include assets that are measured at the lower of cost or fair value. The tables below present the Company's assets measured at fair value on a nonrecurring basis as of December 31, 2021 and 2020, aggregated by the level in the fair value hierarchy within which those measurements fall.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Balance at**<br>**December 31, 2021** | **Level 1** | **Level 2** | **Level 3** | **Total Gains** |
|  | **(In thousands)** | | | | |
|  **Impaired loans** | $**5084** | $**—** | $**—** | $**5084** | $**319** |
|  | **Balance at**<br>**December 31, 2020** | **Level 1** | **Level 2** | **Level 3** | **Total Gains** |
|  | **(In thousands)** |  |  |  |  |
|  Impaired loans | $5173 | $— | $— | $5173 | $31 |

---

**Fair Value of Financial Instruments**

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

**Cash and Cash Equivalents**: The carrying amounts of cash and short-term instruments approximate fair values based on the short-term nature of the assets.

**Investment Securities Available for Sale**: Securities available for sale are carried at fair value using the methods and assumptions described above.

**Federal Home Loan Bank Stock:** The carrying amount of Federal Home Loan Bank stock with no readily determinable fair value approximates fair value.

**Loans and Loans Held for Sale:** For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair value for fixed rate loans are estimated using discounted cash flow analyses, using market interest rates for comparable loans. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. Loans held for sale are carried at the lower of cost or market value and the carrying amount approximates the market value.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 14. FAIR VALUE DISCLOSURES (Continued)** 

**Fair Value of Financial Instruments (Continued)**

**Deposits**: The fair values disclosed for demand deposits (for example, interest and noninterest checking, savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits.

**Subordinated notes:** The carrying amount of subordinated notes approximates fair value based on interest rates for comparable instruments with similar maturities.

**Accrued Interest**: The carrying amounts of accrued interest approximate fair value.

**Off-Balance Sheet Credit-Related Instruments**: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing.

The carrying amount and estimated fair value of the Company's financial instruments at December 31, 2021 and 2020 were as follows (in thousands):

---

| | | |
|:---|:---|:---|
| **December 31, 2021** | **Carrying**<br>**Amount** | **Fair**<br>**Value** |
|  Financial assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $**85775** | $**85775** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities available for sale | **162165** | **162165** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank stock | **247** | **247** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans held for sale | **1213** | **1213** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans | **297981** | **296131** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable | **1171** | **1171** |
|  Financial liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | **519694** | **520883** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes | **9794** | **9794** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable | **76** | **76** |
| **December 31, 2020** | **Carrying**<br>**Amount** | **Fair**<br>**Value** |
|  Financial assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $76418 | $76418 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment securities available for sale | 75549 | 75549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank stock | 360 | 360 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans held for sale | 6409 | 6409 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans | 319568 | 315289 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable | 1401 | 1401 |
|  Financial liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | 444702 | 444956 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes | 9770 | 9770 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable | 95 | 95 |

---

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 15. REVENUE FROM CONTRACTS WITH CUSTOMERS** 

Substantially all of the Company's revenue from contracts with customers in the scope of ASC 606 is recognized within service charges, loss on sale and disposal of fixed assets and miscellaneous on the statements of income. The following table presents the Company's sources of revenue from contracts with customers for the years ended December 31, 2021 and 2020.

---

| | | |
|:---|:---|:---|
|  | **2021** | 2020 |
|  Service charges | $**458943** | $453798 |
|  Loss on sale and disposal of fixed assets | **(268123)** | (17655) |
|  Miscellaneous | **1770793** | 1917817 |
|  | $**1961613** | $2353960 |

---

Service charges: Revenue from service charges relates primarily to deposit accounts and is earned through cash management, overdraft, non-sufficient funds, and other deposit-related services. Revenue is recognized for these services either over time, corresponding with deposit accounts' monthly cycle, or at a point in time for transaction-related services and fees. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers' accounts.

Loss on sales and disposal of fixed assets: The Company records a gain or loss from the sale of assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of assets to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer.

Miscellaneous: Miscellaneous primarily includes revenues generated from commissions on investment sales, ATM fees, and interchange fees from consumer credit and debit cards. Commissions on investment sales and ATM fees are recognized concurrently with the delivery of service on a daily basis as transactions occur. Interchange rates are generally set by the credit card associations and based on purchase volumes and other factors. Interchange fees and merchant discounts are recognized concurrently with the delivery of service on a daily basis as transactions occur. Payment is typically received immediately or in the following month.

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
| **NOTE 16.** | **OCONEE FINANCIAL CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION**  |

---

---

| | | |
|:---|:---|:---|
| **CONDENSED BALANCE SHEETS** | **CONDENSED BALANCE SHEETS** | **CONDENSED BALANCE SHEETS** |
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
|  **Assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | $**3050116** | $3584937 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in subsidiary | **45895090** | 44133006 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | **181860** | 187659 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $**49127066** | $47905602 |
|  **Liabilities and Stockholders' Equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated notes | $**9794445** | $9770497 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stockholders' equity | **39332621** | 38135105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and stockholders' equity | $**49127066** | $47905602 |

---

CONDENSED STATEMENTS OF INCOME

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2021** | **2020** |
|  Other income | $**12000** | $12000 |
|  Dividend income | **582180** | 688968 |
|  | **594180** | 700968 |
|  Other expenses | **711183** | 336847 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income (loss) before income tax benefits and equity in undistributed income of subsidiary | **(117003)** | 364121 |
|  Income tax benefits | **(146828)** | (68218) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income before equity in undistributed income of subsidiary | **29825** | 432339 |
|  Equity in undistributed income of subsidiary | **2969704** | 1456453 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**2999529** | $1888792 |

---

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##### [**Table of Contents**](#toc)
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 16. OCONEE FINANCIAL CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION (Continued)** 

---

| | | |
|:---|:---|:---|
| **CONDENSED STATEMENTS OF CASH FLOWS** | **CONDENSED STATEMENTS OF CASH FLOWS** | **CONDENSED STATEMENTS OF CASH FLOWS** |
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2021** | **2020** |
|  **OPERATING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**2999529** | $1888792 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization | **23948** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity in undistributed income of subsidiary | **(2969704)** | (1456453) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | **5799** | (137352) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | **59572** | 294987 |
|  **INVESTING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in subsidiary bank |  | (6000000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities |  | (6000000) |
|  **FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid | **(582179)** | (538968) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repurchase and retirement of common stock | **(12214)** | (17366) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issuance of subordinated notes, net of cost | **—** | 9770497 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) financing activities | **(594393)** | 9214163 |
|  Net increase (decrease) in cash | **(534821)** | 3509150 |
|  Cash at beginning of year | **3584937** | 75787 |
|  Cash at end of year | $**3050116** | $3584937 |

---

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##### [**Table of Contents**](#toc)
Elberton Federal

Savings & Loan

Association

Financial Statements

Years Ended December 31, 2021 and 2020

![LOGO](g406793g0322152135196.jpg)

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##### [**Table of Contents**](#toc)
![LOGO](g406793g0322152135399.jpg)

**Independent Auditor's Report** 

The Board of Directors

Elberton Federal Savings & Loan Association

Elberton, Georgia

***Opinion***

We have audited the financial statements of Elberton Federal Savings & Loan Association (the "Association"), which comprise the balance sheets as of December 31, 2021 and 2020, and the related statements of operations, comprehensive (loss) income, changes in capital, and cash flows for the years then ended, and the related notes to the financial statements.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of Elberton Federal Savings & Loan Association as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America (''GAAP'').

***Basis for Opinion***

We conducted our audits in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Elberton Federal Savings & Loan Association and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

***Responsibilities of Management for the Financial Statements***

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Elberton Federal Savings & Loan Association's ability to continue as a going concern for one year after the date the financial statements are available to be issued.

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##### [**Table of Contents**](#toc)
***Auditor's Responsibilities for the Audit of the Financial Statements***

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS*,* we:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Exercise professional judgment and maintain professional skepticism throughout the audit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Obtain an understanding of internal control relevant to the audit 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 Elberton Federal Savings & Loan Association's internal control. Accordingly, no such opinion is expressed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluate the overall presentation of the financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise
substantial doubt about Elberton Federal Savings & Loan Association's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

![LOGO](g406793g0322152135524.jpg)

Wipfli LLP

Atlanta, Georgia

May 26, 2022

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Balance Sheets** 

---

| | | |
|:---|:---|:---|
| *As of December 31, 2021 and 2020* | 2021 | 2020 |
|  **Assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and due from banks | $1941741 | $1114912 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing deposits with other banks | 654143 | 1316889 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 2595884 | 2431801 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities available for sale | 2720480 | 3263288 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marketable equity securities | 12589 | 35341 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other investments | 88500 | 206800 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net | 22454128 | 20717618 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment, net | 235579 | 244125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | 217891 | 111643 |
|  Total assets | $28325051 | $27010616 |
|  **Liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | $21307601 | $17931905 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank advances | 2000000 | 3850000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | 34486 | 51301 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 23342087 | 21833206 |
|  **Capital:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 4930399 | 5075064 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income | 52565 | 102346 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total capital | 4982964 | 5177410 |
|  Total liabilities and capital | $28325051 | $27010616 |

---

See accompanying notes to financial statements.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Statements of Operations** 

---

| | | |
|:---|:---|:---|
| *Years Ended December 31, 2021 and 2020* | 2021 | 2020 |
|  Interest and dividend income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and fees on loans | $845583 | $828138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest on securities available for sale | 73489 | 89723 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and dividends on other investments | 37178 | 23438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest and dividend income | 956250 | 941299 |
|  Interest expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense - deposits | 121030 | 115967 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense - borrowings | 53371 | 62570 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | 174401 | 178537 |
|  Net interest income | 781849 | 762762 |
|  Provision for loan losses |  |  |
|  Net interest income after provision for loan losses | 781849 | 762762 |
|  Other income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sales of securities available for sale |  | 30138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other income | 2603 | 625 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income | 2603 | 30763 |
|  Other expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | 395986 | 384258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Occupancy and equipment | 89516 | 97178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Professional fees and expenses | 188979 | 53788 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Directors' fees | 78127 | 78752 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in fair value of equity securities | 22752 | 10163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 153757 | 146907 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | 929117 | 771046 |
|  Net (loss) earnings | $(144665) | $22479 |

---

See accompanying notes to financial statements.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Statements of Comprehensive (Loss) Income** 

---

| | | |
|:---|:---|:---|
| *Years Ended December 31, 2021 and 2020* | 2021 | 2020 |
|  Net (loss) earnings | $(144665) | $22479 |
|  Other comprehensive (loss) income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized (loss) gain on securities | (67037) | 109103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassification adjustment for gains realized in net earnings |  | (30138) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net unrealized (loss) gain on securities | (67037) | 78965 |
|  Other comprehensive (loss) income before tax effect | (67037) | 78965 |
|  Tax effect of other comprehensive (loss) income items | 17256 | (20325) |
|  Other comprehensive (loss) income, net of tax | (49781) | 58640 |
|  Total comprehensive (loss) income | $(194446) | $81119 |

---

See accompanying notes to financial statements.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Statements of Changes in Capital** 

---

| | | | |
|:---|:---|:---|:---|
|  | Retained<br>Earnings | Accumulated<br>Other<br>Comprehensive<br>Income | Total |
|  Balances at January 1, 2020 | $5052585 | $43706 | $5096291 |
|  Net earnings | 22479 |  | 22479 |
|  Other comprehensive income |  | 58640 | 58640 |
|  Balances at December 31, 2020 | 5075064 | 102346 | 5177410 |
|  Net loss | (144665) |  | (144665) |
|  Other comprehensive loss |  | (49781) | (49781) |
|  Balances at December 31, 2021 | $4930399 | $52565 | $4982964 |

---

See accompanying notes to financial statements.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Statements of Cash Flows** 

---

| | | |
|:---|:---|:---|
| *Years Ended December 31, 2021 and 2020* | 2021 | 2020 |
|  Increase (decrease) in cash and cash equivalents: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net (loss) earnings | $(144665) | $22479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of securities available for sale |  | (30138) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for depreciation and amortization | 31432 | 31580 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in fair value of equity securities | 22752 | 10163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | (106248) | 13621 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | 441 | (4274) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash (used in) provided by operating activities | (196288) | 43431 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of securities available for sale |  | (500000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of securities available for sale |  | 566996 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from calls, paydowns and maturities of securities available for sale | 465413 | 586198 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of other investments |  | (500) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales of other investments | 118300 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net increase in loans | (1736510) | (1282337) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of premises and equipment | (12528) | (7638) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (1165325) | (637281) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net increase (decrease) in deposits | 3375696 | 2605809 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayment of Federal Home Loan Bank advances | (1850000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | 1525696 | 2605809 |
|  Net increase (decrease) in cash and cash equivalents | 164083 | 2011959 |
|  Cash and cash equivalents at beginning of year | 2431801 | 419842 |
|  Cash and cash equivalents at end of year | $2595884 | $2431801 |
|  **Supplemental cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid during the year for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest | $173834 | $177803 |

---

See accompanying notes to financial statements.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 1: Summary of Significant Accounting Policies** 

**Nature of Operations** 

Elberton Federal Savings & Loan Association (the "Association") operates as a mutual savings and loan association owned 100% by its depositors. The Association is a community oriented financial institution with emphasis on savings accounts, certificates of deposit, and first mortgage residential real estate loans. The Association has one banking office in Elberton (Elbert County), Georgia, and conducts its banking activities primarily in Elbert and surrounding counties. The Association is primarily regulated by the Office of the Comptroller of the Currency ("OCC") and its deposits are insured by the Federal Deposit Insurance Corporation ("FDIC"). The Association undergoes periodic examinations by the OCC.

**Basis of Presentation** 

The accounting principles followed by the Association and the methods of applying these principles conform with generally accepted accounting principles in the United States of America ("GAAP") and with general practices within the banking industry. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ significantly from those estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses and valuation allowances associated with the realization of deferred tax assets.

**Cash and Cash Equivalents** 

For purposes of reporting cash flows, the Association includes cash and deposits in other banks.

**Debt Securities** 

Debt securities are classified as available for sale and are carried at fair value, with unrealized gains and losses reported in other comprehensive income or loss. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method. Premiums that exceed the amount repayable by the issuer at the next call date are amortized to the next call date. Other premiums and discounts are amortized (accreted) over the estimated lives of the securities. Gains and losses on the sale of securities are recorded on the trade date and determined using the specific-identification method.

Declines in fair value of debt securities that are deemed to be other than temporary, if applicable, are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers the length of time and the extent to which fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

**Marketable Equity Securities** 

Marketable equity securities have a readily determinable fair value and are measured at fair value with changes in fair value reported in net earnings. Gains and losses on the sale of marketable equity securities are recorded on the trade date and determined using the specific-identification method.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 1: Summary of Significant Accounting Policies** (Continued)

**Other Investments** 

Other investments are carried at cost and consist of Federal Home Loan Bank (FHLB) stock. The Association is required to hold the FHLB stock as a member of the FHLB, and transfer of the stock is substantially restricted.

**Loans** 

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal balances adjusted for charge-offs and an allowance for loan losses. Interest on loans is accrued and credited to earnings based on the unpaid principal balance. Loan-origination fees and direct origination costs are recognized as income or expense when received or incurred since capitalization of these fees and costs would not have a significant impact on the financial statements.

The accrual of interest on a loan is discontinued when the loan becomes 90 days delinquent or whenever management believes the borrower will be unable to make payments as they become due. When loans are placed on nonaccrual status or charged off, all unpaid accrued interest is reversed against interest income. The interest on these loans is subsequently accounted for on the cash basis or using the cost-recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

**Allowance for Loan Losses** 

The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, should be charged off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Association will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (TDRs) and classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 1: Summary of Significant Accounting Policies** (Continued)

**Allowance for Loan Losses** (Continued)

All nonaccrual loans and TDRs are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan net of the specific allocation equals the present value of estimated future cash flows using the loan's existing rate or the fair value of underlying collateral less applicable estimated selling costs if repayment is expected solely from the collateral.

TDRs are individually evaluated for impairment and included in the impaired loan disclosures. TDRs are measured at the present value of estimated future cash flows using the loan's original effective rate. If a TDR is considered to be a collateral dependent loan, the loan is measured at the fair value of the collateral less applicable estimated selling costs. For TDRs that subsequently default, the Association determines the amount of the allowance on that loan in accordance with the accounting policy for the allowance for loan losses on loans individually identified as impaired.

The general component covers loans that are collectively evaluated for impairment. The general allowance component includes loans that are not individually identified for impairment evaluation as well as those loans that are individually evaluated but are not considered impaired.

The general component is based on historical loss experience adjusted for current qualitative factors. The historical loss experience is determined by portfolio segment or loan class and is based on the actual loss history experienced by the Association. This actual loss experience is supplemented with other qualitative factors based on the risks present for each portfolio segment or loan class. These qualitative factors include: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and employees; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

Management considers the following when assessing risk in the Association's loan portfolio segments:

• Real estate mortgage loans are affected by the local residential real estate market, the local economy, and, for
variable rate mortgages, movement in indices tied to these loans. At the time of origination, the Association evaluates the borrower's repayment ability through a review of debt to income and credit scores. Appraisals are obtained to support
the loan amount. Financial information is obtained from the borrowers and/or the individual project to evaluate cash flows sufficiency to service debt at the time of origination.

• Commercial loans are primarily for working capital, physical asset expansion, asset acquisition loans and other.
These loans are made based primarily on historical and projected cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not behave as forecasted and collateral
securing loans may fluctuate in value due to economic or individual performance factors. Financial information is obtained from the borrowers to evaluate cash flows sufficiency to service debt and are periodically updated during the life of the
loan.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 1: Summary of Significant Accounting Policies** (Continued)

**Allowance for Loan Losses** (Continued)

• Consumer and other loans may take the form of installment loans, demand loans, or single payment loans and are
extended to individual for household, family, and other personal expenditures. At the time of origination, the Association evaluates the borrower's repayment ability through a review of debt to income and credit scores.

**Premises and Equipment** 

Premises and equipment are stated at cost less accumulated depreciation computed on the straight-line method over the estimated useful lives of the assets.

**Income Taxes** 

Deferred tax assets and liabilities have been determined using the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities as measured by the current enacted tax rates which will be in effect when these differences are expected to reverse. Provision (credit) for deferred taxes is the result of changes in the deferred tax assets and liabilities.

**Revenue Recognition** 

As of January 1, 2019, the Association adopted Accounting Standards Update ("ASU") 2014-09, *Revenue from Contracts with Customers (Topic 606),* using the modified retrospective method. Disclosures of revenue from contracts with customers for periods beginning after January 1, 2019 are presented under ASC Topic 606 and have not materially changed from the prior year amounts. This update prescribes the process related to the recognition of revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 excludes revenue streams relating to loans and investment securities, which are the major source of revenue for the Association, from its scope. As a result, the adoption of the guidance had no material impact on the measurement or recognition of revenue. The Association has no other material contracts in place with customers.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 2: Securities** 

Securities available for sale at December 31, 2021 and 2020 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |<br>Amortized<br>Cost | Gross<br>Unrealized<br>Gains | Gross<br>Unrealized<br>Losses |<br>Estimated<br>Fair Value |
| **2021** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities | $1318168 | $25077 | $— | $1343245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate Securities | 1331528 | 45707 |  | 1377235 |
|  Total | $2649696 | $70784 | $— | $2720480 |
| **2020** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities | $1785597 | $63965 | $— | $1849562 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate securities | 1339870 | 73856 |  | 1413726 |
|  Total | $3125467 | $137821 | $— | $3263288 |

---

The amortized cost and estimated fair value of securities available for sale as of December 31, 2021, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers have the right to call or prepay obligations with or without call or prepayment penalties.

---

| | | |
|:---|:---|:---|
|  | Amortized<br>Cost | Estimated Fair<br>Value |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1 to 5 years | $831528 | $877235 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5 to 10 years | 500000 | 500000 |
|  Mortgage-backed securities | 1318168 | 1343245 |
|  | $2649696 | $2720480 |

---

**Note 3: Loans and Allowance for Loan Losses** 

The following table presents total loans at December 31, 2021 and 2020 by portfolio segment and class of loan:

---

| | | |
|:---|:---|:---|
|  | 2021 | 2020 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial | $349346 | $533020 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Real estate mortgage | 21940857 | 19963195 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consumer | 204567 | 262045 |
|  Subtotal | 22494770 | 20758260 |
|  Allowance for loan losses | (40642) | (40642) |
|  Loans, net | $22454128 | $20717618 |

---

------

##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 3: Loans and Allowance for Loan Losses** (Continued)

The Association grants loans and extensions of credit to individuals and a variety of firms and corporations located primarily in Elbert County and other surrounding Georgia counties. A substantial portion of the loan portfolio is collateralized by improved real estate and is dependent upon the real estate market in these areas.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2021 and 2020

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |<br>Commercial | Real Estate<br>Mortgage |<br>Consumer |<br>Unallocated |<br>Total |
|  Balance at January 1, 2020 | $1174 | $26314 | $— | $13154 | $40642 |
|  Provision for loan losses | (436) | 6861 |  | (6425) |  |
|  Balance at December 31, 2020 | 738 | 33175 |  | 6729 | 40642 |
|  Provision for loan losses | (198) | 4638 |  | (4440) |  |
|  Balance at December 31, 2021 | $540 | $37813 | $— | $2289 | $40642 |

---

Information about how loans were evaluated for impairment and the related allowance for loan losses as of December 31, 2021 and 2020 follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |<br>Commercial | Residential Real<br>Estate |<br>Consumer |<br>Unallocated |<br>Total |
| **2021** |  |  |  |  |  |
|  Loans: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Individually evaluated for impairment | $— | $487104 | $— | $— | $487104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Collectively evaluated for impairment | 349346 | 21453753 | 204567 |  | 22007666 |
|  Total loans | $349346 | $21940857 | $204567 | $— | $22494770 |
|  Related allowance for loan losses: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Individually evaluated for impairment | $— | $16549 | $— | $— | $16549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Collectively evaluated for impairment | 540 | 21264 |  | 2289 | 24093 |
|  Total allowance for loan losses | $540 | $37813 | $— | $2289 | $40642 |

---

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 3: Loans and Allowance for Loan Losses** (Continued)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |<br>Commercial | Residential Real<br>Estate |<br>Consumer |<br>Unallocated |<br>Total |
| **2020** |  |  |  |  |  |
|  Loans: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Individually evaluated for impairment | $— | $136402 | $— | $— | $136402 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Collectively evaluated for impairment | 533020 | 19826793 | 262045 |  | 20621858 |
|  Total loans | $533020 | $19963195 | $262045 | $— | $20758260 |
|  Related allowance for loan losses: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Individually evaluated for impairment | $— | $13552 | $— | $— | $13552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Collectively evaluated for impairment | 738 | 19623 |  | 6729 | 27090 |
|  Total allowance for loan losses | $738 | $33175 | $— | $6729 | $40642 |

---

The Association reviews all loans for impairment that are on nonaccrual or troubled debt restructurings. A loan is considered impaired when, based on current events and circumstances it is probable that all amounts due, according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate, at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. Interest payments received on impaired loans are generally applied as a reduction of the outstanding principal balance. As of December 31, 2021 and 2020, there were five real estate mortgage loans totaling $487,104 and two real estate mortgage loans in the amount of $136,402 that were considered impaired, respectively. There was $16,549 of related allowance for three of the five real estate mortgage impaired loans totaling $291,754 as of December 31, 2021. There was $13,552 of related allowance for one of the two real estate mortgage impaired loans totaling $53,979 as of December 31, 2020. There were no troubled debt restructurings during 2021 or 2020.

The Association categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Association analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Association uses the following definitions for its risk ratings:

**Special Mention** - includes obligations that exhibit potential credit weaknesses or downward trends deserving management's close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects or credit position at a future date. These loans are not adversely classified and do not expose the Association to sufficient risk to warrant adverse classification.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 3: Loans and Allowance for Loan Losses** (Continued)

**Substandard** - includes obligations with defined weaknesses that jeopardize the orderly liquidation of debt. A substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy although no loss of principal is envisioned. There is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard.

**Doubtful** - includes obligations with all the weaknesses found in substandard loans with the added provision that the weaknesses make collection of debt in full, based on currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely. The possibility of loss is extremely high, but because of certain important, reasonably specific pending factors that may work to strengthen the loan, the loans' classification as estimated losses is deferred until a more exact status may be determined. There are no loans rated doubtful in the Association's portfolio as of December 31, 2021 and 2020.

**Loss** - includes obligations incapable of repayment or unsecured debt. Such loans are considered uncollectible and of such little value, that continuance as an active asset is not warranted. Loans determined to be a loss are charged-off at the date of loss determination. There are no loans with a loss rating in the Association's portfolio as of December 31, 2021 and 2020.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans. As of December 31, 2021 and 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |<br>Pass | Special<br>Mention |<br>Substandard |<br>Doubtful/Loss |<br>Total |
| **2021** |  |  |  |  |  |
|  Commercial | $349346 | $— | $— | $— | $349346 |
|  Real estate mortgage | 21278197 | 175556 | 487104 |  | 21940857 |
|  Consumer | 204567 |  |  |  | 204567 |
|  Total | $21832110 | $175556 | $487104 | $— | $22494770 |
| **2020** |  |  |  |  |  |
|  Commercial | $533020 | $— | $— | $— | $533020 |
|  Real estate mortgage | 19740938 | 85855 | 136402 |  | 19963195 |
|  Consumer | 262045 |  |  |  | 262045 |
|  Total | $20536003 | $85855 | $136402 | $— | $20758260 |

---

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 3: Loans and Allowance for Loan Losses** (Continued)

Loan aging information as of December 31, 2021 and 2020 follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |<br>30 - 59 Days<br>Past Due |<br>60 - 89 Days<br>Past Due | Greater than<br>90 Days Past<br>Due |<br>Total Past Due |<br>Current |<br>Non-accrual |
| **2021** |  |  |  |  |  |  |
|  Commercial | $— | $— | $— | $— | $349346 | $— |
|  Real estate mortgage | 218659 | 175556 | 487104 | 881319 | 21059538 | 487104 |
|  Consumer |  |  |  |  | 204567 |  |
|  Total | $218659 | $175556 | $487104 | $881319 | $21613451 | $487104 |
| **2020** |  |  |  |  |  |  |
|  Commercial | $— | $— | $— | $— | $533020 | $— |
|  Real estate mortgage | 159853 | 85855 | 136402 | 382110 | 19581085 | 136402 |
|  Consumer |  |  |  |  | 262045 |  |
|  Total | $159853 | $85855 | $136402 | $382110 | $20376150 | $136402 |

---

At December 31, 2021 and 2020, there were no loans greater than 90 days past due that were still accruing interest.

Directors and executive officers of the Association, including their families and firms in which they are principal owners, are considered related parties. Substantially all loans to these related parties were made on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with others and did not involve more than the normal risk of collectibility or present other unfavorable features.

A summary of loans to directors, executive officers, and their affiliates as of December 31, 2021 and 2020 is as follows:

---

| | | |
|:---|:---|:---|
|  | 2021 | 2020 |
|  Beginning balance | $224913 | $274978 |
|  Loans advanced |  |  |
|  Repayments | (140093) | (50065) |
|  Change in related party |  |  |
|  Ending balance | $84820 | $224913 |

---

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 4: Premises and Equipment** 

An analysis of premises and equipment at December 31, 2021 and 2020 is as follows:

---

| | | |
|:---|:---|:---|
|  | 2021 | 2020 |
|  Building | $482644 | $482644 |
|  Land and land improvements | 15775 | 15775 |
|  Furniture and equipment | 481431 | 468903 |
|  Automobile | 21955 | 21955 |
|  Subtotal | 1001805 | 989277 |
|  Accumulated depreciation | (766226) | (745152) |
|  Total | $235579 | $244125 |

---

Depreciation expense was approximately $21,000 and $20,000 for the years ended December 31, 2021 and 2020, respectively.

**Note 5: Deposits** 

Deposits consist of the following at December 31, 2021 and 2020:

---

| | | |
|:---|:---|:---|
|  | 2021 | 2020 |
|  Savings | $1626228 | $1256277 |
|  Money market | 10183391 | 8168049 |
|  Time | 9497982 | 8507579 |
|  Total | $21307601 | $17931905 |

---

The aggregate amount of time deposits, with a minimum denomination of $250,000, was approximately $1,624,000 at both December 31, 2021 and 2020. At December 31, 2021, the scheduled maturities of all time deposits are as follows:

---

| | |
|:---|:---|
|  | 2021 |
| 2022 | $2900583 |
| 2023 | 1426466 |
| 2024 | 1839684 |
| 2025 | 2276336 |
| 2026 | 1054913 |
|  Total | $9497982 |

---

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 5: Deposits** (Continued)

Deposits from directors, executive officers, principal stockholders, and their affiliates totaled approximately $1,257,000 at December 31, 2021 and $613,000 at December 31, 2020.

At December 31, 2021, the Association had one significant customer deposit relationship with total deposit balances of approximately $1,268,000. At December 31, 2020, the Association had two significant customer deposit relationships with total deposit balances of approximately $2,019,000.

**Note 6: Dividend Restrictions** 

Banking regulations restrict the amount of dividends the Association may pay without obtaining prior approval. In addition to the formal statutes and regulations, regulatory authorities also consider the adequacy of the Association's total capital in relation to its assets, deposits, and other such items. Capital adequacy considerations could further limit the availability of dividends from the Association.

**Note 7: Income Taxes** 

The components of the provision for income taxes are as follows:

---

| | | |
|:---|:---|:---|
|  | 2021 | 2020 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred | (30062) | 8155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in valuation allowance | 30062 | (8155) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $— | $— |

---

A summary of the sources of differences between income taxes at the federal statutory rate and the provision for income taxes for the years ended December 31, 2021 and 2020, is as follows:

---

| | | |
|:---|:---|:---|
|  | 2021 | 2020 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pretax (loss) earnings at statutory rate (21%) | $(30380) | 4721 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State income tax, net | 318 | 477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in valuation allowance | 30062 | (8155) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other |  | 2957 |
|  Total | $— |  |

---

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 7: Income Taxes** (Continued)

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Association's assets and liabilities. The major components of the net deferred tax asset as of December 31, 2021 and 2020 are presented below:

---

| | | |
|:---|:---|:---|
|  | 2021 | 2020 |
|  Deferred income tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | $10281 | $10281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment | 5767 | 9025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating loss and tax credit carryovers | 260165 | 228536 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal tax credits | 1110 | 1110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State tax credits | 24432 | 24582 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 3106 | 1265 |
|  Total gross deferred tax assets | 304861 | 274799 |
|  Deferred tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized gains on investment securities | 18219 | 35475 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized gains on equity securities |  | 5179 |
|  Total gross deferred tax liabilities | 18219 | 40654 |
|  Valuation allowance | (304861) | (274799) |
|  Net deferred income tax liability | $18219 | $40654 |

---

The future tax consequences of the differences between the financial reporting and tax basis of the Association's assets and liabilities resulted in a net deferred tax asset. A valuation allowance was established for the net deferred tax asset, as the realization of these deferred taxes is dependent on future taxable income. At December 31, 2021, the Association had remaining loss carryforwards of approximately $691,000 for federal and $2,686,000 for state income tax purposes which begin to expire in 2026 and began to expire in 2020, respectively, if not previously utilized. Additionally, at December 31, 2021, the 2018 through 2020 tax years were open to examination though no examinations are in process.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 7: Income Taxes** (Continued)

Retained earnings at December 31, 2021, includes $803,802 for which no deferred federal income tax liability has been recognized. This amount represents an allocation of income to bad debt deductions for tax purposes only, which arose prior to December 31, 1987. Reduction of amounts so allocated for purposes other than tax bad-debt losses or adjustments arising from carryback of net operating losses would create income for tax purposes only, which would be subject to the then-current corporate income tax rate. Also, effective for tax years beginning after December 31, 1995, the pre-1988 reserves must be recaptured and taken into income over a six-year period if the Association ceases to qualify as a bank. The Association's intent is to continue to qualify as a bank. The unrecorded deferred income tax liability on the above amounts was approximately $168,800 at December 31, 2021.

**Note 8: Borrowed Funds** 

Borrowed funds consist of the following at December 31, 2021 and 2020:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 2021 | 2021 | 2020 | 2020 |
|  | Rates | Amount | Rates | Amount |
|  Federal Home Loan Bank (FHLB): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fixed rate, fixed term advances | 1.69% - 2.07% | $2000000 | 1.27% - 2.07% | $3850000 |
|  Total |  | $2000000 |  | $3850000 |

---

The following is a summary of scheduled maturities of fixed term borrowed funds as of December 31, 2021:

---

| | | |
|:---|:---|:---|
|  | Fixed Rate Advances | Fixed Rate Advances |
|  | Weighted<br>Average Rate |<br>Amount |
| 2022 | 2.07% | $1000000 |
| 2023 | -% |  |
| 2024 | 1.69% | 1000000 |
|  Total |  | $2000000 |

---

The FHLB advances were collateralized by certain loans which totaled approximately $9,392,000 and $9,221,000 at December 31, 2021 and 2020, respectively, and by the Association's investment in FHLB stock which totaled $88,500 and $206,800 at December 31, 2021 and 2020, respectively.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 9: Commitments** 

In the ordinary course of business, the Association has various outstanding commitments and contingent liabilities that are not reflected in the accompanying financial statements. There were no commitments and contingent liabilities to extend credit at December 31, 2021 or 2020. Commitments to extend credit include exposure to some credit loss in the event of nonperformance of the customer. The Association's credit policies and procedures for credit commitments are the same as those for extension of credit that are recorded on the statements of condition. Because these instruments have fixed maturity dates, and because some of them may expire without being drawn upon, they do not generally present any significant liquidity risk to the Association.

**Note 10: Equity and Regulatory Matters (CBLR)** 

The Association is subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Association's financial statements.

In September 2019, the federal banking agencies jointly finalized a rule that introduced an optional simplified measure of capital adequacy known as the community bank leverage ratio (CBLR) framework. In order to qualify for the CBLR framework, a qualifying community banking organization must have a Tier 1 leverage ratio of greater than 9%, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities. The Coronavirus Aid, Relief, and Economic Security Act lowered the CBLR to 8% through December 31, 2020. Beginning in 2021, the CBLR increased to 8.5% for the calendar year, before increasing back to 9% beginning January 1, 2022. As of December 31, 2021 and 2020, the Association qualified for and elected to use the CBLR framework. An institution opting into the CBLR framework and meeting all requirements under the framework will be considered to have met the well-capitalized ratio requirements under the Prompt Corrective Action regulations and will not be required to report or calculate risk-based capital.

As of December 31, 2021, the most recent notification from the regulatory agencies categorized the Association as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Association must maintain minimum regulatory capital ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Association's category.

The Association's actual capital amounts and ratios as of December 31, 2021 and 2020 are presented in the following table:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | | | **To Be Well Capitalized** | **To Be Well Capitalized** | **To Be Well Capitalized** | **To Be Well Capitalized** |
|  | | | **Under Prompt Corrective** | **Under Prompt Corrective** | **Under Prompt Corrective** | **Under Prompt Corrective** |
|  | **Actual** | **Actual** | **Action Provisions** | **Action Provisions** | **Action Provisions** | **Action Provisions** |
| *(Dollars in Thousands)* | **Amount** | **Ratio** | **Amount** | **Amount** | **Ratio** | **Ratio** |
| **2021** |  |  |  |  |  |  |
|  Community Bank Leverage Ratio | $4930 | 17.58% | <u>></u> $| 2243 | <u>></u> | 8.00% |
|  Community Bank Leverate Ratio | $5075 | 19.01% | <u>></u> $| 2136 | <u>></u> | 8.00% |

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 11: Fair Value Measurements** 

Some assets, such as marketable equity securities and securities available for sale, are measured at fair value on a recurring basis under accounting principles generally accepted in the United States. Other assets, such as impaired loans, may be measured at fair value on a nonrecurring basis.

Following is a description of the valuation methodology and significant inputs used for each asset measured at fair value on a recurring or nonrecurring basis, as well as the classification of the asset within the fair value hierarchy.

*Marketable equity securities* - Marketable equity securities with a readily determinable fair value are measured at fair value on a recurring basis. The fair value measurement of marketable equity securities with a readily determinable fair value are based on the quoted price of the security and is considered a Level 1 fair value measurement. Marketable equity securities without a readily determinable fair value are measured at fair value on a nonrecurring basis when transaction prices for identical or similar securities are identified. Fair value measurements on equity securities without a readily determinable fair value are generally considered a Level 2 fair value measurement.

*Securities available for sale* - Securities available for sale may be classified as Level 1, Level 2, or Level 3 measurements within the fair value hierarchy. Level 1 securities include debt securities traded on a national exchange. The fair value measurement of a Level 1 security is based on the quoted price of the security. Level 2 securities include U.S. government and agency securities, obligations of states and political subdivisions, corporate debt securities, and mortgage related securities. The fair value measurement of a Level 2 security is obtained from an independent pricing service and is based on recent sales of similar securities and other observable market data. Level 3 securities include trust preferred securities that are not traded in a market. The fair value measurements of Level 3 securities are determined by the Association's Chief Executive Officer (CEO), and then reported to the Board of Directors. Fair values are calculated using discounted cash flow models that incorporate various assumptions, including expected cash flows and market credit spreads. When comparable sales are available, these are used to validate the models used. Other available industry data, such as information regarding defaults and deferrals, are incorporated into the expected cash flows.

*Loans* - Loans are not measured at fair value on a recurring basis. However, loans considered to be impaired (see Note 1) may be measured at fair value on a nonrecurring basis. The fair value measurement of an impaired loan that is collateral dependent is based on the fair value of the underlying collateral. Independent appraisals are obtained that utilize one or more valuation methodologies - typically they will incorporate a comparable sales approach and an income approach. Management routinely evaluates the fair value measurements of independent appraisers and adjusts those valuations based on differences noted between actual selling prices of collateral and the most recent appraised value. Such adjustments are usually significant, which results in a Level 3 classification. All other impaired loan measurements are based on the present value of expected future cash flows discounted at the applicable effective interest rate and, thus, are not fair value measurements.

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 11: Fair Value Measurements** (Continued)

Information regarding the fair value of assets measured at fair value on a recurring basis as of December 31, 2021 and 2020 follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Recurring Fair Value Measurements Using | Recurring Fair Value Measurements Using | Recurring Fair Value Measurements Using | |
|  | Quoted Prices<br>in Active<br>Markets for<br>Identical<br>Instruments<br>(Level 1) |<br>Significant<br>Other<br>Observable<br>Inputs<br>(Level 2) |<br>Significant<br>Unobservable<br>Inputs<br>(Level 3) |<br><br><br>Total |
| **2021** |  |  |  |  |
|  Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marketable equity securities | $12589 | $— | $— | $12589 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities available for sale: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities |  | 1343245 |  | 1343245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate securities |  | 1377235 |  | 1377235 |
|  Total | $12589 | $2720480 | $— | $2733069 |
| **2020** |  |  |  |  |
|  Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marketable equity securities | $35341 | $— | $— | $35341 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities available for sale: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities |  | 1849562 |  | 1849562 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate securities |  | 1413726 |  | 1413726 |
|  Total | $35341 | $3263288 | $— | $3298629 |

---

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##### [**Table of Contents**](#toc)
**Elberton Federal Savings & Loan Association** 

**Notes to Financial Statements** 

**Note 11: Fair Value Measurements** (Continued)

Information regarding the fair value of assets measured at fair value on a nonrecurring basis as of December 31, 2021 and 2020 follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Nonrecurring Fair Value Measurements Using | Nonrecurring Fair Value Measurements Using | Nonrecurring Fair Value Measurements Using | |
|  | Quoted Prices<br>in Active<br>Markets<br>(Level 1) |<br>Observable<br>Inputs<br>(Level 2) | Significant<br>Unobservable<br>Inputs<br>(Level 3) |<br><br>Total |
| **2021** |  |  |  |  |
|  Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impaired loans | $— | $— | $470555 | $470555 |
|  Total | $— | $— | $470555 | $470555 |
| **2020** |  |  |  |  |
|  Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impaired loans | $— | $— | $122850 | $122850 |
|  Total | $— | $— | $122850 | $122850 |

---

**Note 12: Subsequent Events** 

On June 1, 2021, the Association announced that it had entered into a definitive agreement to merge with and into Oconee Financial Corporation, the parent company of Oconee State Bank. The transaction is structured as a merger conversion, whereby the Association, will convert to a stock form of organization and will simultaneously merge into Oconee State Bank. As part of the transaction, Oconee Financial Corporation will offer shares of its common stock to qualifying eligible Association account holders and possibly others in a subscription offering and a community offering. The merger is subject to regulatory approvals which are still pending as of the date of these financial statements.

Management has evaluated subsequent events for potential recognition or disclosure in the financial statements through May 26, 2022, the date on which the financial statements were available to be issued.

------

##### [**Table of Contents**](#toc)
**INDEX TO EXHIBITS** 

---

| | |
|:---|:---|
| **Exhibit No.** | **Description of Exhibit** |
| &nbsp;&nbsp;&nbsp;&nbsp;1 | [Agreement with Performance Trust Capital Partners](d406793dex1a1undragmt.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;2.1 | [Articles of Incorporation of Oconee Financial Corporation](d406793dex1a2acharter.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;2.2 | [Bylaws of Oconee Financial Corporation](d406793dex1a2bbylaws.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;4.1 | [Stock Order Form](d406793daddexhb.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;4.2 | [Marketing Materials](d406793daddexhb1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;6.1 | [Oconee Financial Corporation 2021 Equity Incentive Plan](d406793daddexhb2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;6.2 | [Employment Agreement by and between Oconee State Bank and Daniel Graves to be effective as of the Closing of the Merger Conversion](d406793dex1a6matctrct.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;7.1 | [Amended and Restated Agreement and Plan of Merger Conversion dated as of December 15, 2022, by and among Oconee Financial Corporation, Oconee State Bank and Elberton Federal Savings & Loan Association](d406793dex1a7acqagmt.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;7.2 | [Amended and Restated Plan of Merger Conversion dated as of June 1, 2021.](d406793daddexhb3.htm) |
| 11.1 | [Consent of RP Financial, LC](d406793dex1a11consent.htm) |
| 11.2 | [Consent of Alston & Bird LLP](d406793dex1a11consent1.htm) |
| 11.3 | [Consent of Wipfli LLP](d406793dex1a11consent2.htm) |
| 11.4 | [Consent of Mauldin & Jenkins, LLC](d406793dex1a11consent3.htm) |
| 12.1 | [Opinion of Alston & Bird LLP](d406793dex1a12opncnsl.htm) |
| 99.1 | [Elberton Appraisal](d406793daddexhb4.htm) |

---

------

##### [**Table of Contents**](#toc)
**SIGNATURES** 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Watkinsville, State of Georgia, on March 23, 2023.

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| | |
|:---|:---|
| **OCONEE FINANCIAL CORPORATION,** a Georgia corporation and registered bank holding company | **OCONEE FINANCIAL CORPORATION,** a Georgia corporation and registered bank holding company |
| By: | */s/ T. Neil Stevens* |
|  | T. NEIL STEVENS, President, Chief Executive Officer and Director |

---

This offering statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | |
|:---|:---|
| */s/ James R. McLemore*<br> JAMES R. McLEMORE, Executive Vice<br> President and Chief Financial Officer | 3/23/2023<br> Date |
| */s/ G. Robert Bishop* | 3/23/2023 |
| G. ROBERT BISHOP, Director | Date |
| */s/ Brian J. Brodrick* | 3/23/2023 |
| BRIAN J. BRODRICK, Director | Date |
| */s/ J. Albert Hale, Sr.* | 3/23/2023 |
| J. ALBERT HALE, SR., Director | Date |
| */s/ Virginia Wells Mcgeary* | 3/23/2023 |
| VIRGINIA WELLS McGEARY, Director | Date |
| */s/ Jonathan R. Murrow* | 3/23/2023 |
| JONATHAN R. MURROW, Director | Date |
| */s/ Tony L. Powell* | 3/23/2023 |
| TONY L. POWELL, Director | Date |
| */s/ Holly H. Stephenson* | 3/23/2023 |
| HOLLY H. STEPHENSON, Director | Date |
| */s/ Laura H. Whitaker* | 3/23/2023 |
| LAURA H. WHITAKER, Director | Date |

---

***Signature Page to Form 1-A***

## Ex1A-1

**Exhibit 1** 

**(Agreement with Performance Trust Capital Partners)**![LOGO](g406793g12j18.jpg)

January 4, 2021

Board of Directors

Oconee Financial Corporation

Oconee State Bank

35 North Main Street

Watkinsville, Georgia 30677

Board of Directors

Elberton Federal Savings & Loan Association

6 Church Street

Elberton, Georgia 36035

Ladies and Gentlemen:

We understand that the Board of Directors of Oconee Financial Corporation (the "<u>Company</u>") and Oconee State Bank (the "<u>Bank</u>" and collectively with the Company, "<u>Oconee</u>") are considering the adoption of an Agreement and Plan of Conversion Merger (the "<u>Plan"</u>) in connection with the proposed conversion of Elberton Federal Savings & Loan Association ("<u>Elberton Federal</u>" and collectively, with the Company and the Bank, the "<u>Parties</u>") from mutual to stock form and the merger of Elberton Federal with and into Oconee State Bank, the wholly owned subsidiary of the Company (the "<u>Merger</u>").

<u>SERVICES</u> 

Performance Trust Capital Partners, LLC ("<u>Performance Trust</u>") will provide on an exclusive basis financial advisory and investment banking services to the Parties in connection with the Merger. It will work with the Parties and their management, counsel, accountants and other advisors on the Merger and anticipate that our services (the "<u>Services</u>") will include the following, each as may be necessary and as the Parties may reasonably request:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Reviewing with the Boards of the Parties the financial terms and impact of the Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Reviewing the Plan and any related ancillary documents (it being understood that preparation and filing of such
documents will be the responsibility of the Parties and their counsel) and assistance with the Merger negotiations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Providing such other general advice and assistance as may be reasonably requested to promote the successful
completion of the Merger.

<u>FEES</u> 

For the Services, each of Oconee and Elberton Federal agrees to pay Performance Trust (1) $15,000 at the time of the signing of this letter agreement; and (2) $25,000 at the time of the signing of the Plan. Additionally, Oconee agrees to pay Performance Trust $95,000 at the closing of the Merger. These fees are based upon the requirements of current regulations and the Plan as currently contemplated. Any unusual or additional items or duplication of service required as a result of a material change in the regulations or the Plan or a material delay or other similar events may result in extra charges that will be covered in a separate agreement if and when they occur and shall not exceed $5,000**.** The Bank will inform Performance Trust within a reasonable period of time of any changes in the Plan that require changes in Performance Trust's services.

![LOGO](g406793g33v50.jpg)

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![LOGO](g406793g12j18.jpg)

<u>COSTS AND EXPENSES</u> 

As is customary, the Parties will bear all other expenses incurred in connection with the Merger, including, without limitation, (i) the cost of obtaining all regulatory approvals; (ii) the cost of printing and distributing any required member or shareholder materials; and (iii) all fees and disbursements of the Parties' counsel, accountants, transfer agent and other advisors. In the event Performance Trust incurs any such fees and expenses on behalf of the Parties, the Parties will reimburse Performance Trust for such fees and expenses whether or not the Merger is consummated; *provided, however*, that Performance Trust shall not incur any substantial expenses on behalf of the Company without prior approval, which approval will not be unreasonably withheld.

<u>CONFIDENTIALITY</u> 

Except as contemplated in connection with the performance of its Services under this agreement, as authorized by the Parties or as required by law, regulation, legal process or order of any court or governmental or regulatory authority, Performance Trust agrees that it will treat as confidential all material, non-public information relating to the Parties obtained in connection with its engagement hereunder (the "<u>Confidential Information</u>"); provided, however, that Performance Trust may disclose such information to its employees, agents and advisors who are assisting or advising Performance Trust in performing its Services hereunder and who have been directed to comply with the terms and conditions of this paragraph. As used in this paragraph, the term "Confidential Information" shall not include information that (a) is or becomes generally available to the public other than as a result of a disclosure by Performance Trust in breach of the confidentiality obligations contained herein, (b) was available to Performance Trust on a non-confidential basis prior to its disclosure to Performance Trust by the Parties, (c) becomes available to Performance Trust on a non-confidential basis from a person other than the Parties, who is not otherwise known to Performance Trust to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation owed to the Parties or (d) is independently developed by Performance Trust without use of or reference to the Confidential Information disclosed to Performance Trust pursuant to the engagement hereunder.

Upon the written request of any of the Parties, Performance Trust will promptly, but in any event within ten (10) business days after receipt of such request, return, destroy (to the extent technically practicable) or cause the return or destruction of all Confidential Information in written form or set forth in other tangible media provided to it by or on behalf of the Parties (in each case including all copies); *provided, however*, that nothing herein will be construed to limit Performance Trust's ability to retain archival copies of Confidential Information as may be required to fulfill its legal and regulatory obligations and its compliance and recordkeeping obligations policies or procedures. Any destruction of materials shall be verified promptly to the Parties by Performance Trust in writing. Any Confidential Information that has not been returned or destroyed, including, without limitation, any oral Confidential Information, shall remain subject to the confidentiality obligations set forth in this letter agreement.

If Performance Trust is requested or required under applicable law or by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or other legally binding process, to disclose any Confidential Information relating to the Parties, it is agreed that Performance Trust (if legally permitted to do so) will provide the Parties with prompt notice of any such request or requirement (written, if practical) and otherwise provide reasonable cooperation to the Parties (at the Parties' expense) to enable the Parties to seek an appropriate protective order or other appropriate remedy or to waive compliance with the provisions of this letter agreement. Notwithstanding the foregoing, no such notice shall be required in the case of a routine audit or regulatory or administrative review of Performance Trust not specifically related to the Parties. In the event that such protective order or other remedy is not obtained, or that the Parties grant a waiver as provided hereby, Performance Trust may furnish that portion (and only that portion) of the Confidential Information that it is legally compelled to disclose and with respect to which it agrees to exercise its commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded to such information by the receiving party compelling such disclosure. In any event, Performance Trust will not oppose action by the Parties to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Confidential Information.

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|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 2.0 |

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![LOGO](g406793g12j18.jpg)

The Parties hereby acknowledge and agree that the financial models and presentations used by Performance Trust in performing its Services hereunder have been developed by and are proprietary to Performance Trust and are protected under applicable copyright laws. The Parties agree that it will not reproduce or distribute all or any portion of such models or presentations without the prior written consent of Performance Trust.

<u>INDEMNIFICATION</u> 

In connection with Performance Trust's engagement to advise and assist the Parties as provided herein, each of the Parties , jointly and severally, agrees to indemnify and hold Performance Trust and its affiliates and their respective partners, directors, officers, employees, agents and controlling persons within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934 (Performance Trust and each such person being an "<u>Indemnified Party</u>") harmless, to the fullest extent permitted by law, from and against any and all losses, direct or class action claims, damages, costs and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, or otherwise, related to or arising out the engagement of Performance Trust pursuant to, or the performance by Performance Trust of the services contemplated by, this letter agreement, and will reimburse any Indemnified Party for all expenses (including reasonable legal fees and expenses and costs of production or response) as they are incurred, including expenses incurred in connection with the investigation, responding, preparation for or defense of any pending or threatened regulatory inquiry, subpoena or discovery response, claim or any action or other proceeding arising therefrom, whether or not in connection with pending or threatened litigation in which Indemnified Party is a party or inquiry of which Indemnified Party is subject; provided, however, that the Parties will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense which are finally judicially determined to have resulted primarily from Performance Trust's bad faith, gross negligence, or intentional misconduct.

If the foregoing indemnification is judicially determined to be unavailable for any reason, then, in lieu of indemnifying such Indemnified Party, the Parties agree to contribute to such losses, claims, damages, costs, liabilities and expenses (a) in such proportion as is appropriate to reflect the relative benefits to the Parties, on the one hand, and Performance Trust, on the other hand, of the engagement provided for in this letter agreement or (b) if the allocation provided for in clause (a) above is not available, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (a) but also the relative fault of each of the Parties and Performance Trust, as well as any other relevant equitable consideration; provided, however, in no event shall Performance Trust's aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by Performance Trust under this letter agreement. For the purposes of this letter agreement, the relative benefits to the Parties and to Performance Trust of the engagement under this letter agreement shall be deemed to be in the same proportion as (a) the total value paid or contemplated to be paid or received or contemplated to be received by the Parties or the Parties members, as the case may be, in the Merger, whether or not any such Merger is consummated, bears to (b) the fees paid or to be paid to Performance Trust under this letter agreement.

The Parties agree to notify Performance Trust promptly of the assertion against it or any other person of any claim or the commencement of any action or proceeding relating to any transaction contemplated by this letter agreement. The Parties will not, without Performance Trust's prior written consent, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any claim, action or proceeding in respect of which indemnity may be sought hereunder, whether or not any Indemnified Party is an actual or potential party thereto, unless such settlement, compromise, consent or termination (a) includes an explicit and unconditional release of each Indemnified Party from any liabilities arising out of such claim, action or proceeding and (b) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.

<u>MATTERS RELATING TO ENGAGEMENT</u> 

The Parties acknowledge and agree that Performance Trust has been engaged solely as an independent contractor to provide the Services set forth herein. In rendering such Services, Performance Trust will be acting solely pursuant to a contractual relationship on an arm's length basis with respect to such Services and not as a fiduciary to the Parties or any other

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|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 3.0 |

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![LOGO](g406793g12j18.jpg)

person. Additionally, the Parties acknowledge that Performance Trust is not advising the Parties or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Parties shall consult with its own advisors concerning such matters and Performance Trust shall have no responsibility or liability to the Parties with respect thereto. The Parties also acknowledge that nothing in this letter agreement is intended to create duties to the Parties beyond those expressly provided for in this letter agreement or to create duties of any kind to the Parties' creditors or security holders, and Performance Trust and the Parties specifically disclaim the creation of any fiduciary relationship between, or the imposition of any fiduciary duties on, either party. Finally, the Parties agree that Performance Trust may perform the Services contemplated hereby in conjunction with its affiliates, and that any affiliates of Performance Trust performing the Services hereunder shall be entitled to the benefits and be subject to the terms of this letter agreement.

The Parties acknowledge that Performance Trust is a securities firm engaged in securities, trading and brokerage activities and providing investment banking and financial advisory services. In addition, Performance Trust and its affiliates may from time to time perform various investment banking and financial advisory services for other clients and customers who may have conflicting interests with respect to you. The Parties also acknowledge that Performance Trust and its affiliates have no obligation to use in connection with this engagement or to furnish the Parties, confidential information obtained from other persons.

<u>REPRESENTATIONS</u> 

Each of the Parties represent and warrant that it has all requisite power and authority to enter into and carry out the terms and provisions of this letter agreement, the execution, delivery and performance of this letter agreement does not breach or conflict with any agreement, document or instrument to which it is a party or bound and this letter agreement has been duly authorized, executed and delivered by it.

<u>MISCELLANEOUS</u> 

This letter agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. This letter agreement can only be altered by written consent signed by the parties.

It is understood that the provisions contained under the caption "Representations" will survive any termination of this letter agreement.

This letter agreement and any claim, controversy or dispute arising under or related to this letter agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws principles thereof. The Parties and Performance Trust irrevocably agree to waive trial by jury in any action, proceeding, claim or counterclaim brought by or on behalf of either party related to or arising out of this letter agreement or the performance of the Services hereunder.

Each of the parties hereto irrevocably agrees that, except as otherwise set forth in this paragraph, any state or federal court sitting in the City of New York shall have exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute arising out of or relating to this letter agreement and, for such purposes, irrevocably submits to the jurisdiction of such courts. The Parties hereby agree that service of any process, summons, notice or document by hand delivery or registered mail addressed to the Parties, shall be effective service of process for any suit, action or proceeding brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. The Parties agree that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon the Parties and may be enforced in any other court to whose jurisdiction each of the Parties is or may in the future be subject, by suit upon judgment. The Parties further agree that nothing herein shall affect Performance Trust's right to effect service of process in any other manner permitted by law or to bring a suit, action or proceeding (including a proceeding for enforcement of a judgment) in any other court or jurisdiction in accordance with applicable law.

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|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 4.0 |

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![LOGO](g406793g12j18.jpg)

Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Performance Trust the duplicate copy of this letter agreement enclosed herewith.

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| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| PERFORMANCE TRUST CAPITAL PARTNERS, LLC | PERFORMANCE TRUST CAPITAL PARTNERS, LLC |
| By: | /s/ R. Lee Burrows, Jr. |
|  | R. Lee Burrows, Jr. |
|  | Vice Chairman-Investment Banking |

---

Accepted and agreed to as of the date first above written:

OCONEE FINANCIAL CORPORATION

OCONEE STATE BANK

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| | |
|:---|:---|
| By: | /s/ T. Neil Stevens |
|  | T. Neil Stevens |
|  | President, Chief Executive Officer and Director |

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ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION

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| | |
|:---|:---|
| By: | /s/ R. Daniel Graves |
|  | R. Daniel Graves |
|  | Chief Executive Officer and Director |

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|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 5.0 |

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![LOGO](g406793g12j18.jpg)

December [•], 2020

Board of Directors

Oconee Financial Corporation

35 North Main Street

Watkinsville, Georgia 30677

Attention: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr. T. Neil Stevens

President, Chief Executive Officer and Director

Ladies and Gentlemen:

We understand that the Board of Directors of Oconee Financial Corporation (the "<u>Company</u>") and Oconee State Bank (the "<u>Bank</u>") are considering the adoption of an Agreement and Plan of Conversion Merger in connection with the proposed conversion of Elberton Federal Savings & Loan Association ("<u>Elberton Federal</u>") from mutual to stock form (the "<u>Conversion</u>") and the merger of Elberton Federal with and into Oconee State Bank, the wholly owned subsidiary of the Company (the "<u>Merger</u>"). As a part of the Merger, the Company intends to offer and sell certain shares of its common stock (the "<u>Shares</u>") in a community offering. Performance Trust Capital Partners, LLC ("<u>Performance Trust</u>") is pleased to assist the Company on a best efforts basis with the Offering, as such term is hereinafter defined, and this letter agreement is to confirm the terms and conditions of our engagement as exclusive marketing agent to the Company.

Under the terms of the Agreement and Plan of Conversion and the Plan and a Plan of Conversion Merger to be adopted by Elberton Federal and the Bank (collectively, the "<u>Plan</u>"), and applicable regulations, the Shares will be offered first to eligible members of Elberton Federal (the "<u>Subscription Offering</u>"). Subject to the prior rights of subscribers in the Subscription Offering, the Shares may be offered in a community offering, with a preference given in the community offering to residents of the communities served by the Elberton Federal and to shareholders of the Company (the "<u>Community Offering</u>," and together with the Subscription Offering, the "<u>Subscription and Community Offering</u>"). Shares not subscribed for in the Subscription and Community Offering, if any, may be offered to the general public by Performance Trust on a best efforts basis ("<u>Syndicated Offering</u>" and together with the Subscription and Community Offering and Syndicated Offering, the "<u>Offering</u>"). Performance Trust may, in consultation with the Company, form a syndicate of registered dealers to assist in any Syndicated Offering.

<u>SERVICES</u> 

Performance Trust will act as exclusive marketing agent for the Company in the Offering and will serve as sole manager of any Syndicated Offering. It will work with the Company and its management, counsel, accountants and other advisors on the Offering and anticipate that our services (the "<u>Services</u>") will include the following, each as may be necessary and as the Company may reasonably request:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Consulting as to the marketing implications of the Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Reviewing with the Board the financial impact of the Offering on the Company, based upon the independent
appraiser's appraisal of Elberton Federal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Reviewing all offering documents, including the prospectus, stock order forms and related offering materials
(it being understood that preparation and filing of such documents will be the responsibility of the Company and its counsel);

![LOGO](g406793g33v50.jpg)

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![LOGO](g406793g12j18.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Assisting in the design and implementation of a marketing strategy for the Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Assisting Company management in scheduling and preparing for meetings with potential investors and/or other
broker-dealers in connection with the Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Employee training; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Providing such other general advice and assistance as may be reasonably requested to promote the successful
completion of the Offering.

<u>SUBSCRIPTION AND COMMUNITY OFFERING FEES</u> 

If the Offering is consummated, the Company agrees to pay Performance Trust for its Services a fee (the "Service Fee") of seven percent (7.00%) of the aggregate Actual Purchase Price of the shares of Common Stock sold in the Subscription and Community Offering. For purposes of this letter agreement, the term "Actual Purchase Price" shall mean the price at which the Shares of Common Stock are sold in the Offering.

If (a) Performance Trust 's engagement hereunder is terminated for any of the reasons provided for under the second paragraph of the section of this letter agreement captioned "Definitive Agreement," or (b) the Company either terminates the Offering or determines to not proceed with the Offering, no fees shall be payable by the Company to Performance Trust hereunder; however, the Company shall reimburse Performance Trust for its reasonable out-of-pocket expenses (including legal fees) incurred in connection with its engagement hereunder and for any fees and expenses incurred by Performance Trust on behalf of the Company pursuant to the second paragraph under the section captioned "Costs and Expenses" below.

All fees and expense reimbursements payable to Performance Trust hereunder shall be payable in immediately available funds at the time of the closing of the Offering, or upon the termination of Performance Trust's engagement hereunder or termination of the Offering, as the case may be. In recognition of the long lead times involved in the stock offering process, the Company agrees to pay Performance Trust a one-time non-refundable management fee (the "Management Fee") in the amount of $40,000, payable upon execution of this letter agreement. The Management Fee shall be deemed to have been earned in full when due. The Management Fee will be credited against the Service Fee.

<u>SYNDICATED COMMUNITY OFFERING</u> 

If any shares of the Common Stock remain available after the expiration of the Subscription and Community Offering, at the request of the Company and subject to the continued satisfaction of the conditions set forth in the second paragraph under the section captioned "Definitive Agreement" below, Performance Trust will seek to sell such Common Stock in a Syndicated Community Offering on a best efforts basis, subject to the terms and conditions to be set forth in a selected dealers agreement, and may, in consultation with the Company, form a syndicate of registered dealers to assist in such efforts. With respect to any Shares of Common Stock sold by Performance Trust or any other FINRA member firm under any selected dealers agreements in a Syndicated Community Offering, the Company agrees to pay a commission of seven percent (7.00%) of the aggregate Actual Purchase Price of the Shares of Common Stock sold in such Syndicated Community Offering. Performance Trust will endeavor to distribute the Common Stock among dealers in a fashion that best meets the distribution objectives of the Company and the requirements of the Plan, which may result in limiting the allocation of stock to certain selected dealers. It is understood that in no event shall Performance Trust be obligated to take or purchase any shares of the Common Stock in the Offering.

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|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 2.0 |

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![LOGO](g406793g12j18.jpg)

<u>COSTS AND EXPENSES</u> 

In addition to any fees that may be payable to Performance Trust hereunder and the expenses to be borne by the Company pursuant to the following paragraph, the Company agrees to reimburse Performance Trust, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with its engagement hereunder, regardless of whether the Offering is consummated, including, without limitation, legal fees and expenses, communications, syndication and travel expenses, up to a maximum of $45,000 for legal fees and expenses and $10,000 for all other out-of-pocket expenses for a total of $55,000; *provided, however*, in the event that a Syndicated Community Offering is conducted, such expense reimbursement amount shall be increased to $60,000; *and provided, further,* that Performance Trust shall document such expenses to the reasonable satisfaction of the Company. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification provisions of this letter agreement.

As is customary, the Company will bear all other expenses incurred in connection with the Offering, including, without limitation, (i) the cost of obtaining all securities and bank regulatory approvals, including any required FINRA filing fees; (ii) the cost of printing and distributing the offering materials; (iii) the costs of blue sky qualification (including fees and expenses of blue sky counsel) of the Shares in the various states; (iv) listing fees; (v) all fees and disbursements of the Company's counsel, accountants, records management agent, transfer agent and other advisors; and (vi) the establishment and operational expenses for the Stock Information Center (e.g., postage, telephones, supplies, temporary employees, etc.). In the event Performance Trust incurs any such fees and expenses on behalf of the Company, the Company will reimburse Performance Trust for such fees and expenses whether or not the Offering is consummated; *provided, however*, that Performance Trust shall not incur any substantial expenses on behalf of the Company without prior approval, which approval will not be unreasonably withheld.

<u>DUE DILIGENCE REVIEW</u> 

Performance Trust's obligation to perform the Services contemplated by this letter agreement shall be subject to the satisfactory completion of such investigation and inquiries relating to the Company, the Bank, Elberton Federal and their directors, officers, agents and employees, as Performance Trust and its counsel in their sole discretion may deem appropriate under the circumstances. In this regard, the Company agrees that, at its expense, it will make available to Performance Trust all information that Performance Trust requests, and will allow Performance Trust the opportunity to discuss with the management of the Company the financial condition, business and operations of the Company and the Bank will use its best efforts to allow Performance Trust the opportunity to discuss with the management of Elberton Federal the financial condition, business and operations of Elberton Federal. The Company acknowledges that Performance Trust will rely upon the accuracy and completeness of all information received from the Company and its directors, officers, employees, agents, independent accountants and counsel.

<u>BLUE SKY MATTERS</u> 

Performance Trust and the Company agree that the Company's counsel shall serve as counsel with respect to blue sky matters in connection with the Offering. The Company will cause such counsel to prepare a Blue Sky Memorandum related to the Offering, including Performance Trust 's participation therein, and shall furnish Performance Trust a copy thereof addressed to Performance Trust or upon which such counsel shall state Performance Trust may rely.

<u>CONFIDENTIALITY</u> 

Except as contemplated in connection with the performance of its Services under this agreement, as authorized by the Company or as required by law, regulation, legal process or order of any court or governmental or regulatory authority, Performance Trust agrees that it will treat as confidential all material, non-public information relating to the Company and the Bank obtained in connection with its engagement hereunder (the "<u>Confidential Information</u>"); provided, however, that Performance Trust may disclose such information to its employees, agents and advisors who are assisting or advising Performance Trust in performing its Services hereunder and who have been directed to comply with the terms and conditions of this paragraph. As used in this paragraph, the term "Confidential Information" shall not include information that (a) is or becomes generally available to the public other than as a result of a disclosure by Performance Trust in breach of the

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| | |
|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 3.0 |

---

------

![LOGO](g406793g12j18.jpg)

confidentiality obligations contained herein, (b) was available to Performance Trust on a non-confidential basis prior to its disclosure to Performance Trust by the Company, (c) becomes available to Performance Trust on a non-confidential basis from a person other than the Company, who is not otherwise known to Performance Trust to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation owed to the Company or (d) is independently developed by Performance Trust without use of or reference to the Confidential Information disclosed to Performance Trust pursuant to the engagement hereunder.

Upon the written request of the Company, Performance Trust will promptly, but in any event within ten (10) business days after receipt of such request, return, destroy (to the extent technically practicable) or cause the return or destruction of all Confidential Information in written form or set forth in other tangible media provided to it by or on behalf of the Company (in each case including all copies); *provided, however*, that nothing herein will be construed to limit Performance Trust's ability to retain archival copies of Confidential Information as may be required to fulfill its legal and regulatory obligations and its compliance and recordkeeping obligations policies or procedures. Any destruction of materials shall be verified promptly to the Company by Performance Trust in writing. Any Confidential Information that has not been returned or destroyed, including, without limitation, any oral Confidential Information, shall remain subject to the confidentiality obligations set forth in this letter agreement.

If Performance Trust is requested or required under applicable law or by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or other legally binding process, to disclose any Confidential Information relating to the Company or the Bank, it is agreed that Performance Trust (if legally permitted to do so) will provide the Company with prompt notice of any such request or requirement (written, if practical) and otherwise provide reasonable cooperation to the Company (at the Company's expense) to enable the Company to seek an appropriate protective order or other appropriate remedy or to waive compliance with the provisions of this letter agreement. Notwithstanding the foregoing, no such notice shall be required in the case of a routine audit or regulatory or administrative review of Performance Trust not specifically related to the Company. In the event that such protective order or other remedy is not obtained, or that the Company grants a waiver as provided hereby, Performance Trust may furnish that portion (and only that portion) of the Confidential Information that it is legally compelled to disclose and with respect to which it agrees to exercise its commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded to such information by the receiving party compelling such disclosure. In any event, Performance Trust will not oppose action by the Company to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Confidential Information.

The Company hereby acknowledges and agrees that the financial models and presentations used by Performance Trust in performing its Services hereunder have been developed by and are proprietary to Performance Trust and are protected under applicable copyright laws. The Company agrees that it will not reproduce or distribute all or any portion of such models or presentations without the prior written consent of Performance Trust.

<u>INDEMNIFICATION</u> 

The Company agrees to indemnify and hold Performance Trust and its affiliates and their respective partners, directors, officers, employees, agents and controlling persons within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (collectively, the "<u>Performance Trust Indemnified Parties</u>" and each such person being an "<u>Performance Trust Indemnified Party</u>") harmless from and against any and all losses, claims, damages and liabilities, joint or several, to which such Performance Trust Indemnified Party may become subject under applicable federal or state law, or otherwise, (i) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the offering documents, including documents described or incorporated by reference therein, or in any other written or oral communication provided by or on behalf of the Company to any actual or prospective purchaser of the Shares or arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, (ii) arising out of or based in whole or in part on any inaccuracy in the representations or warranties of the Company or the Bank contained in any agency agreement, or any failure of the Company or the Bank to perform its respective obligations thereunder or (iii) related to or arising out of the Offering or the engagement of Performance Trust pursuant to, or the

---

| | |
|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 4.0 |

---

------

![LOGO](g406793g12j18.jpg)

performance by Performance Trust of the Services contemplated by, this letter agreement, and will reimburse any Performance Trust Indemnified Party for all expenses (including reasonable legal fees and expenses) as they are incurred, including expenses incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party; *provided, however*, that the Company will not be liable to Performance Trust (a) to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon any untrue statement of a material fact or the omission of a material fact required to be stated therein or necessary to make not misleading any statements contained in any final prospectus, or any amendment or supplement thereto, made in reliance on and in conformity with written information furnished to the Company by Performance Trust expressly for use therein, or (b) under clause (iii) of this paragraph to the extent that any such loss, claim, damage, liability or expense is finally judicially determined to be primarily attributable to the gross negligence, willful misconduct or bad faith of Performance Trust. If the foregoing indemnification is unavailable for any reason other than for the reasons stated in subparagraph (a) or (b) above, the Company agrees to contribute to such losses, claims, damages, liabilities and expenses in the proportion that its financial interest in the Offering bears to that of Performance Trust; *provided, however,* in no event shall Performance Trust's aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by Performance Trust pursuant to the provisions of this letter agreement. The Company further agrees that neither Performance Trust nor any of its controlling persons, affiliates, partners, directors, officers, employees or consultants shall have any liability (whether direct or indirect, in contract, tort or otherwise) to the Company or any person asserting claims on behalf of or in right of the Company for any losses, claims, damages, liabilities or expenses arising out of or relating to this letter agreement or the Services to be rendered by Performance Trust hereunder, unless it is finally judicially determined that such losses, claims, damages, liabilities or expenses resulted directly from the gross negligence, bad faith or willful misconduct of Performance Trust.

The Company agrees to notify Performance Trust promptly of the assertion against it or any other person of any claim or the commencement of any action or proceeding relating to any transaction contemplated by this letter agreement. The Company will not without Performance Trust's prior written consent, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any claim, action or proceeding in respect of which indemnity may be sought hereunder, whether or not any Performance Trust Indemnified Party is an actual or potential party thereto, unless such settlement, compromise, consent or termination (i) includes an explicit and unconditional release of each Performance Trust Indemnified Party from any liabilities arising out of such claim, action or proceeding and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Performance Trust Indemnified Party. If the Company enters into any agreement or arrangement with respect to, or effects, any proposed sale, exchange, dividend or other distribution or liquidation of all or substantially all of its assets in one or a series of transactions, the Company shall provide for the assumption of its obligations under this section by the purchaser or transferee of such assets or another party reasonably satisfactory to Performance Trust.

In no event shall a Performance Trust Indemnified Party be liable for any consequential, indirect, incidental, or special damages. The defense, indemnity, reimbursement, contribution and other obligations and agreements of the Company set forth herein shall apply to any modifications of this letter agreement and shall be in addition to any liability that Performance Trust may otherwise have. The rights of the Performance Trust Indemnified Parties under this letter agreement shall be in addition to any rights that any Performance Trust Indemnified Party may have at common law, in equity, or otherwise. For the sole purpose of enforcing and otherwise giving effect to the provisions of this letter agreement, the Company hereby consents to personal jurisdiction and service and venue in any court in which any claim which is subject to this letter agreement is brought against the Performance Trust Indemnified Parties.

The reimbursement, indemnity and contribution obligations of the Company set forth herein shall apply to any modification of this letter agreement and shall remain in full force and effect regardless of any termination of, or the completion of, any Performance Trust Indemnified Party's Services hereunder.

---

| | |
|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 5.0 |

---

------

![LOGO](g406793g12j18.jpg)

<u>MATTERS RELATING TO ENGAGEMENT</u> 

The Company acknowledges and agrees that Performance Trust has been engaged solely as an independent contractor to provide the Services set forth herein. In rendering such Services, Performance Trust will be acting solely pursuant to a contractual relationship on an arm's length basis with respect to such Services (including in connection with determining the terms of each Investment) and not as a fiduciary to the Company or any other person. Additionally, the Company acknowledges that Performance Trust is not advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with its own advisors concerning such matters and Performance Trust shall have no responsibility or liability to the Company with respect thereto. The Company also acknowledges that nothing in this letter agreement is intended to create duties to the Company beyond those expressly provided for in this letter agreement or to create duties of any kind to the Company's creditors or security holders, and Performance Trust and the Company specifically disclaim the creation of any fiduciary relationship between, or the imposition of any fiduciary duties on, either party. Finally, the Company agrees that Performance Trust may perform the Services contemplated hereby in conjunction with its affiliates, and that any affiliates of Performance Trust performing the Services hereunder shall be entitled to the benefits and be subject to the terms of this letter agreement.

The Company acknowledges that Performance Trust is a securities firm engaged in securities, trading and brokerage activities and providing investment banking and financial advisory services. In addition, Performance Trust and its affiliates may from time to time perform various investment banking and financial advisory services for other clients and customers who may have conflicting interests with respect to you. The Company also acknowledges that Performance Trust and its affiliates have no obligation to use in connection with this engagement or to furnish the Company, confidential information obtained from other persons.

<u>REPRESENTATIONS</u> 

The Company represents and warrants that it has all requisite power and authority to enter into and carry out the terms and provisions of this letter agreement, the execution, delivery and performance of this letter agreement does not breach or conflict with any agreement, document or instrument to which it is a party or bound and this letter agreement has been duly authorized, executed and delivered by it.

<u>DEFINITIVE AGREEMENT</u> 

Performance Trust and the Company agree that (a) except as set forth in clause (b), the foregoing represents the general intention of the Company and Performance Trust with respect to the Services to be provided by Performance Trust in connection with the Offering, which will serve as a basis for Performance Trust commencing activities, and (b) the only legal and binding obligations of the Company and Performance Trust with respect to the Offering shall be (1) the Company's obligation to reimburse costs and expenses pursuant to the section captioned "Costs and Expenses," (2) those set forth under the captions "Confidentiality", "Representations" and "Indemnification," and (3) as set forth in a duly negotiated and executed definitive agency agreement (the "Agency Agreement") to be entered into prior to the commencement of the Offering relating to the Services of Performance Trust in connection with the Offering. Such Agency Agreement shall be in form and content satisfactory to Performance Trust and the Company and their respective counsel and shall contain standard indemnification and contribution provisions consistent herewith.

Performance Trust's execution of such Agency Agreement shall also be subject to (i) Performance Trust's satisfaction with its investigation of each of the business, financial condition and results of operations of the Company, the Bank and Elberton Federal, (ii) preparation of offering materials that are satisfactory to Performance Trust and its counsel, (iii) compliance with all relevant legal and regulatory requirements to the reasonable satisfaction of Performance Trust, (iv) agreement that the price established by the independent appraiser is reasonable, and (v) market conditions at the time of the commencement of the proposed Offering. Performance Trust may terminate this agreement if such Agency Agreement is not entered into prior to July 31, 2021.

---

| | |
|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 6.0 |

---

------

![LOGO](g406793g12j18.jpg)

<u>MISCELLANEOUS</u> 

This letter agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. This letter agreement can only be altered by written consent signed by the parties.

It is understood that the provisions contained under the caption "Representations" will survive any termination of this letter agreement.

This letter agreement and any claim, controversy or dispute arising under or related to this letter agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws principles thereof. The Company and Performance Trust irrevocably agree to waive trial by jury in any action, proceeding, claim or counterclaim brought by or on behalf of either party related to or arising out of this letter agreement or the performance of the Services hereunder.

Each of the parties hereto irrevocably agrees that, except as otherwise set forth in this paragraph, any state or federal court sitting in the City of New York shall have exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute arising out of or relating to this letter agreement and, for such purposes, irrevocably submits to the jurisdiction of such courts. The Company hereby agrees that service of any process, summons, notice or document by hand delivery or registered mail addressed to the Company, shall be effective service of process for any suit, action or proceeding brought in any such court. The Company irrevocably and unconditionally waives any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. The Company agrees that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon the Company and may be enforced in any other court to whose jurisdiction the Company is or may in the future be subject, by suit upon judgment. The Company further agrees that nothing herein shall affect Performance Trust's right to effect service of process in any other manner permitted by law or to bring a suit, action or proceeding (including a proceeding for enforcement of a judgment) in any other court or jurisdiction in accordance with applicable law.

*(Remainder of Page Intentionally Left Blank)* 

---

| | |
|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 7.0 |

---

------

![LOGO](g406793g12j18.jpg)

Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Performance Trust the duplicate copy of this letter agreement enclosed herewith.

---

| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| PERFORMANCE TRUST CAPITAL PARTNERS, LLC | PERFORMANCE TRUST CAPITAL PARTNERS, LLC |
| By: | /s/ R. Lee Burrows, Jr. |
|  | R. Lee Burrows, Jr. |
|  | Vice Chairman-Investment Banking |

---

---

| | |
|:---|:---|
| Accepted and agreed to as of the date first above written: | Accepted and agreed to as of the date first above written: |
| OCONEE FINANCIAL CORPORATION | OCONEE FINANCIAL CORPORATION |
| By: | /s/ T. Neil Stevens |
|  | T. Neil Stevens |
|  | President, Chief Executive Officer and Director |

---

---

| | |
|:---|:---|
| ![LOGO](g406793g33v50.jpg) | 8.0 |

---

## Ex1A-2A

**Exhibit 2.1** 

---

| | | |
|:---|:---|:---|
| **Secretary of State** | DOCKET NUMBER | : 011300933 |
| **Corporations Division** | CONTROL NUMBER | : K832088 |
| **315 West Tower** | EFFECTIVE DATE | : 05/09/2001 |
| **#2 Martin Luther King, Jr. Dr.** | REFERENCE | : 0044 |
| **Atlanta, Georgia 30334-1530** | PRINT DATE | : 05/10/2001 |
|  | FORM NUMBER | : 111 |

---

KILPATRICK STOCKTON LLP

KELLY A. HOWLEY

1100 PEACHTREE ST, STE 2800

ATLANTA, GA 30309

**CERTIFICATE OF AMENDMENT** 

I, Cathy Cox, the Secretary of State and the Corporations Commissioner of the State of Georgia, do hereby certify under the seal of my office that

**OCONEE FINANCIAL CORPORATION** 

**A DOMESTIC PROFIT CORPORATION** 

has filed article's of amendment in the Office of the Secretary of State and has paid the required fees as provided by Title 14 of the Official Code of Georgia Annotated. Attached hereto is a true and correct copy of said articles of amendment.

WITNESS my hand and official seal in the City of Atlanta and the State of Georgia on the date set forth above.

![LOGO](g406793dsp5aa.jpg)

---

| | |
|:---|:---|
| ![LOGO](g406793dsp5b.jpg) | /s/ Cathy Cox<br> Cathy Cox<br> Secretary of State |

---

------

---

| | |
|:---|:---|
| **ARTICLES OF AMENDMENT**<br>**OF**<br>**OCONEE FINANCIAL CORPORATION** | 011300933<br> K832088 |

---

1. The name of the corporation is Oconee Financial Corporation. The corporation was incorporated on August 27, 1998. (Control Number K832088)

2. The Articles of Incorporation are amended by deleting Article IV in its entirety and inserting in lieu thereof the following:

"IV

The Corporation shall have authority to issue 1,500,000 shares of common stock, $2.00 par value (the "Common Stock"). The Common Stock shall together have unlimited voting rights and be entitled to receive the net assets of the Corporation upon dissolution."

3. The amendment was duly adopted by written consent of the board of directors on April 16, 2001. Pursuant to O.C.G.A. §14-2-1002 shareholder action with respect to the amendment was not required.

IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment to the Articles of Incorporation of Oconee Financial Corporation this 16th day of April, 2001.

---

| | |
|:---|:---|
| OCONEE FINANCIAL CORPORATION | OCONEE FINANCIAL CORPORATION |
| By: | /s/ B. Amrey Harden |
| Name: | B. Amrey Harden |
| Title: | President & CEO |

---

![LOGO](g406793dsp6.jpg)

------

---

| | | |
|:---|:---|:---|
| **Secretary of State** | CONTROL NUMBER | : 9832088 |
| **Corporations Division** | EFFECTIVE DATE | : 08/27/1998 |
| **Suite 315, West Tower** | COUNTY | : OCONEE |
| **2 Martin Luther King Jr. Dr.** | REFERENCE | : 0048 |
| **Atlanta, Georgia 30334-1530** | PRINT DATE | : 08/28/1998 |
|  | FORM NUMBER | : 311 |

---

F. SHEFFIELD HALE, ESQ.

1100 PEACHTREE STREET

SUITE 2800

ATLANTA, GA 30309

**CERTIFICATE OF INCORPORATION** 

I, Lewis A. Massey, the Secretary of State and the Corporation Commissioner of the State of Georgia, do hereby certify under the seal of my office that

**OCONEE FINANCIAL CORPORATION** 

**A DOMESTIC PROFIT CORPORATION** 

has been duly incorporated under the laws of the State of Georgia on the effective date stated above by the filing of articles of incorporation in the office of the Secretary of State and by the paying of fees as provided by Title 14 of the Official Code of Georgia Annotated.

WITNESS my hand and official seal in the City of Atlanta and the State of Georgia on the date set forth above.

---

| | |
|:---|:---|
| ![LOGO](g406793dsp7.jpg) | /s/ Lewis A. Massey<br> Lewis A. Massey<br> Secretary of State |

---

------

**ARTICLES OF INCORPORATION** 

**OF** 

**OCONEE FINANCIAL CORPORATION** 

**I.** 

The name of the corporation is Oconee Financial Corporation (the "Corporation").

**II.** 

The Corporation is organized pursuant to the provisions of the Georgia Business Corporation Code (the "Code").

**III.** 

The Corporation is a corporation for profit and is organized for the following general purposes: to be a bank holding company; to carry on any lawful businesses or activities relating thereto; and to engage in any lawful act or activity for which Corporations may be organized under the Georgia Business Corporation Code.

**IV.** 

The Corporation shall have authority to issue 300,000 shares of common stock, $10.00 par value (the "Common Stock"). The Common Stock shall together have unlimited voting rights and be entitled to receive the net assets of the Corporation upon dissolution.

**V.** 

The Corporation shall issue shares, option rights, or securities having conversion or option rights by first offering them to shareholders of the same class in proportion to their holdings of shares of such class. No holder of shares of any class shall have any preemptive right with respect to shares of any other class which may be issued or sold by the corporation. The holders of shares entitled to the preemptive rights shall be given prompt notice setting forth the time within which and the terms and conditions upon which such shareholders may exercise their preemptive rights. Such notice shall be given at least thirty (30) days prior to the expiration of the period during which the rights may be exercised.

------

There shall be no preemptive right to (i) shares issued as a share dividend; (ii) fractional shares; (iii) shares issued pursuant to employee stock option or purchase plans; (iv) shares issued pursuant to acquisitions of substantially all of the assets of a corporation; (v) shares released by waiver from their preemptive right by the affirmative vote or written consent of the holders of two-thirds of the shares of the class to be issued and (vi) shares which have been offered to shareholders to satisfy their preemptive right but not purchased by them within the prescribed time and which are thereafter issued or sold to any other person or persons at the price not less than the price at which they were offered to such shareholders.

**VI.** 

The street address and county of the Corporation's initial registered office shall be 35 North Main Street, Watkinsville, Georgia. The initial registered agent of the Corporation at that office shall be Jerry K. Wages.

**VII.** 

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The name and address of the sole incorporator is:<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F. Sheffield Hale<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1100 Peachtree Street, Suite 2800<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Atlanta, Georgia 30309<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **VIII.**<br>The mailing address of the initial principal office of the Corporation shall be: | ![LOGO](g406793dsp9.jpg) |

---

35 North Main Street

Watkinsville, Georgia 30677-0205

IN WITNESS WHEREOF, the undersigned has executed these Articles of Incorporation as of this 27<sup>th</sup> day of August, 1998.

---

| |
|:---|
| /s/ F. Sheffield Hale |
| F. Sheffield Hale, Incorporator |

---

## Ex1A-2B

**Exhibit 2.2** 

**AMENDED AND RESTATED** 

**BYLAWS** 

**OF** 

**OCONEE FINANCIAL CORPORATION** 

ARTICLE I

<u>OFFICES</u> 

Section 1. <u>Registered Office</u>. The corporation shall maintain at all times a registered office in the State of Georgia and a registered agent at that office.

Section 2. <u>Other Offices</u>. The corporation may also have offices at such other places, both inside or outside of the State of Georgia, as the board of directors may from time to time designate or the business of the corporation may require.

ARTICLE II

<u>SHAREHOLDERS MEETINGS</u> 

Section 1. <u>Annual Meetings</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1. <u>Date, time and purpose of meeting</u>. The annual meeting of the shareholders of the corporation shall be held on the first Monday of June, or at a different time and date determined by the board of directors with proper notice to the shareholders in accordance with these bylaws, for the purpose of electing directors and transacting such other business as may properly be brought before the meeting.

The only business that may be conducted at an annual meeting of stockholders shall be business brought before the meeting (a) by or at the direction of the board of directors prior to the meeting, (b) by or at the direction of the chairman of the board, the president, or the treasurer, or (c) by a shareholder of the corporation who is entitled to vote with respect to the business and who complies with applicable notice procedures. For business to be brought properly before an annual meeting by a shareholder, the shareholder must have given timely notice of the business in writing to the secretary of the corporation. To be timely, a shareholder's notice must be delivered or mailed to and received at the principal offices of the corporation on or before the later to occur of (i) 15 days prior to the annual meeting or (ii) 5 days after notice of the meeting is provided to the shareholders pursuant to these bylaws. A shareholder's notice to the secretary shall set forth a brief description of each matter of business the shareholder proposes to bring before the meeting and the reasons for conducting that business at the meeting; the name, as it appears on the corporation's books, and address of the

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shareholder proposing the business; the series or class and number of shares of the corporation's capital stock that are beneficially owned by the shareholder; and any material interest of the shareholder in the proposed business. The chairman of the meeting shall have the discretion to declare to the meeting that any business proposed by a shareholder to be considered at the meeting is out of order and that such business shall not be transacted at the meeting <u>if</u> (i) the chairman concludes that the matter has been proposed in a manner inconsistent with these bylaws or (ii) the chairman concludes that the subject matter of the proposed business is inappropriate for consideration by the shareholders at the meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2. <u>Failure to hold meeting</u>. The failure to hold an annual meeting at the time stated in or fixed in accordance with these bylaws shall not affect the validity of any corporate action.

Section 2. <u>Special Meetings</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1. <u>Call of special meetings</u>. The chairman of the board of directors, if any, or the president may call a special meeting of the shareholders at any time. The president or the secretary must call a special meeting:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) when so directed by the board of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) at the request in writing of shareholders owning at least 25% of the outstanding shares of the corporation
entitled to vote thereat; provided that such request shall state the purposes for which the meeting is to be called.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2. <u>Business conducted</u>. Except as otherwise provided in these bylaws, only business within the purpose or purposes described in the notice of the meeting may be conducted at a special meeting.

Section 3. <u>Place of Meetings</u>. Meetings of the shareholders of the corporation shall be held at any place within or without the State of Georgia designated by the board of directors or any other person(s) who properly called the meeting as may be specified in the notice of meeting given in accordance with these bylaws or, if not specified in the notice, at the principal office of the corporation.

Section 4. <u>Notice of Meetings</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1. <u>Notice requirements</u>. Written notice of every meeting of shareholders, stating the place, date and time of the meeting, shall be given to each shareholder of record entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2. <u>Notice by mail</u>. Notice may be given in any manner permitted by law. Any written notice deposited in the United States mail with prepaid first class postage thereon addressed to the shareholder at his address as it appears on the corporation's record of shareholders shall be deemed delivered when so deposited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3. <u>Waiver by attendance</u>. A shareholder's attendance, in person or by proxy, at a meeting of shareholders shall constitute:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a waiver of notice of the meeting and of all objections to lack of notice or defective notice of the meeting,
unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a waiver of objection to consideration of a particular matter at the meeting that is not within the purpose or
purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4. <u>Other waivers of notice</u>. Notice of a meeting of shareholders need not be given to any shareholder who signs a waiver of notice, in person or by proxy, either before or after the meeting. Neither the business transacted nor the purpose of the meeting need be specified in the waiver, except that any waiver of the notice of a meeting at which the shareholders consider an amendment of the articles of incorporation, a plan of merger or share exchange, or a sale or other disposition of assets, or any other action which would entitle the shareholder to dissent and obtain payment for his shares shall not be effective unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) prior to the execution of the waiver, the shareholder shall have been furnished the same material that would
have been required to be sent to the shareholder in a notice of the meeting, including notice of any applicable dissenters' rights; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the waiver expressly waives the right to receive the material required to be furnished.

Section 5. <u>Quorum</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1. <u>Required number</u>. At all meetings of the shareholders, a majority of the shares outstanding and entitled to vote thereat, present in person or by proxy, shall constitute a quorum for the transaction of all business, except as otherwise provided by law, by the articles of incorporation, or by these bylaws.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2. <u>Adjournment</u>. If a quorum is not present at any meeting of the shareholders, a majority of the shares present and entitled to vote thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting before adjournment of the date, time, and place for the adjourned meeting, until a quorum shall be present. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting. If, after the meeting is adjourned, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3. <u>When shares present</u>. Once a share is represented for any purpose at a meeting other than solely to object to holding the meeting or transacting business at the meeting, it is present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is set for the adjourned meeting.

Section 6. <u>Order of Business</u>. At the annual meeting of shareholders the order of business shall be as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Calling of meeting to order.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Proof of notice of meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Reading of minutes of last previous annual meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Reports of officers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Reports of committees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Election of directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Miscellaneous business.

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Section 7. <u>Voting</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1. <u>Number of votes per share</u>. Unless the articles of incorporation or applicable law otherwise provide, each outstanding share, regardless of class, shall be entitled to one vote on each matter voted on at a meeting of shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2. <u>Votes required</u>. If a quorum exists, action on a matter is approved if the votes cast favoring the action exceed the votes cast opposing the action, unless the articles of incorporation, these bylaws, or applicable law require a different vote.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3. <u>Voting for directors</u>. Directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. Shareholders do not have a right to cumulate their votes for directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4. <u>Shareholder nominations of directors</u>. Shareholders may nominate a person for election to the board of directors (other than any candidate to be sponsored by. and proposed at the instance of the management) in accordance with the requirements of this Section. Such shareholder or shareholders shall promptly notify the president by first class registered mail sent not less than *5* business days before the meeting or within *5* days after the shareholder receives notice of the meeting. Such notification shall contain the following information with respect to each nominee, to the extent known to the shareholder giving such notification:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Name, address, and principal present occupation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) To the knowledge of the shareholder who proposed to make such nomination, the total number of shares that may
be voted for such proposed nominee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The names and address of the shareholders who propose to make such nomination, and the number of shares of the
corporation owned by each of such shareholders; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The following additional information with respect to each nominee: age, past employment, education, beneficial
ownership of shares in the corporation, past and present financial standing, criminal history (including any convictions, indictments, or settlements thereof), involvement in any past or pending litigation or administrative proceedings (including
threatened involvement), relationship to and agreements (whether or not in writing) with the shareholder(s) (and their relatives, subsidiaries, and affiliates) intending to make such nomination, past and present relationships or dealings with the
corporation or any of its subsidiaries, affiliates, directors, officers, or agents, plans or ideas for managing the affairs of the corporation (including, without

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limitation, any termination of employees, any sales of corporate assets, any proposed merger, business combination, or recapitalization involving the corporation, and any proposed dissolution or liquidation of the corporation), and all additional information relating to such person that would be required to be disclosed, or otherwise required, pursuant to Sections 13 or 14 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder in connection with any acquisition of shares by such nominee or in connection with the solicitation of proxies by such nominee for his election as a director, regardless of the applicability of such provisions of the Securities Exchange Act of 1934.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any nominations not in accordance with the provisions of this Section may be disregarded by the chairman of the meeting, and upon instruction by the chairman, votes cast for each such nominee shall be disregarded. If a person should be nominated by more than one shareholder, and if one such nomination complies with the provisions of this Section, such nomination shall be honored, and all shares voted for such nominee shall be counted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.5. <u>Proxies</u>. A shareholder may vote his shares in person or by proxy. A shareholder may appoint a proxy to vote or otherwise act for him by signing an appointment form. An appointment is valid for 11 months unless a shorter or longer period is expressly provided in the appointment form.

Section 8. <u>Action Without Meeting</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1. <u>Generally</u>. Action required or permitted to be taken at a meeting of shareholders may be taken without a meeting if the action is evidenced by one or more written consents describing the action taken and executed by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) two-thirds (2/3) of the shareholders entitled to vote on the action; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) if so provided in the articles of incorporation, persons who would be entitled to vote, at a meeting, shares
having voting power to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shareholders entitled to vote were present and voted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2. <u>Requirements for consent</u>. A written consent is valid only if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the consenting shareholder was furnished the same material that would have been required to be sent to
shareholders in a notice of a meeting at which the proposed action would have been submitted to the shareholders for action, including notice of any applicable dissenters' rights; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) it contains an express waiver of the right to receive the material otherwise required to be furnished.

Section 9. <u>List of Shareholders</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1. <u>Maintenance of list</u>. The corporation shall keep or cause to be kept a record of its shareholders, giving their names and addresses and the number, class and series, if any, of shares held by each. After a record date for a meeting of shareholders is fixed, the corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of the meeting. The list shall show the address of and number of shares held by each shareholder, and shall comply as to form in all other respects with applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2. <u>Inspection by shareholders</u>. The list of shareholders shall be made available for inspection by any shareholder, his agent, or his attorney at the time and place of a meeting of shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3. <u>Validity of action</u>. Refusal or failure to prepare or make available the list of shareholders shall not affect the validity of action taken at a meeting of shareholders.

ARTICLE III

<u>DIRECTORS</u> 

Section 1. <u>Powers</u>. Except as otherwise provided by any legal agreement among the shareholders, the property, affairs and business of the corporation shall be managed and directed by its board of directors, which may exercise all powers of the corporation and do all lawful acts and things which are not by law, by any legal agreement among shareholders, by the articles of incorporation, or by these bylaws directed or required to be exercised or done by the shareholders.

Section 2. <u>Number, Election, and Term</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1. <u>Number of directors</u>. The number of directors that shall constitute the whole board shall be set by resolution of the board of directors or by the shareholders from time to time as provided in Article II; provided, that no decrease in the number of directors shall have the effect of shortening the term of an incumbent director.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2. <u>Qualifications</u>. Directors shall be natural persons who are 18 years of age or older and shareholders of the corporation, but need not be residents of the State of Georgia.

Section 3. <u>Vacancies</u>. Except as otherwise provided in the articles of incorporation, these bylaws, or applicable law, a vacancy on the board of directors, including a vacancy resulting from an increase in the number of directors, may be filled by the shareholders, the board of directors, or the affirmative vote of a majority of all the directors remaining in office, if the directors remaining in office constitute fewer than a quorum of the board.

Section 4. <u>Meetings and Notice</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1. <u>Place of meetings</u>. The board of directors may hold regular or special meetings either within or without the State of Georgia.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2. <u>Notice of meetings</u>. Regular meetings of the board of directors may be held without notice at such date, time, and place as shall from time to time be determined by the board. Special meetings of the board of directors may be called by the chairman of the board, if any, or the president, or by any two directors, on at least one day's oral, telegraphic, or written notice of the date, time, and place of the meeting. The notice of a meeting need not state the purpose of the meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3. <u>Waiver of notice</u>. Notice of a meeting of the board of directors need not be given to any director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting unless the director at the beginning of the meeting or promptly upon his arrival objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

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Section 5. <u>Quorum</u>. Except as otherwise provided by law, the articles of incorporation, or these bylaws, a majority of directors shall constitute a quorum for the transaction of business. If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors. If a quorum shall not be present, or shall no longer be present, at any meeting of the board, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 6. <u>Conference Telephone Meeting</u>. Unless the articles of incorporation or these bylaws provide otherwise, directors may participate in a meeting of the board by means of conference telephone or similar communications equipment whereby all persons participating in the meeting can hear each other. Participation in the meeting shall constitute presence in person.

Section 7. <u>Action Without Meeting</u>. Action required or permitted to be taken at a meeting of the board of directors may be taken without a meeting if the action is evidenced by one or more written consents describing the action taken, signed by each director, and delivered to the corporation for inclusion in the minutes or filing with the corporate records. Action by consent has the effect of a meeting vote and may be described as such in any document.

Section 8. <u>Committees</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1. <u>Creation.</u> The board of directors from time to time may create one or more committees and appoint one or more directors to serve on them at the pleasure of the board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2. <u>Authority</u>. To the extent specified by the board of directors, the articles of incorporation or these bylaws, each committee may exercise the authority of the board of directors, except that, unless otherwise permitted by law, a committee may not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) approve or propose to shareholders action that is required to be approved by shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) fill vacancies on the board of directors or on any of its committees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) amend the articles of incorporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) adopt, amend, or repeal these bylaws; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) approve a plan of merger not requiring shareholder approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3. <u>Meetings, notice, quorum and voting</u>. Sections 4 through 7 of this Article shall also apply to committees and their members, unless otherwise provided by the articles of incorporation, these bylaws, or applicable law.

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Section 9. <u>Removal of Directors</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1. <u>Removal right</u>. The shareholders may remove any director, with or without cause, by a majority of the votes entitled to be cast for the election of directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2. <u>Meeting required</u>. A director may be removed only at a meeting called for the purpose of removing him and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3. <u>Replacement</u>. A vacancy resulting from the removal of a director by the shareholders may be filled by the shareholders at the same meeting at which the director was removed or any subsequent meeting of the shareholders; or, if (but only if) the shareholders do not fill such a vacancy within sixty days after the removal, by majority vote of the remaining directors.

Section 10. <u>Compensation of Directors</u>. Directors shall be entitled to such reasonable compensation for their services as directors or members of any committee of the board as shall be fixed from time to time by resolution adopted by the board, and shall also be entitled to reimbursement for any reasonable expenses incurred in attending any meeting of the board or any such committee.

Section 11. <u>Honorary and Advisory Directors</u>. The Board of Directors may from time to time appoint any individual an Honorary Director, Director Emeritus, or a member of any advisory Board established by the Board of Directors. Any individual appointed an Honorary Director, Director Emeritus, or member of an advisory board as provided by this Section 11 may be compensated as provided in Section 10 of this Article, but such individual may not vote at any meeting of the Board of Directors or be counted in determining a quorum as provided in Section 5 of this Article and shall not have any responsibility or be subject to any liability imposed upon a director, or otherwise be deemed a director.

ARTICLE IV

<u>OFFICERS</u> 

Section 1. <u>Number</u>. The officers of the corporation shall be chosen by the board of directors and shall be a president, a secretary, and a treasurer (the "principal officers"). The board of directors may also choose a chairman of the board and may choose one or more vice-presidents (any of whom may have such distinguishing designations or titles as the board may determine), assistant secretaries and assistant treasurers, and such other officers as the board shall from time to time deem necessary. Any number of offices may be held by the same person.

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Section 2. <u>Compensation</u>. The salaries of all officers and agents of the corporation shall be fixed by the board of directors or by a committee or officer appointed by the board.

Section 3. <u>Term of Office</u>. Unless otherwise provided by the board of directors, the principal officers shall be chosen annually by the board at the first meeting of the board following the annual meeting of shareholders of the corporation, or as soon thereafter as is conveniently possible. Other officers may be chosen from time to time. Each officer shall serve until his successor shall have been chosen and qualified, or until his death, resignation or removal, and any failure to choose officers of the corporation annually shall not affect the validity of any action taken by or the authority of an officer previously duly chosen and qualified and not theretofore resigned or removed by the board of directors.

Section 4. <u>Removal</u>. Any officer may be removed from office at any time, with or without cause, by the board of directors whenever in its judgment the best interest of the corporation will be served thereby.

Section 5. <u>Vacancies</u>. Any vacancy in an office resulting from any cause may be filled by the board of directors.

Section 6. <u>Powers and Duties</u>. Except as hereinafter provided and subject to the control of the board of directors, the officers of the corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the board of directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) <u>President</u>. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the shareholders and (unless the board shall have created an office of chairman of the board) the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. He may execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) <u>Vice-President</u>. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there is more than one vice-president, the vice-presidents in the ranking established by the board of directors, or in the absence of any ranking, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors or the president may from time to time prescribe.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) <u>Secretary</u>. The secretary shall attend all meetings of the board of directors and all meetings of the shareholders, shall have responsibility for the preparation of minutes of all meetings of the board of directors and of the shareholders and shall keep, or cause to be kept, as permanent records of the corporation, in a book or books for that purpose, all minutes of such meetings, all executed consents evidencing corporate actions taken without a meeting, records of all actions taken by a committee of the board of directors in place of the board, and waivers of notice of all meetings of the board and its committees. He shall have responsibility for authenticating records of the corporation. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have charge of the corporate seal of the corporation and shall be authorized to use the seal of the corporation on all documents which are authorized to be executed on behalf of the corporation under its seal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) <u>Assistant Secretary</u>. The assistant secretary or if there is more than one, any assistant secretary, shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors, the president, or the secretary may from time to time prescribe.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) <u>Treasurer</u>. The treasurer shall have the legal custody of the corporate funds and securities and shall keep or cause to be kept full and accurate accounts of receipts and disbursements and other appropriate accounting records in books belonging to the corporation and shall deposit all funds and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. He shall render to the president and the board of directors, at its regular meetings, or when the president or board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. If required by the board of directors, he shall give the corporation a bond in such sum, or such conditions, and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) <u>Assistant Treasurer</u>. The assistant treasurer, or if there is more than one, any assistant treasurer, shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors, the president, or the treasurer may from time to time prescribe.

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Section 7. <u>Securities of Corporation</u>. Any security issued by any other corporation or entity and owned or controlled by the corporation may be voted, and all rights and powers incident to the ownership of such securities, including without limitation execution of any consent of shareholders or other consents in respect thereof, may be exercised on behalf of the corporation by the president, who may in his discretion delegate any of the foregoing powers, by executing proxies or otherwise. The board of directors may from time to time confer like powers on any person or persons.

Section 8. <u>Checks and Drafts</u>. All checks, drafts, and similar items drawn on the corporation's bank account shall be signed by such officer or officers or agent or agents as the board of directors shall from time to time determine.

ARTICLE V

<u>SHARES</u> 

Section 1. <u>Authorization of Issuance of Shares</u>. The par value and maximum number of shares of the capital stock of the corporation which may be issued and outstanding shall be set forth from time to time in the Articles of Incorporation of the Corporation.

Section 2. <u>Form and Content of Certificate</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1. <u>Form</u>. Every holder of fully-paid shares in the corporation shall be entitled to have a certificate in such form as the board of directors may from time to time prescribe in accordance with applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2. <u>Required signatures</u>. Except as otherwise provided by the board of directors from time to time, each share certificate shall be signed by any two officers of the corporation, who may, but shall not be required to, seal the certificate with the seal of the corporation or a facsimile thereof.

Section 3. <u>Lost Certificates</u>. The board of directors may direct that a new share certificate be issued in place of any certificate theretofore issued by the corporation and alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum and on such conditions as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed, and/or satisfy any other reasonable requirements imposed by the board of directors.

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Section 4. <u>Transfers</u>. (1) Transfers of shares of the corporation shall be made only on the books of the corporation by the registered holder thereof, or by his duly authorized attorney, or with a transfer agent or registrar appointed as provided in Section 6 of this Article, and on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and for all other purposes, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Shares of the corporation may be transferred by delivery of the certificates therefor, accompanied either by an assignment in writing on the back of the certificates or by separate written power of attorney to sell, assign and transfer the same, signed by the record holder thereof, or by his duly authorized attorney-in-fact, and accompanied by such evidence that all such signatures are genuine as the corporation may, at its option, request, but no transfer shall affect the right of the corporation to pay any dividend upon the stock to the holder of record as the holder in fact thereof for all purposes, and no transfer shall be valid, except between the parties thereto, until such transfer shall have been made upon the books of the corporation as herein provided.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The board may, from time to time, make such additional rules and regulations as it may deem expedient, not inconsistent with these bylaws or the articles of incorporation, concerning the issue, transfer and registration of certificates for shares of the corporation, and nothing contained herein shall limit or waive any rights of the corporation with respect to such matters under applicable law or any subscription or other agreement.

Section 5. <u>Record Date</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1. <u>Fixing of record date</u>. For the purpose of determining the shareholders entitled to notice of a meeting of shareholders, to demand a special meeting, to vote, or to take any other action, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of shares, or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than 70 days before any meeting or action requiring a determination of shareholders.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2. <u>No record date fixed</u>. If no record date is fixed by the board of directors for the determination of shareholders entitled to notice of and to vote at any meeting of shareholders, the record date shall be at the close of business on the day before the day on which the first notice thereof is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. If no record date is fixed by the board for determining shareholders entitled to express consent to corporate action in writing without a meeting when no prior action by the board of directors is required by law, the record date shall be the first date on which a signed written consent to such action shall have been delivered to the corporation in any manner permitted by law on behalf of all shareholders. If no record date is fixed for other purposes, the record date shall be at the close of business on the day on which the board of directors adopts the resolution or otherwise takes formal action relating thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3. <u>Adjournment of meeting</u>. A determination of the shareholders entitled to notice of or to vote at a meeting of shareholders shall be effective for any adjournment of the meeting unless the board of directors fixes a new record date. The board of directors must fix a new record date if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.

Section 6. <u>Transfer Agent and Registrar</u>. The board of directors may appoint such transfer agents and/or registrars as it shall determine, and may require all certificates of stock to bear the signature or signatures of any of them.

ARTICLE VI

<u>GENERAL PROVISIONS</u> 

Section 1. <u>Distributions and Share Dividends</u>. Distributions upon the shares of the corporation, subject to the provisions, if any, of the articles of incorporation, or any lawful agreement among shareholders, may be declared by the board of directors at any regular or special meetings, pursuant to law. Distributions may be paid in cash or in property, subject to the provisions of the articles of incorporation. Before payment of any distribution, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing distributions, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

Section 2. <u>Fiscal Year</u>. The fiscal year of the corporation shall be fixed by the board of directors.

Section 3. <u>Seal</u>. The corporate seal shall be in such form as the Board of Directors may from time to time determine.

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Section 4. <u>Annual Statements</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1. <u>Required statements</u>. Not later than four months after the close of each fiscal year, and in any case prior to the next annual meeting of shareholders, the corporation shall prepare the following financial statements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a balance sheet showing in reasonable detail the financial condition of the corporation as of the close of its
fiscal year; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a profit and loss statement showing the results of its operations during its fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2. <u>Principles used; other information</u>. If financial statements are prepared by the corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared, and must disclose that they are so prepared, on that basis. If otherwise prepared, they must so disclose and must be prepared on the same basis as other reports or statements prepared by the corporation for the use of others. If the statements are reported upon by a public accountant, his report must accompany them. If not, the statements shall be accompanied by a statement of the president or the person responsible for the corporation's accounting records:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) stating his reasonable belief whether the statements were prepared on the basis of generally accepted
accounting principles and, if not, describing the basis of preparation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) describing any respects in which the statements were not prepared on a basis of accounting consistent with the
statements prepared for the preceding year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3. <u>Requests for financial statements</u>. Upon written request, the corporation promptly shall mail to any shareholder of record a copy of the most recent annual balance sheet and profit and loss statement. If prepared for other purposes, the corporation shall also furnish upon written request a statement of changes in shareholders' equity for the fiscal year.

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ARTICLE VII

<u>INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES,</u> 

<u>AND AGENTS</u> 

Section 1. <u>Authority to Indemnify</u>. Every person who is or was an officer, director, employee or agent of this corporation may in accordance with Section 3 hereof be indemnified for any liability and expense that may be incurred by him in connection with or resulting from any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, or in connection with any appeal relating thereto, in which he may have become involved, as a party, prospective party or otherwise, by reason of his being an officer, director, employee or agent of this corporation, if he acted in a manner he believed in good faith to be in or not opposed to the best interest of the corporation and, in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. As used in this Article, the terms "expense" and "liability" shall include attorneys fees and reasonable expenses incurred with respect to a proceeding and the obligation to pay a judgment, settlement, penalty, and fine including an excise tax assessed with respect to an employee benefit plan.

Notwithstanding the foregoing, the corporation shall not indemnify an officer, director, employee or agent in connection with a proceeding by or in the right of the corporation in which the officer, director, employee, or agent was adjudged liable to the corporation or in connection with any other proceeding in which he was adjudged liable on the basis that personal benefit was improperly received by him. In addition, indemnification permitted pursuant to this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.

Section 2. <u>Mandatory Indemnification</u>. Every officer, director, employee or agent, to the extent that he has been successful, on the merits or otherwise, in defense of any proceeding to which he was a party, or in defense of any claim, issue or matter therein, because he is or was an officer, director, employee or agent, of this corporation, shall be indemnified by the corporation against reasonable expenses incurred by him in connection therewith.

Section 3. <u>Determination and Authorization of Indemnification</u>. Except as provided in Section 2 above, any indemnification under Section 1 above shall not be made unless a determination has been made in the specific case that indemnification of the officer, director, employee, or agent is permissible under the circumstances because he has met the standard of conduct set forth in Section 1 above. The determination shall be made: (a) by the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding; (b) if such a quorum cannot be obtained, then by majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to the proceeding; (c) by special legal counsel (i) selected by the board of directors or its committee in the manner prescribed above or (ii) if a quorum of the board of directors cannot be obtained and a committee cannot be designated, then selected by majority vote of the full board of directors (in which selection directors who are parties may participate); or (d) by the shareholders, but the shares owned by or voted under the control of directors who are at the time parties to the proceeding may not be voted on the determination.

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Once it has been determined that indemnification of the officer, director, employee, or agent is permissible, an authorization of indemnification or an obligation to indemnify and an evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be determined in the manner prescribed in item (c) above.

Section 4. <u>Advance for Expenses</u>. Expenses incurred with respect to any claim, action, suit, or proceeding of the character described in Section 1 to this Article VII may be advanced by the corporation prior to the time of the disposition thereof upon the receipt of written affirmation from the director of his good faith belief that he has met the standard of conduct set forth in Section 1 above and the officer, director, employee, or agent furnishes the corporation a written undertaking executed personally or on his behalf to repay any advances if it is ultimately determined that he is not entitled to indemnification under Section 1 of this Article.

ARTICLE VIII

<u>FAIR PRICE REQUIREMENTS</u> 

All of the requirements of Part 2 of Article 11 of the Georgia Business Corporation Code (currently codified in Sections 14-2-1110 through 14-2-1113), as may be in effect from time to time, shall apply to all "business combinations" (as defined in Section 14-2-1110 of the Georgia Business Corporation Code) involving the corporation. The requirements of the Fair Price Statute shall be in addition to the requirements of articles of incorporation, and nothing contained in the articles of incorporation shall be deemed to limit the provisions contained in the Fair Price Statute.

ARTICLE IX

<u>AMENDMENT'S</u> 

<u>Power to Amend By-Laws</u>. The shareholders shall have the power to alter, amend or repeal these by-laws or adopt new by-laws, by majority vote of all shares, at any regular or special meeting of the shareholders.

## Add

**Exhibit 4.1** 

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| | |
|:---|:---|
| **STOCK ORDER FORM** | **For Internal Use Only** |
| <br>![LOGO](g406793g00a30.jpg) <br> <u>SEND OVERNIGHT</u><br> <u>PACKAGES TO:</u><br>Performance Trust Capital Partners<br> Oconee Stock Information Center<br> 500 W. Madison St., Suite 450<br> Chicago, Illinois 60661<br> [TBD] | <br> BATCH #<u> </u> ORDER #<u> </u> PRIORITY#<u> </u><br>REC'D<u> </u> CHECK<u> </u><br>|
| <br>![LOGO](g406793g00a30.jpg) <br> <u>SEND OVERNIGHT</u><br> <u>PACKAGES TO:</u><br>Performance Trust Capital Partners<br> Oconee Stock Information Center<br> 500 W. Madison St., Suite 450<br> Chicago, Illinois 60661<br> [TBD] |  |
| <br>![LOGO](g406793g00a30.jpg) <br> <u>SEND OVERNIGHT</u><br> <u>PACKAGES TO:</u><br>Performance Trust Capital Partners<br> Oconee Stock Information Center<br> 500 W. Madison St., Suite 450<br> Chicago, Illinois 60661<br> [TBD] | ORDER DEADLINE & DELIVERY: **A Stock Order Form, properly completed and with full payment, must be received (not postmarked) before 5:00 p.m., Eastern Time, on June __, 2023.** Subscription rights will become void after this deadline. Stock Order Forms can be delivered by overnight delivery to the Stock Information Center address to the left, by hand-delivery to Elberton, at 6 E. Church St., Elberton, GA, or by mail using the Stock Order Reply Envelope provided. Faxes or copies of this form may not be accepted.<br>|

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**PLEASE PRINT CLEARLY AND COMPLETE ALL APPLICABLE SHADED AREAS. READ THE ENCLOSED STOCK ORDER FORM INSTRUCTIONS (BLUE SHEET) AS YOU COMPLETE THIS FORM.**

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| | | |
|:---|:---|:---|
| <br> **(1) NUMBER OF SHARES** | <br> **PRICE PER SHARE** | **(2) TOTAL PAYMENT DUE** |
|  | × [TBD] = | $ |
| **Minimum Number of Shares: 25.**<br> **Maximum Number of Shares: 5% of shares sold.**<br> **See Stock Order Form instructions or call our Stock Information Center for assistance with purchase limitations.** | **Minimum Number of Shares: 25.**<br> **Maximum Number of Shares: 5% of shares sold.**<br> **See Stock Order Form instructions or call our Stock Information Center for assistance with purchase limitations.** | **Minimum Number of Shares: 25.**<br> **Maximum Number of Shares: 5% of shares sold.**<br> **See Stock Order Form instructions or call our Stock Information Center for assistance with purchase limitations.** |
| <br> **(3) METHOD OF PAYMENT – CHECK OR MONEY ORDER** | <br> **(3) METHOD OF PAYMENT – CHECK OR MONEY ORDER** | <br> **(3) METHOD OF PAYMENT – CHECK OR MONEY ORDER** |
| Enclosed is a personal check, bank check or money order made payable to **Oconee Financial Corporation** in the amount of: | Enclosed is a personal check, bank check or money order made payable to **Oconee Financial Corporation** in the amount of: | $ |
| ***Wire transfers and third party checks will not be accepted for this purchase. Checks and money orders will be cashed upon receipt.*** | ***Wire transfers and third party checks will not be accepted for this purchase. Checks and money orders will be cashed upon receipt.*** | ***Wire transfers and third party checks will not be accepted for this purchase. Checks and money orders will be cashed upon receipt.*** |
| ***Wire transfers and third party checks will not be accepted for this purchase. Checks and money orders will be cashed upon receipt.*** | ***Wire transfers and third party checks will not be accepted for this purchase. Checks and money orders will be cashed upon receipt.*** | ***Wire transfers and third party checks will not be accepted for this purchase. Checks and money orders will be cashed upon receipt.*** |

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| | | |
|:---|:---|:---|
| <br> **(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL**<br>The undersigned authorizes withdrawal from the Elberton deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds must be available at the time this form is received. | <br> **(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL**<br>The undersigned authorizes withdrawal from the Elberton deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds must be available at the time this form is received. | <br> **(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL**<br>The undersigned authorizes withdrawal from the Elberton deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds must be available at the time this form is received. |
| <br> **(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL**<br>The undersigned authorizes withdrawal from the Elberton deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds must be available at the time this form is received. | <br> **(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL**<br>The undersigned authorizes withdrawal from the Elberton deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds must be available at the time this form is received. | <br> **(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL**<br>The undersigned authorizes withdrawal from the Elberton deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds must be available at the time this form is received. |
| <br> **(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL**<br>The undersigned authorizes withdrawal from the Elberton deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds must be available at the time this form is received. | <br> **(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL**<br>The undersigned authorizes withdrawal from the Elberton deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds must be available at the time this form is received. | <br> **(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL**<br>The undersigned authorizes withdrawal from the Elberton deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds must be available at the time this form is received. |
| &nbsp;&nbsp;&nbsp;&nbsp;For Internal Use Only | Deposit Account Number | Amount(s) |
|  |  | $|
|  |  | $|
|  |  | $|
|  | Total Withdrawal Amount | $|

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**ATTACH A SEPARATE PAGE IF ADDITIONAL SPACE IS NEEDED.** 

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| |
|:---|
| <br> &nbsp;&nbsp;&nbsp;&nbsp;**(5) PURCHASER INFORMATION** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Subscription Offering.** Check the one box that applies, <u>as of the earliest eligibility date,</u> to the<br>purchaser(s) listed in Section 7.<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**a.** <sub> ![LOGO](g406793g32b15.jpg) </sub>Depositors of Elberton with aggregate balances of at least $50 at the close of business on March 31, 2020.<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**b.** <sub> ![LOGO](g406793g32b15.jpg) </sub>Depositors of Elberton with aggregate balances of at least $50 at the close of business on [TBD]<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**c.** <sub> ![LOGO](g406793g32b15.jpg) </sub> Depositors and borrowers of Elberton at the close of business on [TBD]<br>**Community Offering.** If (a), (b) or (c) above do not apply to the purchaser(s) listed in Section 7, check the *first* box that applies to this order:<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**d.** <sub> ![LOGO](g406793g32b15.jpg) </sub>Shareholders of record of Oconee as of the close of business on [TBD]<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**e.**<sub> ![LOGO](g406793g32b15.jpg) </sub> Residents of Elbert County, Georgia<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**f.<sub> ![LOGO](g406793g32b15.jpg) </sub>** Residents of Oconee County, Georgia |

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| | |
|:---|:---|
| <br> **ACCOUNT INFORMATION – SUBSCRIPTION OFFERING** | <br> **ACCOUNT INFORMATION – SUBSCRIPTION OFFERING** |
| <br> If you checked box (a), (b) or (c) under "Purchaser Information," please provide the following information as of the eligibility date under which purchaser(s) listed in Section 7 below qualify in the Subscription Offering: | <br> If you checked box (a), (b) or (c) under "Purchaser Information," please provide the following information as of the eligibility date under which purchaser(s) listed in Section 7 below qualify in the Subscription Offering: |
| &nbsp;&nbsp;&nbsp;Name(s) on Account | Account Number |
| <br> **NOTE: NOT LISTING ALL ELIGIBLE ACCOUNTS, OR PROVIDING INCORRECT OR INCOMPLETE INFORMATION, COULD RESULT IN THE LOSS OF ALL OR PART OF ANY SHARE ALLOCATION. ATTACH A SEPARATE PAGE IF ADDITIONAL SPACE IS NEEDED.** | <br> **NOTE: NOT LISTING ALL ELIGIBLE ACCOUNTS, OR PROVIDING INCORRECT OR INCOMPLETE INFORMATION, COULD RESULT IN THE LOSS OF ALL OR PART OF ANY SHARE ALLOCATION. ATTACH A SEPARATE PAGE IF ADDITIONAL SPACE IS NEEDED.** |

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<br> **(6) ASSOCIATES/ACTING IN CONCERT**<br>

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| | |
|:---|:---|
| ![LOGO](g406793g32b15.jpg) | Check here if you, or any associate or persons acting in concert with you, have submitted other orders for shares in the Offering. If you check the box, list below all other orders submitted by you or your associates or by persons acting in concert with you. ***("Associate" and "Acting in Concert" defined on reverse side of this form)*** |

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| | | | |
|:---|:---|:---|:---|
| Name(s) listed in Section 7 on other Stock Order Forms | Number of shares | Name(s) listed in Section 7 on other Stock Order Forms | Number of shares |

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**(7) STOCK REGISTRATION** The name(s) and address that you provide below will be reflected on your ownership statement, and will be used for other communications related to this order. Please PRINT clearly and use full first and last name(s), not initials. If purchasing in the Subscription Offering, you may not add the name(s) of others whose names are not also listed on your qualifying accounts. See Stock Order Form Instructions for further guidance.<br>

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ![LOGO](g406793g32b15.jpg) Individual | ![LOGO](g406793g32b15.jpg) Tenants in Common | ![LOGO](g406793g32b15.jpg) Uniform Transfers to Minors Act *(for reporting SSN, use minor's)* | ![LOGO](g406793g32b15.jpg) Uniform Transfers to Minors Act *(for reporting SSN, use minor's)* | ![LOGO](g406793g32b15.jpg) Uniform Transfers to Minors Act *(for reporting SSN, use minor's)* | **FOR TRUSTEE/BROKER USE ONLY:** |
| ![LOGO](g406793g32b15.jpg) Joint Tenants | ![LOGO](g406793g32b15.jpg) Corporation | ![LOGO](g406793g32b15.jpg) Partnership | ![LOGO](g406793g32b15.jpg) Trust – Under Agreement Dated<u> </u> | ![LOGO](g406793g32b15.jpg) Other<u> </u> | ![LOGO](g406793g32b15.jpg) IRA<br>(SSN of Beneficial Owner)<u> </u>-<u> </u>-<u> </u> |

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;First Name, Middle Initial, Last Name | &nbsp;&nbsp;&nbsp;&nbsp;First Name, Middle Initial, Last Name | &nbsp;&nbsp;&nbsp;&nbsp;First Name, Middle Initial, Last Name | &nbsp;&nbsp;&nbsp;&nbsp;First Name, Middle Initial, Last Name | Reporting SSN/Tax ID No. |
| &nbsp;&nbsp;&nbsp;&nbsp;First Name, Middle Initial, Last Name | &nbsp;&nbsp;&nbsp;&nbsp;First Name, Middle Initial, Last Name | &nbsp;&nbsp;&nbsp;&nbsp;First Name, Middle Initial, Last Name | &nbsp;&nbsp;&nbsp;&nbsp;First Name, Middle Initial, Last Name | Secondary SSN/Taxid No. |
| &nbsp;&nbsp;&nbsp;&nbsp;Street | &nbsp;&nbsp;&nbsp;&nbsp;Street | &nbsp;&nbsp;&nbsp;&nbsp;Street | &nbsp;&nbsp;&nbsp;&nbsp;Street | Phone # (DAY) |
| &nbsp;&nbsp;&nbsp;&nbsp;City | State | Zip | County (Important) | Phone # (NIGHT) |

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| | | | | |
|:---|:---|:---|:---|:---|
| **(8) ACKNOWLEDGMENT, CERTIFICATION AND SIGNATURE(S)** | **(8) ACKNOWLEDGMENT, CERTIFICATION AND SIGNATURE(S)** | **(8) ACKNOWLEDGMENT, CERTIFICATION AND SIGNATURE(S)** | **(8) ACKNOWLEDGMENT, CERTIFICATION AND SIGNATURE(S)** | **(8) ACKNOWLEDGMENT, CERTIFICATION AND SIGNATURE(S)** |
| I understand that, to be effective, this form, properly completed, together with full payment, must be received no later than 5:00 p.m., Eastern Time, on [TBD] otherwise this form and all subscription rights will be void. ***(continued on reverse side of this form)*** | I understand that, to be effective, this form, properly completed, together with full payment, must be received no later than 5:00 p.m., Eastern Time, on [TBD] otherwise this form and all subscription rights will be void. ***(continued on reverse side of this form)*** | I understand that, to be effective, this form, properly completed, together with full payment, must be received no later than 5:00 p.m., Eastern Time, on [TBD] otherwise this form and all subscription rights will be void. ***(continued on reverse side of this form)*** | I understand that, to be effective, this form, properly completed, together with full payment, must be received no later than 5:00 p.m., Eastern Time, on [TBD] otherwise this form and all subscription rights will be void. ***(continued on reverse side of this form)*** | I understand that, to be effective, this form, properly completed, together with full payment, must be received no later than 5:00 p.m., Eastern Time, on [TBD] otherwise this form and all subscription rights will be void. ***(continued on reverse side of this form)*** |
| **<u>ORDER NOT VALID UNLESS SIGNED</u>**<br> ![LOGO](g406793g32c22.jpg) ![LOGO](g406793g32d38.jpg)  | **<u>ORDER NOT VALID UNLESS SIGNED</u>**<br> ![LOGO](g406793g32c22.jpg) ![LOGO](g406793g32d38.jpg)  | **<u>ORDER NOT VALID UNLESS SIGNED</u>**<br> ![LOGO](g406793g32c22.jpg) ![LOGO](g406793g32d38.jpg)  | **<u>ORDER NOT VALID UNLESS SIGNED</u>**<br> ![LOGO](g406793g32c22.jpg) ![LOGO](g406793g32d38.jpg)  | Bank Use |
| **ONE SIGNATURE REQUIRED, UNLESS SECTION 4 OF THIS FORM INCLUDES ACCOUNTS REQUIRING MORE THAN ONE SIGNATURE TO AUTHORIZE**<br> **WITHDRAWAL. IF SIGNING AS A CUSTODIAN, TRUSTEE, CORPORATE OFFICER, ETC., PLEASE INCLUDE YOUR FULL TITLE.** | **ONE SIGNATURE REQUIRED, UNLESS SECTION 4 OF THIS FORM INCLUDES ACCOUNTS REQUIRING MORE THAN ONE SIGNATURE TO AUTHORIZE**<br> **WITHDRAWAL. IF SIGNING AS A CUSTODIAN, TRUSTEE, CORPORATE OFFICER, ETC., PLEASE INCLUDE YOUR FULL TITLE.** | **ONE SIGNATURE REQUIRED, UNLESS SECTION 4 OF THIS FORM INCLUDES ACCOUNTS REQUIRING MORE THAN ONE SIGNATURE TO AUTHORIZE**<br> **WITHDRAWAL. IF SIGNING AS A CUSTODIAN, TRUSTEE, CORPORATE OFFICER, ETC., PLEASE INCLUDE YOUR FULL TITLE.** | **ONE SIGNATURE REQUIRED, UNLESS SECTION 4 OF THIS FORM INCLUDES ACCOUNTS REQUIRING MORE THAN ONE SIGNATURE TO AUTHORIZE**<br> **WITHDRAWAL. IF SIGNING AS A CUSTODIAN, TRUSTEE, CORPORATE OFFICER, ETC., PLEASE INCLUDE YOUR FULL TITLE.** |  |
| Signature (title, if applicable) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Date  | Signature (title, if applicable) | Date |  |

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**STOCK ORDER FORM – SIDE 2**

**(6) ASSOCIATES/ACTING IN CONCERT (continued from front of Stock Order Form)**

<u>Associate</u> – The term "associate" of a person means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any corporation or organization, other than Elberton Federal Savings, Oconee State Bank, Oconee Financial Corporation or a majority-owned subsidiary of any of these entities, of which the person is a senior officer,
partner or beneficially owns, directly or indirectly, 10% or more of any class of equity securities of the corporation or organization;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a fiduciary capacity, excluding any employee stock benefit plan in which the person has a substantial
beneficial interest or serves as trustee or in a similar fiduciary capacity; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any blood or marriage relative of the person, who either lives in the same house as the person or who is a director or senior officer of Elberton Federal Savings, Oconee State Bank, or Oconee Financial Corporation

<u>Acting in Concert</u> – The term "acting in concert" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or
otherwise.

In general, a person or company that acts in concert with another person or company ("other party") shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the employee plan will be aggregated.

Our directors are not treated as associates of each other solely because of their membership on the Board of Directors. We have the right to determine, in our sole discretion, whether prospective purchasers are associates or acting in concert. Persons having the same address or exercising subscription rights through qualifying accounts registered to the same address at any of the eligibility, supplemental eligibility, or voting record dates will be assumed to be associates of, and acting in concert with, each other.

Please see the Offering Circular section entitled "Terms of the Offering — Maximum and Minimum Purchase Limitations" for more information on purchase limitations.

**(8) ACKNOWLEDGMENT, CERTIFICATION, AND SIGNATURE(S) (continued from front of Stock Order Form)** 

I agree that, after receipt by Oconee, this Stock Order Form may not be modified or canceled without Oconee's consent, and that if withdrawal from an Elberton deposit account has been authorized, the authorized amount will not otherwise be available for withdrawal. Under penalty of perjury, I certify that (1) the Social Security or Tax ID information and all other information provided hereon are true, correct and complete, (2) **I am purchasing shares solely for my own account and that there is no agreement or understanding regarding the sale or transfer of such shares, or my right to subscribe for shares,** and (3) I am not subject to backup withholding tax [cross out (3) if you have been notified by the IRS that you are subject to backup withholding]. I acknowledge that my order does not conflict with the overall purchase limitation of 5% of the shares sold in the offering in all categories of the offering combined, for any person or entity, together with any associate or group of persons acting in concert, as set forth in the Plan of Merger Conversion Offering Circular dated [TBD]

**Subscription rights pertain to those eligible to subscribe in the Subscription Offering. Subscription rights are only exercisable by completing and submitting a Stock Order Form, with full payment for the shares subscribed for. Federal regulations prohibit any person from transferring or entering into any agreement directly or indirectly to transfer the legal or beneficial ownership of subscription rights, or the underlying securities, to the account of another.** 

**I ACKNOWLEDGE THAT THE SHARES OF COMMON STOCK ARE NOT DEPOSITS OR ACCOUNTS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.** If anyone asserts that this security is Federally insured or guaranteed, or is as safe as an insured deposit, I should call the Office of the Comptroller of the Currency.

I further certify that, before subscribing for shares of the common stock of Oconee Financial Corporation, I received the Offering Circular dated [TBD], and I have read the terms and conditions described in the Offering Circular, including disclosure concerning the nature of the security being offered and the risks involved in the investment, in the "Risk Factors" section, beginning on page [TBD]. Risks include, but are not limited to the following:

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| | |
|:---|:---|
| Risk Factors<br>*Risks Related to the Offering*<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Because the trading market for Oconee stock is not active, you may not be able to sell your shares at the times and in the amounts you want.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The price of our common stock may fluctuate significantly, and this may make it difficult for you to sell shares of common stock at times or at prices you find attractive.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. There is limited public information concerning Oconee and its business, operations and financial condition.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The offering may not be fully subscribed.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. We may pursue additional capital in the future, which may not be available on acceptable terms or at all, could dilute the holders of our outstanding common stock, and may adversely affect the market price of our common stock.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Your investment may be diluted because of the ability of management to offer stock to others.<br>*Risks Related to Oconee and the Banking Business*<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. We have paid annual dividends in the past but may not be able to pay dividends in the future.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. We rely heavily on the payment of dividends from our subsidiary, the Bank, which may be restricted by applicable laws and regulations.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. Because we have discretion in the use of the proceeds, we may not apply these funds effectively which could have an adverse effect on our business.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. The holders of our debentures have rights that are senior to those of our shareholders.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. Our directors and executive officers control a large amount of our stock, and your interests may not always be the same as those of the board and management.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. Our business has been and may in the future be adversely affected by volatile conditions in the financial markets and unfavorable economic conditions generally.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. Inflation could adversely affect our business and our customers.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. Concentrations of real estate and real estate secured loans could subject us to increased risks in the event of a prolonged real estate recession, pandemic or natural disaster.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. Our concentration of commercial real estate loans exposes us to increased lending risks.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. Repayment of our commercial loans is often dependent on the cash flows of the borrowers, which may be unpredictable, and the collateral securing these loans may fluctuate in value.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. We may experience loan losses in excess of our allowance for credit losses.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. Our use of appraisals in deciding whether to make a loan secured by real property does not ensure the value of the real property collateral.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. We are exposed to risk of environmental liabilities with respect to properties to which we obtain title.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. Adverse changes in the economic conditions of the markets where Oconee will operate could have a negative effect on the business.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21. Our expenses could increase as a result of increases in FDIC insurance premiums or other regulatory assessments.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22. Our business has been, and may continue to be, affected by a significant concentration of deposits with two customers. | <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23. We may not be able to continue to attract and retain banking customers at current levels, and our efforts to compete may reduce our profitability.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24. New or acquired banking offices may not be profitable.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25. Negative public opinion surrounding Oconee and the banking industry generally could damage Oconee's reputation and adversely impact its earnings.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26. If we are not able to successfully keep pace with technological changes affecting the industry, our business could be hurt.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27. Our operations could be adversely impacted if our third-party service providers experience difficulty.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28. Unauthorized disclosure of sensitive or confidential customer information, whether through a cyber-attack, other breach of our computer systems or any other means, could severely harm our business<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;29. If our information systems were to experience a system failure, our business and reputation could suffer.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30. We are subject to a variety of operational risks, including reputational risk, legal risk and compliance risk, and the risk of fraud or theft by employees or outsiders, which may adversely affect our business and results of operations.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31. Previously enacted and potential future financial regulatory reforms could have a significant impact on our business, financial condition and results of operations.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32. Reductions in service charge income or failure to comply with payment network rules could negatively impact our earnings.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;33. Reductions in interchange income could negatively impact our earnings<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;34. We depend on our executive officers and key personnel to implement our business strategy and could be harmed by the loss of their services.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;35. We may be adversely affected by the financial stability of other financial institutions.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;36. Changes in interest rates could adversely affect our profitability, business and prospects.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;37. The value of the securities in our investment portfolio may be negatively affected by market disruptions, adverse credit events or fluctuations in interest rates, which could have a material adverse impact on regulatory capital levels.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*38.* Non-compliance with USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions and curtail expansion opportunities. <br>*Risks Related to the Merger Conversion*<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;39. The Merger Conversion may be more difficult, costly or time consuming than expected, and the anticipated benefits and cost savings of the Merger Conversion may not be realized.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;40. The value of the shares after the Merger Conversion may be affected by factors that are different from those affecting the shares of Oconee currently.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;41. Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined organization following the Merger Conversion.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;42. The Bank and Oconee will be subject to business uncertainties and contractual restrictions while the Merger Conversion is pending. |

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**By executing this form, the investor is not waiving any rights under federal or state securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934.** 

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| | |
|:---|:---|
| ![LOGO](g406793g49d19.jpg) | **See Front of Stock Order Form** |

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**OCONEE FINANCIAL CORPORATION** 

**STOCK INFORMATION CENTER: [TBD]** 

**STOCK ORDER FORM INSTRUCTIONS – SIDE 1** 

**Sections (1) and (2) – Number of Shares and Total Payment Due.** Indicate the Number of Shares that you wish to subscribe for and the Total Payment Due. Calculate the Total Payment Due by multiplying the Number of Shares by the price per share. The minimum purchase is 25 shares. The maximum allowable purchase by any person or entity, together with any associate or group of persons acting in concert, is 5% of the shares sold in the Offering in all categories of the offering combined. Please see the Offering Circular section entitled "Terms of the Offering – Maximum and Minimum Purchase Limitations" for more specific information. By signing this form, you are certifying that your order does not conflict with these purchase limitations.

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**Section (3) – Method of Payment – Check or Money Order.** Payment may be made by including with this form a personal check, bank check or money order made payable to Oconee Financial Corporation. Checks will be deposited upon receipt. Funds remitted by personal check must be available when your Stock Order Form is received. Indicate the amount remitted. Interest will be calculated at [TBD] per annum from the date payment is processed until the offering is completed, at which time a subscriber will be issued a check for interest earned. Please do not remit cash, wire transfers or third party checks for this purchase.

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**Section (4) – Method of Payment – Deposit Account Withdrawal.** Payment may be made by authorizing a withdrawal from your Elberton deposit account(s). Indicate the account number(s) and the amount(s) you wish withdrawn. Attach a separate page, if necessary. Funds must be available at the time this Stock Order Form is received. Upon receipt of this order, we will place a hold on the amount(s) designated by you – the funds will be unavailable to you for withdrawal thereafter. The funds will continue to earn interest within the account(s) at the contractual rate. The interest will remain in the accounts when the designated withdrawal is made, at the completion of the offering. There will be no early withdrawal penalty for withdrawal from a certificate of deposit (CD) account.<u> </u>

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**Section (5) – Purchaser Information.** Please check the <u>one</u> box that applies to the purchaser(s) listed in Section 7 of this form. Purchase priorities in the Subscription Offering are based on eligibility dates. Boxes (a), (b) and (c) refer to the Subscription Offering. Please list all Elberton deposit account numbers that the purchaser(s) had ownership in as of the applicable eligibility date. Include all forms of account ownership (e.g. individual, joint, etc.). If purchasing shares for a minor, list only the minor's eligible accounts. If purchasing shares for a corporation or partnership, list only that entity's eligible accounts. Attach a separate page, if necessary. **Failure to complete this section, or providing incorrect or incomplete information, could result in a loss of part or all of your share allocation in the event of an oversubscription.**

See the Offering Circular section entitled "Terms of the Offering" for further details about the Subscription Offering.

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**Section (6) – Associates/Acting in Concert.** Check the box, if applicable, and provide the requested information. Attach a separate page if necessary.

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**Section (7) – Stock Registration.** Clearly PRINT the name(s) in which you want the shares registered and the mailing address for all correspondence related to your order, including a stock ownership statement. Each Stock Order Form will generate one stock ownership statement, subject to the stock allocation provisions described in the Offering Circular. **IMPORTANT: Subscription rights are non-transferable.** When placing an order in the Subscription Offering, you may not add the names of others whose names are not also listed on your qualifying accounts. A Social Security or Tax ID Number must be provided. The first number listed will be identified with the stock for tax reporting purposes. Listing at least one phone number is important in the event we need to contact you about this form. **NOTE FOR FINRA MEMBERS.** If you are a member of the Financial Industry Regulatory Authority ("FINRA"), or a person affiliated or associated with a FINRA member, you may have additional reporting requirements. Please report this subscription in writing to the applicable department of the FINRA member firm within one day of payment thereof.

(over)

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**OCONEE FINANCIAL CORPORATION** 

**STOCK INFORMATION CENTER: [TBD]** 

**STOCK ORDER FORM INSTRUCTIONS – SIDE 2** 

**Form of Stock Ownership.** For reasons of clarity and standardization, the stock transfer industry has developed uniform stockholder registrations for issuance of stock ownership statements. Beneficiaries may not be named on stock registrations. If you have any questions on wills, estates, beneficiaries, etc., please consult your legal advisor. When registering stock, do not use two initials – use the full first name, middle initial and last name. Omit words that do not affect ownership such as "Dr." or "Mrs." Check the one box that applies.

**<u>Buying Stock Individually</u> –** Used when shares are registered in the name of only one owner. To qualify in the Subscription Offering, the individual named in Section 7 of the Stock Order Form must have had an eligible account at Elberton at the close of business on one of the dates identified in section 5 of the stock order form.

**<u>Buying Stock Jointly</u> –** To qualify in the Subscription Offering, the persons named in Section 7 of the Stock Order Form must have had an eligible account at Elberton at the close of business on one of the dates identified in section 5 of the stock order form.

***<u>Joint Tenants</u>* –**May be specified to identify two or more owners where ownership is ****intended to pass automatically to the surviving tenant(s). All owners must agree to the sale of shares.

***<u>Tenants in Common</u>* –**May be specified to identify two or more owners where, upon the death of one co-tenant, ownership of ****the stock will be held by the surviving co-tenant(s) and by the heirs of the deceased co-tenant. All owners must agree to the sale of shares.

**<u>Buying Stock for a Minor</u> –** Shares may be held in the name of a custodian for a minor under the Uniform Transfer to Minors Act. To qualify in the Subscription Offering, the minor (not the custodian) named in Section 7 of the Stock Order Form must have had an eligible account at Elberton at the close of business on one of the dates identified in section 5 of the stock order form.

The standard abbreviation for custodian is "CUST." The Uniform Transfer to Minors Act is "UTMA." Include the state abbreviation. For example, stock held by John Smith as custodian for Susan Smith under the Georgia Uniform Transfer to Minors Act should be registered as John Smith CUST Susan Smith UTMA-GA (list only the minor's social security number).

**<u>Buying Stock for a Corporation/Partnership</u> –** On the first name line indicate the name of the corporation or partnership and indicate the entity's Tax ID Number for reporting purposes. To qualify in the Subscription Offering, the corporation or partnership named in Section 7 of the Stock Order Form must have had an eligible account at Elberton at the close of business on one of the dates identified in section 5 of the stock order form.

**<u>Buying Stock in a Trust/Fiduciary Capacity</u> –** Indicate the name of the fiduciary and the capacity under which the fiduciary is acting (for example, "Executor"), or name of the trust, the trustees and the date of the trust. Indicate the Tax ID Number to be used for reporting purposes. To qualify in the Subscription Offering, the entity named in Section 7 of the Stock Order Form must have had an eligible account at Elberton at the close of business on one of the dates identified in section 5 of the stock order form.

**<u>Buying Stock in a Self-Directed IRA</u>** *(for trustee/broker use only)* – Registration should reflect the custodian or trustee firm's registration requirements. For example, on the first name line, indicate the name of the brokerage firm, followed by CUST or TRUSTEE. On the second name line, indicate the name of the beneficial owner (for example, "FBO John SMITH IRA"). You can indicate an account number or other underlying information and the custodian or trustee firm's address and department to which all correspondence should be mailed related to this order, including a stock ownership statement. Indicate the TAX ID Number under which the IRA account should be reported for tax purposes. Also provide the SSN of the beneficial owner of the IRA where indicated.

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**Section (8) – Acknowledgment, Certification and Signature(s).** Sign and date the Stock Order Form where indicated. **<u>Before you sign, please carefully review the information you provided and read the acknowledgment</u>**. Verify that you have printed clearly and completed all applicable shaded areas on the Stock Order Form. Only one signature is required, unless any account listed in Section 4 requires more than one signature to authorize a withdrawal.

Please review the Offering Circular carefully before making an investment decision. Deliver your completed Stock Order Form, with full payment or deposit account withdrawal authorization, so that it is *received* (not postmarked) before 5:00 p.m., Eastern Time, on [TBD]. **Stock Order Forms can be delivered by overnight delivery to the Stock Information Center address provided on the Stock Order Form for that purpose. You may also hand deliver your order and payment in person to Elberton during normal banking hours. Lastly, you may send your order and payment by regular mail using the enclosed Stock Order Reply Envelope. Hand delivered stock order forms will only be accepted at Elberton. Do not deliver this form to any other location. Do not mail Stock Order Forms to Elberton's office. Faxes or copies of this form may not be accepted. Oconee Financial Corporation reserves the right to reject improperly completed stock order forms**.

**OVERNIGHT DELIVERY can be made to the Stock Information Center address provided on the front of the Stock Order Form.** 

**QUESTIONS? Call our Stock Information Center, at [TBD], from 10:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday. The Stock Information Center is not open on bank holidays.**

## Add

**Exhibit 4.2** 

**ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION** 

Dear Member:

I am pleased to tell you about an investment opportunity and just as importantly, to request your vote on a matter of importance. Pursuant to a Plan of Merger Conversion (the "Plan"), Elberton Federal Savings and Loan Association ("Elberton") plans to convert from the mutual (meaning no stockholders) to the stock form of ownership, and immediately thereafter merge with and into Oconee State Bank (the "Merger Conversion"). Also pursuant to the Plan, Oconee Financial Corporation ("Oconee"), the parent company of Oconee State Bank (the "Bank"), is offering shares of its common stock for sale to eligible Elberton depositors and borrowers (the "Offering").

**THE PROXY VOTE** 

**<u>Your vote is very important</u>.** Your proxy card(s) should be voted in advance of our special meeting of members, which is scheduled for _______, 2023 at ____ a.m./p.m. Eastern Time at 6 E. Church Street, Elberton, Georgia. If you have more than one account, you may receive more than one proxy card. *These are not duplicate proxy cards* . Please vote all proxy cards received. **We urge you to cast your votes immediately by internet or telephone by following the instructions on the proxy card.** Alternatively, you may mark your vote, sign, date and mail the proxy card(s) in the enclosed proxy reply envelope today. You may also deliver your signed proxy cards in person to Elberton Federal Savings during normal banking hours. **Regardless of how you choose to cast your votes, please vote today. Our Board of Directors urges you to vote "FOR" the Merger Conversion proposal. Not voting will have the same effect as voting "AGAINST" the Merger Conversion proposal.**

Please note:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• There will be no change to the balances, interest rates or other terms of your accounts with us as a result of
the Merger Conversion. At the completion of the Merger Conversion all active deposit and loan accounts with Elberton will become accounts with the Bank, and the Elberton banking office will become a branch location of the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Voting does not obligate you to purchase shares of Oconee common stock in the Offering.

**THE STOCK OFFERING** 

**As an eligible member of Elberton, you have non-transferable rights, but no obligation, to purchase shares of common stock during the Offering before any shares are made available for sale to the general public.** The common stock is being offered at $[TBD] per share, and there will be no sales commission charged to purchasers during the offering.

Please read the enclosed materials carefully. If you are interested in purchasing shares of common stock, complete the enclosed Stock Order Form and return it, with full payment. **You may submit your Stock Order Form by overnight delivery to the indicated address on the Stock Order Form,** by hand delivery to Elberton's office, located at 6 E. Church Street, Elberton, GA, or by mail using the Stock Order Reply Envelope provided. **Stock Order Forms and full payment must be *received* (not postmarked) before 5:00 p.m., Eastern Time, on [TBD].** If you are considering purchasing stock with funds you have in an IRA, please call our Stock Information Center *promptly* for guidance, because these orders require additional processing time.

If you have questions about the Merger Conversion or purchasing shares, please refer to the enclosed Proxy Statement, Offering Circular and Questions and Answers Brochure or call our Stock Information Center at the number shown below.

I invite you to consider this opportunity to share in our future. Thank you for your continued support as an Elberton member.

Sincerely,

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| |
|:---|
| ![LOGO](g406793rdanielgraves.jpg)  |
| R. Daniel Graves |
| President and Chief Executive Officer |

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------

**Questions?** 

Call our Stock Information Center at [TBD]

from 10:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday, except bank holidays.

*This is not an offer to sell or a solicitation of an offer to buy shares of common stock. The offer is made only by the Offering Circular. The shares of common stock being offered are not savings accounts or deposits and are not insured or guaranteed by Oconee State Bank, Oconee Financial Corporation, Elberton Federal Savings and Loan Association, the Federal Deposit Insurance Corporation or any other government agency.*

**M** 

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**ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION** 

Dear Friend:

I am pleased to tell you about an investment opportunity. Pursuant to a Plan of Merger Conversion (the "Plan"), Elberton Federal Savings and Loan Association ("Elberton") plans to convert from the mutual (meaning no stockholders) to the stock form of ownership, and immediately thereafter merge with and into Oconee State Bank (the "Merger Conversion"). Also pursuant to the Plan, Oconee Financial Corporation ("Oconee"), the parent company of Oconee State Bank (the "Bank"), is offering shares of its common stock for sale to eligible Elberton depositors and borrowers (the "Offering").

**Our records indicate that you were a depositor of Elberton as of the close of business on March 31, 2020 or [TBD] whose account(s) was/were closed thereafter. As such, you have non-transferable rights, but no obligation, to purchase shares of common stock during the Offering before any shares are made available for sale to the general public.** 

Please read the enclosed Offering Circular and related materials carefully before making an investment decision. If you are interested in purchasing shares of common stock, complete the enclosed Stock Order Form and return it, with full payment. **You may submit your Stock Order Form by overnight delivery to the indicated address on the Stock Order Form**, by hand delivery to Elberton's office, located at 6 E. Church Street, Elberton, GA, or by mail using the Stock Order Reply Envelope provided. **Stock Order Forms and full payment must be *received* (not postmarked) before 5:00 p.m., Eastern Time, on [TBD].** If you are considering purchasing stock with funds you have in an IRA, please call our Stock Information Center *promptly* for guidance, because these orders require additional processing time.

If you have questions about the Merger Conversion or purchasing shares, please refer to the enclosed Offering Circular and Questions and Answers Brochure or call our Stock Information Center at the number shown below.

I invite you to consider this opportunity to share in our future as an Oconee Financial Corporation stockholder.

Sincerely,

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| |
|:---|
| ![LOGO](g406793rdanielgraves.jpg)  |
| R. Daniel Graves |
| President and Chief Executive Officer |

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**Questions?** 

Call our Stock Information Center at [TBD]

from 10:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday, except bank holidays.

*This is not an offer to sell or a solicitation of an offer to buy shares of common stock. The offer is made only by the Offering Circular. The shares of common stock being offered are not savings accounts or deposits and are not insured or guaranteed by Oconee State Bank, Oconee Financial Corporation, Elberton Federal Savings and Loan Association, the Federal Deposit Insurance Corporation or any other government agency.*

**F** 

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![LOGO](g406793g00a20.jpg)

Dear Interested Investor:

I am pleased to tell you about an investment opportunity. Pursuant to a Plan of Merger Conversion (the "Plan"), Elberton Federal Savings and Loan Association ("Elberton") plans to convert from the mutual (meaning no stockholders) to the stock form of ownership, and immediately thereafter merge with and into Oconee State Bank (the "Merger Conversion"). Also pursuant to the Plan, Oconee Financial Corporation ("Oconee"), the parent company of Oconee State Bank (the "Bank"), is offering shares of its common stock for sale to eligible Elberton depositors and borrowers (the "Offering").

Please read the enclosed materials carefully before making an investment decision. If you are interested in purchasing share of common stock, complete the enclosed Stock Order Form and return it, with full payment. **You may submit your Stock Order Form by overnight delivery to the indicated address on the Stock Order Form**, by hand delivery to Elberton's office, located at 6 E. Church Street, Elberton, GA, or by mail using the Stock Order Reply Envelope provided. **Stock Order Forms and full payment must be *received (not postmarked) before 5:00 p.m., Eastern Time, on [TBD]***.

I invite you to consider this opportunity to share in our future as an Oconee Financial Corporation stockholder.

Sincerely,

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| |
|:---|
| Timothy N. Stevens |
| President and Chief Executive Officer |

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**Questions?** 

Call our Stock Information Center at [TBD]

from 10:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday, except bank holidays.

*This is not an offer to sell or a solicitation of an offer to buy shares of common stock. The offer is made only by the Offering Circular. The shares of common stock being offered are not savings accounts or deposits and are not insured or guaranteed by Oconee State Bank, Oconee Financial Corporation, Elberton Federal Savings and Loan Association, the Federal Deposit Insurance Corporation or any other government agency.* 

**C** 

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![LOGO](g406793g02w63.jpg)

Dear Sir/Madam:

Performance Trust Capital Partners, LLC has been retained by Oconee Financial Corporation as marketing agent in connection with the offering of Oconee Financial Corporation common stock.

At the request of Oconee Financial Corporation, we are enclosing materials regarding the offering of shares of Oconee Financial Corporation common stock. Included in this package is an Offering Circular describing the stock offering. We encourage you to read the enclosed information carefully, including the "Risk Factors" section of the Offering Circular.

Sincerely,

Performance Trust Capital Partners, LLC

**Questions?** 

Call our Stock Information Center at [TBD]

from 10:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday, except bank holidays.

*This is not an offer to sell or a solicitation of an offer to buy shares of common stock. The offer is made only by the Offering Circular. The shares of common stock being offered are not savings accounts or deposits and are not insured or guaranteed by Oconee State Bank, Oconee Financial Corporation, Elberton Federal Savings and Loan Association, the Federal Deposit Insurance Corporation or any other government agency.* 

**D** 

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**ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION** 

Dear Member:

I am writing to request your vote on a matter of importance. Pursuant to a Plan of Merger Conversion (the "Plan"), Elberton Federal Savings and Loan Association ("Elberton") plans to convert from the mutual (meaning no stockholders) to the stock form of ownership, and immediately thereafter merge with and into Oconee State Bank (the "Merger Conversion"). Also pursuant to the Plan, Oconee Financial Corporation ("Oconee"), the parent company of Oconee State Bank (the "Bank"), is offering shares of its common stock for sale to eligible Elberton depositors and borrowers (the "Offering").

**Your vote is very important**. As a member of Elberton Federal Savings, we need your participation in an important vote. Enclosed are materials describing the Merger Conversion proposal, the offering and your voting rights. Also enclosed are one or more proxy cards which represent your voting rights as a member of Elberton.

Your proxy card(s) should be voted in advance of our special meeting of members, which is scheduled for _______, 2023 at ____ a.m./p.m. Eastern Time at 6 E. Church Street, Elberton, Georgia. If you have more than one account, you may receive more than one proxy card. *These are not duplicate proxy cards* . Please vote all proxy cards received. **We urge you to cast your votes immediately by internet or telephone by following the instructions on the proxy card.** Alternatively, you may mark your vote, sign, date and mail the proxy card(s) in the enclosed proxy reply envelope today. You may also deliver your signed proxy cards in person to Elberton during normal banking hours.

**Regardless of how you choose to cast your vote, please vote today. Our Board of Directors urges you to vote "FOR" the Merger Conversion proposal. Not voting will have the same effect as voting "AGAINST" the Merger Conversion proposal.** 

We urge you to vote on the Plan. **However, we regret that Oconee Financial Corporation is unable to offer to you the sale of common stock in the Offering because the small number of Elberton customers in your state makes registration of the common stock under your state's securities laws prohibitively expensive or otherwise impractical.**

If you have any questions about the Merger Conversion or how to cast your votes, please refer to the enclosed Proxy Statement, Offering Circular, and Questions and Answers Brochure, or call our Stock Information Center at the number shown below.

Sincerely,

---

| |
|:---|
| ![LOGO](g406793rdanielgraves.jpg)  |
| R. Daniel Graves |
| President and Chief Executive Officer |

---

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**Questions?** 

Call our Stock Information Center at [TBD]

from 10:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday, except bank holidays.

*This is not an offer to sell or a solicitation of an offer to buy shares of common stock. The offer is made only by the Offering Circular. The shares of common stock being offered are not savings accounts or deposits and are not insured or guaranteed by Oconee State Bank, Oconee Financial Corporation, Elberton Federal Savings and Loan Association, the Federal Deposit Insurance Corporation or any other government agency.*

**B** 

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![LOGO](g406793g00a20.jpg)

Dear Fellow Shareholder:

I am pleased to tell you about an opportunity for further investment in Oconee Financial Corporation ("Oconee" or "OSBK") common stock.

Pursuant to a Plan of Merger Conversion (the "Plan"), Oconee State Bank (the "Bank") plans to acquire Elberton Federal Savings and Loan Association ("Elberton"). Pursuant to the Plan, Oconee, the parent company of the Bank, is offering shares of its common stock for sale to certain eligible investors (the "Offering"), at a price which is approximately 85% of the average daily closing price of Oconee common stock on the OTCQX market for the consecutive period of thirty full trading days ending on [INSERT DATE OF OFFERING CIRCULAR].

As an Oconee shareholder of record as of [TBD], you are eligible to participate in the Offering.

Please read the enclosed materials carefully before making an investment decision. If you are interested in purchasing shares of common stock, complete the enclosed Stock Order Form and return it, with full payment. **You may submit your Stock Order Form by overnight delivery to the indicated address on the Stock Order Form**, by hand delivery to the Bank's main office, located at 41 N. Main Street, Watkinsville, GA, or by mail using the Stock Order Reply Envelope provided. **Stock Order Forms and full payment must be *received (not postmarked) before 5:00 p.m., Eastern Time, on [TBD]***.

I invite you to consider this opportunity to share in our future as an Oconee Financial Corporation stockholder.

Sincerely,

---

| |
|:---|
| Timothy N. Stevens |
| President and Chief Executive Officer |

---

------

**Questions?** 

Call our Stock Information Center at TBD]

from 10:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday, except bank holidays.

This is not an offer to sell or a solicitation of an offer to buy shares of common stock. The offer is made only by the Offering Circular. The shares of common stock being offered are not savings accounts or deposits and are not insured or guaranteed by Oconee State Bank, Oconee Financial Corporation, Elberton Federal Savings and Loan Association, the Federal Deposit Insurance Corporation or any other government agency.

**S** 

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![LOGO](g406793g00r81.jpg)

## Questions and Answers About Our Plan of Merger Conversion and Related Oconee Stock Offering
**ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION** 

---

| | |
|:---|:---|
| ![LOGO](g406793g00a10.jpg) | ![LOGO](g406793g00a20.jpg) |

---

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***This pamphlet answers questions about our plan of merger conversion and related stock offering. Investing in shares of common stock involves certain risks. Before making an investment decision, please read the enclosed Offering Circular carefully, including the "Risk Factors" section.***

***GENERAL — THE MERGER CONVERSION*** 

**Q.** **What is the Merger Conversion?** 

**A.** Under our plan of merger conversion (the "Plan"), Elberton Federal Savings and Loan
Association ("Elberton") plans to convert from the mutual (meaning no stockholders) to the stock form of ownership, and immediately thereafter merge with and into Oconee State Bank (the "Merger Conversion"). Also pursuant to the
Plan, Oconee Financial Corporation ("Oconee"), the parent company of Oconee State Bank, is offering shares of its common stock for sale to eligible Elberton depositors and borrowers (the "Offering").

At the completion of the Merger Conversion all active deposit and loan accounts with Elberton will become accounts with Oconee State Bank, and the Elberton banking office will become a branch location of Oconee State Bank.

**Q.** **What are the reasons for the Merger Conversion and Offering?** 

**A.** As described more fully in the Elberton Notice of Special Meeting and Proxy Statement dated [TBD],
many factors were considered before arriving at the decision to pursue the Merger Conversion, among them being:

• the complementary aspects of Elberton's and Oconee State Bank's respective businesses; and

• our belief that the Merger Conversion will allow Elberton's members to participate in the future
performance of a combined institution that would have better future prospects and economies of scale than Elberton was likely to achieve on a stand-alone basis or through other strategic alternatives.

For these reasons and many others, the Elberton board of directors determined that the Merger Conversion is in the best interests of its members, employees and community.

**Q.** **Will the Merger Conversion affect the balance, rate or terms of Elberton member accounts?** 

**A.** **No. The Merger Conversion will not affect the balance , rate or terms of Elberton deposits or loans .** Deposits will continue to be federally insured by the Federal
Deposit Insurance Corporation, up to the maximum legal limits. At the completion of the Merger Conversion all active deposit and loan accounts with Elberton will become accounts with Oconee State Bank, and the Elberton banking office will become a
branch location of Oconee State Bank.

***THE PROXY VOTE*** 

**Although we have received regulatory approval, the Merger Conversion proposal is also subject to approval by Elberton's eligible members.** 

**Q.** **Why should I vote "FOR" the Merger Conversion proposal?** 

**A.** **Your vote "FOR" the Merger Conversion proposal is extremely important to us.** The Merger
Conversion cannot be implemented without the approval of the members of Elberton. As described more fully in the Proxy Statement and the Offering Circular, upon completion of the Merger Conversion Elberton's deposit and loan customers will
become customers of Oconee State Bank. As customers of Oconee State Bank, you will have access to additional banking locations as well as products and services which the smaller Elberton has historically been unable to offer its customers.

**Voting does not obligate you to purchase common stock during the Offering.** 

**Q.** **Who is eligible to vote on the Merger Conversion proposal?** 

**A.** Elberton's depositors and borrowers as of the close of business on [TBD] are entitled to vote,
provided that they continue to be depositors or borrowers as of [TBD], which is the date of the Special Meeting.

**Q.** **What happens if I don't vote?** 

**A.** **Your vote is very important.** Not voting the Proxy Cards you receive will have the same effect as
voting "AGAINST" the proposal. *Without sufficient favorable votes, we cannot proceed with the Merger Conversion and related Oconee stock offering.* 

**Q.** **How do I vote?** 

**A.** **You may cast your vote immediately today by following the telephone or internet voting instructions on the Proxy Card**, or if you prefer, mark your vote, sign each Proxy Card, and return the card(s) in the enclosed Proxy Reply Envelope. **You may also return your signed proxy cards to Elberton during normal banking hours.** PLEASE VOTE
PROMPTLY. NOT VOTING HAS THE SAME EFFECT AS VOTING "AGAINST" THE MERGER CONVERSION PROPOSAL. Telephone and Internet voting are available 24 hours a day.

**Q.** **How many votes are available to me?** 

**A.** Depositors of Elberton at the close of business on [TBD] are entitled to one vote for each $100 or
fraction thereof on deposit. In addition, borrowers at that date are entitled to one vote in addition to any votes they may also be entitled to cast as depositors. However, no member may cast more than 50 votes. Proxy Cards are not imprinted with
your number of votes. However, votes will be automatically tallied by computer.

------

**Q.** **Why did I receive more than one Proxy Card?** 

A. If you had more than one deposit or loan account on [TBD], you may have received more than one Proxy Card,
depending on the ownership structure of your accounts.  ***There are no duplicate cards — please promptly vote all of the Proxy Cards sent to you.*** 

**Q.** **More than one name appears on my Proxy Card. Who must sign?** 

**A.** The name(s) reflect the title of your accounts. Proxy Cards for joint accounts require the signature
of only one of the account holders. Proxy Cards for trust or custodian accounts must be signed by the trustee or the custodian, not the listed beneficiary.

***THE STOCK OFFERING AND PURCHASING SHARES*** 

**Q.** **How many shares are being offered and at what price?** 

**A.** Oconee is offering for sale between [TBD] and [TBD] shares of common stock. All shares will be sold in
the offering at $[TBD] per share. No sales commission will be charged to purchasers.

**Q.** **Who is eligible to purchase stock during the stock offering?** 

**A.** Pursuant to our Plan, non-transferable rights to subscribe for
shares of Oconee common stock in the Offering have been granted in the following descending order of priority:

***Priority #1*** — Depositors of Elberton with aggregate balances of at least $50 at the close of business on March 31, 2020;

***Priority #2*** — Depositors of Elberton with aggregate balances of at least $50 at the close of business on [TBD]; and

***Priority #3*** — Depositors and borrowers of Elberton at the close of business on [TBD].

Shares not sold in the above priorities may be offered for sale to the general public through a community offering with a preference given to 1) Shareholders of record of Oconee on [TBD], 2) residents of Elbert County, Georgia, and 3) residents of Oconee County, Georgia.

**Q.** **I am eligible to subscribe for shares of common stock in the Offering but am not interested in investing. May I allow someone else to use my Stock Order Form to take advantage of my priority rights?** 

**A.** **No. Subscription rights are non-transferable!** Only those persons eligible to purchase in the Offering priorities described above may purchase shares in the Offering. Subject to limited exceptions, to preserve subscription rights,
the shares may only be registered in the name(s) of eligible account holder(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**Q.** **How may I buy shares during the Offering?** 

**A.** Shares can be purchased by completing a Stock Order Form and returning it, with full payment, so that
it is *received* (not postmarked) before the offering deadline. **You may submit your Stock Order Form by overnight delivery to the indicated address on the Stock Order Form**, by hand delivery to Elberton, located at 6 E. Church Street, Elberton, GA, or by mail using the Stock Order Reply Envelope provided. You may not hand-deliver Stock Order
Forms to any other location. Please do not mail Stock Order Forms to Elberton's or Oconee's offices.

**Q.** **What is the deadline for purchasing shares?** 

**A.** To purchase shares in the Offering, you must deliver a properly completed, signed Stock Order Form,
with full payment, so that it is  ***received*** (not postmarked) before 5:00 p.m., Eastern Time, on [TBD]. Acceptable methods for delivery of Stock Order Forms are described above.

**Q.** **How may I pay for the shares?** 

**A.** Payment for shares can be remitted in two ways:

(1)  ***By personal   check, bank check or money order*** , payable to Oconee Financial Corporation. All checks will be deposited upon
receipt. We cannot accept wires or third-party checks. Please do not mail cash!

(2)  ***By authorized deposit account withdrawal*** of funds from your Elberton deposit account(s). The
Stock Order Form section titled "Method of Payment — Deposit Account Withdrawal" allows you to list the account number(s) and amount(s) to be withdrawn. Funds designated for withdrawal must be in the account(s) at the time the Stock
Order Form is received.

**Q.** **Will I earn interest on my funds?** 

**A.** Yes. If you pay by personal check, bank check or money order, you will earn interest at [TBD] per
annum from the date your payment is processed until the completion of the Merger Conversion and the Offering. At that time, you will be issued a check for interest earned on these funds. If you pay for shares by authorizing withdrawal from your
Elberton deposit account(s), your funds will continue earning interest within the account at the contractual rate. The interest will remain in your account(s) when the designated withdrawal is made, upon completion of the conversion and offering.

**Q.** **How many shares may I subscribe for?** 

A. The minimum order is 25 shares ($[TBD]). The maximum number of shares that may be purchased by a person,
entity or group of persons through a single account is 5% of the shares sold in the Offering.

More detail on purchase limits can be found in the Offering Circular. Please call the Stock Information Center with any questions about purchase limits.

------

**Q.** **Can I subscribe for shares and add someone who is not on my accounts to my stock registration?** 

**A.** No.

**Q.** **May I use a loan from Elberton or Oconee to pay for shares?** 

**A.** No. Elberton and Oconee are precluded by regulation from loaning funds to anyone for the purchase of
Oconee common stock during the Offering.

**Q.** **May I change my mind after I place an order to subscribe for stock?** 

**A.** No. After receipt, your executed Stock Order Form cannot be modified or revoked without our consent.

**Q.** **Will the stock be insured?** 

**A.** No. Like any common stock, Oconee's common stock is not insured.

**Q.** **Will dividends be paid on the stock?** 

**A.** Following completion of the Offering, Oconee's board of directors will have the authority to
declare dividends on its shares of common stock, subject to financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. No decision has been made with respect to the
amount, if any, and timing of any future Oconee dividend payments. We cannot assure you that we will pay dividends in the future, or, if dividends are paid, that any such dividends will not be reduced or eliminated in the future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**Q.** **How will the newly issued shares of Oconee trade?** 

**A.** Oconee's common stock is currently quoted on the OTCQX Marketplace, operated by OTC Markets
Group, under the trading symbol "OSBK". When the shares sold in the Offering are issued, they will continue to trade on the OTCQX Marketplace. Once the shares have begun trading, you may contact a firm offering investment services in order
to buy or sell Oconee Financial Corporation common stock.

**Q.** **If I purchase shares in the Offering, when will I receive my shares?** 

**A.** As soon as practicable after completion of the Offering, our transfer agent will send, by first class
mail, a statement reflecting your stock ownership. All shares of Oconee common stock sold in the Offering will be issued in book-entry form on the books of our transfer agent, through the Direct Registration System. *Paper stock certificates will not be issued*.

***WHERE TO GET MORE INFORMATION***

**Q.** **How can I get more information?** 

**A.** For more information, refer to the enclosed Offering Circular or call our Stock Information Center at
[TBD], from 10:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday. The Stock Information Center is not open on bank holidays.

**This brochure is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Offering Circular. These securities are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other government agency.** 

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**ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION** 

## PLEASE VOTE

## THE ENCLOSED PROXY CARD!
***If you have not yet voted the Proxy Card(s) we recently mailed***

***to you in a large white package,***

***please vote the enclosed replacement Proxy Card.***

***<u>You may cast your vote immediately today by following the telephone or internet</u> <u>voting instructions on the Proxy Card,</u> or if you prefer, mark your vote, sign each Proxy Card, and return the card(s) in the enclosed Proxy Reply Envelope. You may also return your signed Proxy Card(s) in person to Elberton Federal Savings during normal banking hours.***

**PLEASE JOIN YOUR BOARD OF DIRECTORS IN VOTING** 

**"<u>FOR"</u> THE MERGER CONVERSION PROPOSAL.** 

**Not Voting Has The Same Effect As Voting "<u>AGAINST</u>" The Proposal.** 

**Voting Does Not Obligate You To Purchase Common Stock During The Offering.** 

**THE PLAN OF MERGER CONVERSION WILL NOT RESULT IN CHANGES TO THE BALANCES, RATES OR TERMS OF YOUR DEPOSIT OR LOAN ACCOUNTS. DEPOSIT ACCOUNTS WILL CONTINUE TO BE INSURED BY THE FDIC UP TO THE MAXIMUM LEGAL LIMITS.** 

**If you receive more than one of these reminder mailings,** 

**please vote <u>each</u> Proxy Card received. Your votes will not be counted twice.** 

## QUESTIONS?
**Please call our Information Center at [TBD]** 

**from 10:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday, except bank holidays.** 

**PG1** 

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**Elberton Federal Savings** 

**and Loan Association**![LOGO](g406793g00a20.jpg)

## You're Invited to a Community Meeting
We cordially invite you to attend one of our community meetings to learn more about the offering of Oconee Financial Corporation common stock to be sold in connection with the merger of Elberton Federal Savings with Oconee State Bank.

❖ Members of senior management will discuss the planned merger of Elberton Federal Savings with Oconee State Bank.

❖ You will be able to meet one-on-one with officers of Elberton Federal Savings and Oconee State Bank to ask questions.

❖ There will be no sales pressure. You will receive Oconee Financial Corporation stock offering materials. Then you decide if the stock purchase matches your investment objectives.

Community meetings will be held in Elberton and Watkinsville, Georgia. For meeting times and to make a reservation, or to receive an Offering Circular and a Stock Order Form, please call our Stock Information Center at [TBD], Monday through Friday, 10:00 a.m. to 5:00 p.m., Eastern Time.

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**Elberton Federal Savings** 

**and Loan Association**![LOGO](g406793g00a20.jpg)

## Community Meetings

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| | |
|:---|:---|
| ***[Date TBD]***<br> *Location<br>Address<br>City, State Zip<br>Code* | ***[Date TBD]***<br> *Location<br>Address<br>City, State Zip<br>Code* |
| ***[Date TBD]***<br> *Location<br>Address<br>City, State Zip<br>Code* | ***[Date TBD]***<br> *Location<br>Address<br>City, State Zip<br>Code* |

---

❖

*This is not an offer to sell or a solicitation of an offer to buy shares of common stock. The offer is made only by the Offering Circular. The shares of common stock being offered are not savings accounts or deposits and are not insured or guaranteed by Oconee State Bank, Oconee Financial Corporation, Elberton Federal Savings and Loan Association, the Federal Deposit Insurance Corporation or any other government agency.*

## Add

**Exhibit 6.1** 

**OCONEE FINANCIAL CORPORATION** 

**2021 EQUITY INCENTIVE PLAN** 

**ARTICLE 1** 

**PURPOSE** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <u>GENERAL</u>. The purpose of the Oconee Financial Corporation 2021 Equity Incentive Plan (the "Plan") is to promote the success, and enhance the value, of Oconee Financial Corporation (the "Company"), by linking the personal interests of employees, officers, directors and consultants of the Company or any Affiliate (as defined below) to those of Company shareholders and by providing such persons with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of employees, officers, directors and consultants upon whose judgment, interest, and special effort the successful conduct of the Company's operation is largely dependent. Accordingly, the Plan permits the grant of incentive awards from time to time to selected employees, officers, directors and consultants of the Company and its Affiliates.

**ARTICLE 2** 

**DEFINITIONS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <u>DEFINITIONS</u>. When a word or phrase appears in this Plan with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase shall generally be given the meaning ascribed to it in this Section or in Section 1.1 unless a clearly different meaning is required by the context. The following words and phrases shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "<u>Affiliate</u>" means (i) any Subsidiary or Parent, or (ii) an entity that directly or through one or more intermediaries controls, is controlled by or is under common control with, the Company, as determined by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "<u>Award</u>" means an award of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Deferred Stock Units, Performance Awards, Other Stock-Based Awards, or any other right or interest relating to Stock or cash, granted to a Participant under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "<u>Award Certificate</u>" means a written document, in such form as the Board prescribes from time to time, setting forth the terms and conditions of an Award. Award Certificates may be in the form of individual award agreements or certificates or a program document describing the terms and provisions of an Award or series of Awards under the Plan. The Board may provide for the use of electronic, internet or other non-paper Award Certificates, and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "<u>Beneficial Owner</u>" shall have the meaning given such term in Rule 13d-3 of the General Rules and Regulations under the 1934 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "<u>Board</u>" means the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "<u>Cause</u>" as a reason for a Participant's termination of employment shall have the meaning assigned such term in the employment, severance or similar agreement, if any, between such Participant and the Company or an Affiliate; <u>provided</u>, <u>however</u>, that if there is no such employment, severance or similar agreement in which such term is defined, and unless otherwise defined in the applicable Award

------

Certificate, "Cause" shall mean a good faith determination by the Company that any of the following has occurred: (i) a failure by the Participant to perform his or her duties and responsibilities, which remains uncured after the expiration of thirty (30) days following the delivery of written notice of such breach to the Participant by the Company or any Affiliate; <u>provided</u>, <u>however</u>, that the Participant shall not have the opportunity to cure if the breach is not susceptible to being cured or such an opportunity would otherwise conflict with applicable federal or state regulatory requirements; (ii) conduct by the Participant that amounts to fraud, dishonesty or willful misconduct in the performance of his or her duties and responsibilities; (iii) arrest for, charged in relation to (by criminal information, indictment or otherwise), or conviction of the Participant of any felony or any other crime involving breach of trust or moral turpitude; (iv) conduct by the Participant that amounts to gross and willful insubordination, gross neglect or inattention to his or her duties and responsibilities; (v) the exhibition of a standard of behavior within the scope of or related to his or her employment that is materially disruptive to the orderly conduct of the Company's or any Affiliate's business operations (including, without limitation, substance abuse, sexual harassment or sexual misconduct), which remains uncured after the expiration of thirty (30) days following the delivery of written notice of such disruptive behavior to the Participant by the Company or any Affiliate; <u>provided</u>, <u>however</u>, that the Participant shall not have the opportunity to cure if the disruptive behavior is not susceptible to being cured or such an opportunity would otherwise conflict with applicable federal or state regulatory requirements; (vi) the receipt of any form of notice, written or otherwise, that any regulatory agency having jurisdiction over the Company or any Affiliate intends to institute any form of formal or informal regulatory action against the Participant or the Company or any Affiliate; or (vii) Participant's removal and/or permanent prohibition from participating in the conduct of the Company's or any Affiliate's affairs by an order issued under Section 8(e) or 8(g) of the FDIA (12 U.S.C. 1818(e) and (g)).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "<u>Change in Control</u>" means and includes the occurrence of any one of the following events (but shall specifically exclude a Public Offering and the EFS Merger):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) during any consecutive 12-month period, individuals who, at the beginning of such period, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of such Board, provided that any person becoming a director after the beginning of such 12-month period and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board shall be an Incumbent Director; <u>provided</u>, <u>however</u>, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to the election or removal of directors ("Election Contest") or other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board ("Proxy Contest"), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any Person becomes a Beneficial Owner, directly or indirectly, of either (A) 50% or more of the then-outstanding shares of common stock of the Company ("Company Common Stock") or (B) securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities eligible to vote for the election of directors (the "Company Voting Securities"); <u>provided</u>, <u>however</u>, that for purposes of this subsection (ii), the following acquisitions of Company Common Stock or Company Voting Securities shall not constitute a Change in Control: (w) an acquisition directly from the Company, (x) an acquisition by the Company or a Subsidiary, (y) an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, or (z) an acquisition pursuant to a Non-Qualifying Transaction (as defined in subsection (iii) below); or

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or a Subsidiary (a "Reorganization"), or the sale or other disposition of all or substantially all of the Company's assets (a "Sale") or the acquisition of assets or stock of another corporation or other entity (an "Acquisition"), unless immediately following such Reorganization, Sale or Acquisition: (A) all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the outstanding Company Common Stock and outstanding Company Voting Securities immediately prior to such Reorganization, Sale or Acquisition beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Reorganization, Sale or Acquisition (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets or stock either directly or through one or more subsidiaries, the "Surviving Entity") in substantially the same proportions as their ownership, immediately prior to such Reorganization, Sale or Acquisition, of the outstanding Company Common Stock and the outstanding Company Voting Securities, as the case may be, and (B) no person (other than (x) the Company or any Subsidiary, (y) the Surviving Entity or its ultimate parent entity, or (z) any employee benefit plan (or related trust) sponsored or maintained by any of the foregoing is the Beneficial Owner, directly or indirectly, of 50% or more of the total common stock or 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Entity, and (C) at least a majority of the members of the board of directors of the Surviving Entity were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) "<u>Code</u>" means the Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "<u>Company</u>" means Oconee Financial Corporation, a Georgia corporation, or any successor corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) "<u>Continuous Service</u>" means the absence of any interruption or termination of service as an employee, officer, director or consultant of the Company or any Affiliate, as applicable. Continuous Service shall not be considered interrupted in the following cases: (i) a Participant transfers employment between the Company and an Affiliate or between Affiliates, (ii) in the discretion of the Board as specified at or prior to such occurrence, in the case of a spin-off, sale or disposition of the Participant's employer from the Company or any Affiliate, (iii) a Participant transfers from being an employee of the Company or an Affiliate to being a director of the Company or of an Affiliate, or vice versa, (iv) in the discretion of the Board, a Participant transfers from being an employee of the Company or an Affiliate to being a consultant to the Company or of an Affiliate, or vice versa, or (v) any leave of absence authorized in writing by the Company prior to its commencement. Whether military, government or other service or other leave of absence shall constitute a termination of Continuous Service shall be determined in each case by the Board at its discretion, and any determination by the Board shall be final and conclusive; <u>provided</u>, <u>however</u>, that for purposes of any Award that is subject to Code Section 409A, the determination of a leave of absence must comply with the requirements of a "bona fide leave of absence" as provided in Treas. Reg. Section 1.409A-1(h).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) "<u>Deferred Stock Unit</u>" means a right granted to a Participant under Article 9 to receive Shares (or the equivalent value in cash or other property if the Board so provides) at a future time as determined by the Board, or as determined by the Participant within guidelines established by the Board in the case of voluntary deferral elections.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) "<u>Disability</u>" of a Participant means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant's employer. In the event of a dispute, the determination of whether a Participant is Disabled will be made by the Board and may be supported by the advice of a physician competent in the area to which such Disability relates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) "<u>Dividend Equivalent</u>" means a right granted pursuant to Article 11.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) "<u>Effective Date</u>" has the meaning assigned such term in Section 3.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) "<u>EFS Merger</u>" means the closing date of the transactions contemplated by the Agreement and Plan of Conversion Merger, dated as of February 15, 2021, by and among the Company, Oconee State Bank and Elberton Federal Savings and Loan Association.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) "<u>Eligible Participant</u>" means an employee, officer, director or consultant of the Company or any Affiliate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) "<u>Fair Market Value</u>" means the fair market value per Share as determined by such method or procedures as the Board determines in good faith to be reasonable and in compliance with Code Section 409A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) "<u>Full-Value Award</u>" means an Award other than in the form of an Option or SAR, and which is settled by the issuance of Stock (or at the discretion of the Board, settled in cash valued by reference to Stock value).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) "<u>Grant Date</u>" of an Award means the first date on which all necessary corporate action has been taken to approve the grant of the Award as provided in the Plan, or such later date as is determined and specified as part of that authorization process. Notice of the grant shall be provided to the grantee within a reasonable time after the Grant Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) "<u>Option</u>" means a right granted to a Participant under Article 7 of the Plan to purchase Stock at a specified price during specified time periods.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) "<u>Other Stock-Based Award</u>" means a right, granted to a Participant under Article 12, that relates to or is valued by reference to Stock or other Awards relating to Stock.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) "<u>Parent</u>" means a corporation, limited liability company, partnership or other entity which owns or beneficially owns a majority of the outstanding voting stock or voting power of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) "<u>Participant</u>" means an Eligible Participant who has been granted an Award under the Plan; provided that in the case of the death of a Participant, the term "Participant" refers to a beneficiary designated pursuant to Section 13.4 or the legal guardian or other legal representative acting in a fiduciary capacity on behalf of the Participant under applicable state law and court supervision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) "<u>Performance Award</u>" means any award granted under the Plan pursuant to Article 10.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) "<u>Person</u>" means any individual, entity or group, within the meaning of Section 3(a)(9) of the 1934 Act and as used in Section 13(d)(3) or 14(d)(2) of the 1934 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) "<u>Plan</u>" means the Oconee Financial Corporation 2021 Equity Incentive Plan, as amended from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) "<u>Public Offering</u>" means a public offering of any class or series of the Company's equity securities pursuant to a registration statement filed by the Company under the 1933 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) "<u>Restricted Stock</u>" means Stock granted to a Participant under Article 9 that is subject to certain restrictions and to risk of forfeiture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) "<u>Restricted Stock Unit</u>" means the right granted to a Participant under Article 9 to receive shares of Stock (or the equivalent value in cash or other property if the Board so provides) in the future, which right is subject to certain restrictions and to risk of forfeiture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) "<u>Shares</u>" means shares of the Company's Stock. If there has been an adjustment or substitution with respect to the Shares (whether or not pursuant to Article 14, the term "Shares" shall also include any shares of stock or other securities that are substituted for Shares or into which Shares are adjusted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) "<u>Stock</u>" means the Company's common stock, $2.00 par value and such other securities of the Company as may be substituted for Stock pursuant to Article 14.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) "<u>Stock Appreciation Right</u>" or "<u>SAR</u>" means a right granted to a Participant under Article 8 to receive a payment equal to the difference between the Fair Market Value of a Share as of the date of exercise of the SAR over the base price of the SAR, all as determined pursuant to Article 8.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg) "<u>Subsidiary</u>" means any corporation, limited liability company, partnership or other entity, domestic or foreign, of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh) "<u>1933 Act</u>" means the Securities Act of 1933, as amended from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) "<u>1934 Act</u>" means the Securities Exchange Act of 1934, as amended from time to time.

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**ARTICLE 3** 

**EFFECTIVE TERM OF PLAN** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <u>EFFECTIVE DATE</u>. The Plan shall be effective on the date it is approved by the Board (the "Effective Date").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 <u>TERM OF PLAN</u>. Unless earlier terminated as provided herein, the Plan shall continue in effect until the tenth (10th) anniversary of the Effective Date or, if the shareholders approve an amendment to the Plan that increases the number of Shares subject to the Plan, the tenth (10th) anniversary of the date of such approval. The termination of the Plan on such date shall not affect the validity of any Award outstanding on the date of termination, which shall continue to be governed by the applicable terms and conditions of the Plan.

**ARTICLE 4** 

**ADMINISTRATION** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <u>ADMINISTRATOR</u>. The Plan shall be administered by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <u>ACTION AND INTERPRETATIONS BY THE BOARD</u>. For purposes of administering the Plan, the Board may from time to time adopt rules, regulations, guidelines and procedures for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the Plan, as the Board may deem appropriate. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent it deems necessary to carry out the intent of the Plan. The Board's interpretation of the Plan, any Awards granted under the Plan, any Award Certificate and all decisions and determinations by the Board with respect to the Plan are final, binding, and conclusive on all parties and shall be given the maximum deference permitted by applicable law. Each member of the Board is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company's or an Affiliate's independent certified public accountants, Company counsel or any executive compensation consultant or other professional retained by the Company or the Board to assist in the administration of the Plan. No member of the Board will be liable for any good faith determination, act or omission in connection with the Plan or any Award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <u>AUTHORITY OF BOARD</u>. The Board has the exclusive power, authority and discretion to: (i) grant Awards; (ii) designate Participants; (iii) determine the type or types of Awards to be granted to each Participant; (iv) determine the number of Awards to be granted and the number of Shares or dollar amount to which an Award will relate; (v) determine the terms and conditions of any Award granted under the Plan; (vi) prescribe the form of each Award Certificate, which need not be identical for each Participant; (vii) decide all other matters that must be determined in connection with an Award; (viii) establish, adopt or revise any plan, program or policy for the grant of Awards as it may deem necessary or advisable, including but not limited to short-term incentive programs, and any special plan documents; (ix) establish, adopt or revise any rules, regulations, guidelines or procedures as it may deem necessary or advisable to administer the Plan; (x) make all other decisions and determinations that may be required under the Plan or as the Board deems necessary or advisable to administer the Plan; (xi) amend the Plan or any Award Certificate as provided herein; and (xii) adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of the United States or any non-U.S. jurisdictions in which the Company or any Affiliate may operate, in order to assure the viability of the benefits of Awards granted to participants located in the United States or such other jurisdictions and to further the objectives of the Plan.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 <u>DELEGATION</u>. The Board may delegate to one or more of its members or to one or more officers of the Company or an Affiliate or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Board or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Board or such individuals may have under this Plan. In addition, the Board may, by resolution, expressly delegate to one or more of its members or to one or more officers of the Company, the authority, within specified parameters as to the number and terms of Awards, to (i) designate officers and/or employees of the Company or any of its Affiliates to be recipients of Awards under the Plan, and (ii) to determine the number of such Awards to be received by any such Participants. The acts of such delegates shall be treated hereunder as acts of the Board and such delegates shall report regularly to the Board regarding the delegated duties and responsibilities and any Awards so granted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 <u>INDEMNIFICATION</u>. Each person who is or shall have been a member of the Board, or an officer of the Company to whom authority was delegated in accordance with this Article 4, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

**ARTICLE 5** 

**SHARES SUBJECT TO THE PLAN** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <u>NUMBER OF SHARES</u>. Subject to adjustment as provided in Section 5.2 and Section 14.1, the aggregate number of Shares reserved and available for issuance pursuant to Awards granted under the Plan shall be 40,000 Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <u>SHARE COUNTING</u>. Shares covered by an Award shall be subtracted from the Plan share reserve as of the Grant Date, but shall be added back to the Plan share reserve or otherwise treated in accordance with subsections (a) through (g) of this Section 5.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To the extent that an Award is canceled, terminates, expires, is forfeited or lapses for any reason (including by reason of failure to achieve maximum performance goals), any unissued or forfeited Shares subject to the Award will be added back to the Plan share reserve and again be available for issuance pursuant to Awards granted under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Shares subject to Awards settled in cash will be added back to the Plan share reserve and again be available for issuance pursuant to Awards granted under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Shares withheld from an Award to satisfy tax withholding requirements will count against the number of Shares remaining available for issuance pursuant to Awards granted under the Plan, and Shares delivered by a participant to satisfy tax withholding requirements will not be added to the Plan share reserve.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The full number of Shares subject to an Option shall count against the number of Shares remaining available for issuance pursuant to Awards granted under the Plan, even if the exercise price of an Option is satisfied through net-settlement or by delivering Shares to the Company (by either actual delivery or attestation).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The full number of Shares subject to a SAR shall count against the number of Shares remaining available for issuance pursuant to Awards made under the Plan (rather than the net number of Shares actually delivered upon exercise).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Substitute Awards granted pursuant to Section 13.9 of the Plan shall not count against the Shares otherwise available for issuance under the Plan under Section 5.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <u>STOCK DISTRIBUTED</u>. Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market.

**ARTICLE 6** 

**ELIGIBILITY** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 <u>GENERAL</u>. Awards may be granted only to Eligible Participants. Eligible Participants who are service providers to an Affiliate may be granted Options or SARs under this Plan only if the Affiliate qualifies as an "eligible issuer of service recipient stock" within the meaning of Treas. Reg. Section 1.409A-1(b)(5)(iii)(E) of the final regulations under Code Section 409A.

**ARTICLE 7** 

**STOCK OPTIONS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 <u>GENERAL</u>. The Board is authorized to grant Options to Participants on the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Exercise Price</u>. The exercise price per Share under an Option shall be determined by the Board, provided that the exercise price for any Option (other than an Option issued as a substitute Award pursuant to Section 13.9) shall not be less than the Fair Market Value as of the Grant Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Time and Conditions of Exercise</u>. The Board shall determine the time or times at which an Option may be exercised in whole or in part, subject to Section 7.1(d), and may include in the Award Certificate a provision that an Option that is otherwise exercisable and has an exercise price that is less than the Fair Market Value of the Stock on the last day of its term will be automatically exercised on such final date of the term by means of a "net exercise," thus entitling the optionee to Shares equal to the intrinsic value of the Option on such exercise date, less the number of Shares required for tax withholding. The Board shall also determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised or vested.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Payment</u>. The Board shall determine the methods by which the exercise price of an Option may be paid, the form of payment, and the methods by which Shares shall be delivered or deemed to be delivered to Participants. As determined by the Board at or after the Grant Date, payment of the exercise price of an Option may be made, in whole or in part, in the form of (i) cash or cash equivalents, (ii) delivery (by either actual delivery or attestation) of previously-acquired Shares based on the Fair Market Value of the Shares on the date the Option is exercised, (iii) withholding of Shares from the Option based on the Fair Market Value of the Shares on the date the Option is exercised, (iv) broker-assisted market sales, or (iv) any other "cashless exercise" arrangement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Exercise Term</u>. No Option granted under the Plan shall be exercisable for more than ten years from the Grant Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>No Deferral Feature</u>. No Option shall provide for any feature for the deferral of compensation other than the deferral of recognition of income until the exercise or disposition of the Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>No Dividend Equivalents</u>. No Option shall provide for Dividend Equivalents.

**ARTICLE 8** 

**STOCK APPRECIATION RIGHTS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 <u>GRANT OF STOCK APPRECIATION RIGHTS</u>. The Board is authorized to grant Stock Appreciation Rights to Participants on the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Right to Payment</u>. Upon the exercise of a SAR, the Participant has the right to receive, for each Share with respect to which the SAR is being exercised, the excess, if any, of: (i) the Fair Market Value of one Share on the date of exercise; over (ii) the base price of the SAR as determined by the Board and set forth in the Award Certificate, which (except for a SAR issued as a substitute Award pursuant to Section 13.9) shall not be less than the Fair Market Value of one Share on the Grant Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Time and Conditions of Exercise</u>. The Board shall determine the time or times at which a SAR may be exercised in whole or in part, and may include in the Award Certificate a provision that a SAR that is otherwise exercisable and has a base price that is less than the Fair Market Value of the Stock on the last day of its term will be automatically exercised on such final date of the term, thus entitling the holder to cash or Shares equal to the intrinsic value of the SAR on such exercise date, less the cash or number of Shares required for tax withholding. No SAR shall be exercisable for more than ten years from the Grant Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>No Deferral Feature</u>. No SAR shall provide for any feature for the deferral of compensation other than the deferral of recognition of income until the exercise or disposition of the SAR.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>No Dividend Equivalents</u>. No SAR shall provide for Dividend Equivalents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Other Terms</u>. All SARs shall be evidenced by an Award Certificate. Subject to the limitations of this Article 8, the terms, methods of exercise, methods of settlement, form of consideration payable in settlement (e.g., cash, Shares or other property), and any other terms and conditions of the SAR shall be determined by the Board at the time of the grant and shall be reflected in the Award Certificate.

**ARTICLE 9** 

**RESTRICTED STOCK AND STOCK UNITS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 <u>GRANT OF RESTRICTED STOCK AND STOCK UNITS</u>. The Board is authorized to make Awards of Restricted Stock, Restricted Stock Units or Deferred Stock Units to Participants in such amounts and subject to such terms and conditions as may be selected by the Board. An Award of Restricted Stock, Restricted Stock Units or Deferred Stock Units shall be evidenced by an Award Certificate setting forth the terms, conditions, and restrictions applicable to the Award.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 <u>ISSUANCE AND RESTRICTIONS</u>. Restricted Stock, Restricted Stock Units or Deferred Stock Units shall be subject to such restrictions on transferability and other restrictions as the Board may impose (including, for example, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or otherwise, as the Board determines at the time of the grant of the Award or thereafter. A Participant shall have none of the rights of a shareholder with respect to Restricted Stock Units or Deferred Stock Units until such time as Shares of Stock are paid in settlement of such Awards.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3 <u>DIVIDENDS AND DIVIDEND EQUIVALENTS</u>. Unless otherwise determined by the Board, dividends accrued on shares of Restricted Stock or Dividend Equivalents accrued with respect to Restricted Stock Units or Deferred Stock Units before the underlying Awards are vested shall be credited by the Company to an account for the Participant and accumulated without interest until the date upon which the host Award becomes vested, and any dividends or Dividend Equivalents accrued with respect to forfeited Restricted Stock, Restricted Stock Units or Deferred Stock Units will be reconveyed to the Company without further consideration or any act or action by the Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4 <u>FORFEITURE</u>. Subject to the terms of the Award Certificate and except as otherwise determined by the Board at the time of the grant of the Award or thereafter, upon termination of Continuous Service during the applicable restriction period or upon failure to satisfy a performance goal during the applicable restriction period, Restricted Stock or Restricted Stock Units that are at that time subject to restrictions shall be forfeited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5 <u>DELIVERY OF RESTRICTED STOCK</u>. Shares of Restricted Stock shall be delivered to the Participant at the Grant Date either by book-entry registration or by delivering to the Participant, or a custodian or escrow agent (including, without limitation, the Company or one or more of its employees) designated by the Board, a stock certificate or certificates registered in the name of the Participant. If physical certificates representing shares of Restricted Stock are registered in the name of the Participant, such certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.

**ARTICLE 10** 

**PERFORMANCE AWARDS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 <u>GRANT OF PERFORMANCE AWARDS</u>. The Board is authorized to grant any Award under this Plan, including cash-based Awards, with performance-based vesting criteria, on such terms and conditions as may be selected by the Board. Any such Awards with performance-based vesting criteria are referred to herein as Performance Awards. The Board shall have the complete discretion to determine the number of Performance Awards granted to each Participant and to designate the provisions of such Performance Awards as provided in Section 4.3. All Performance Awards shall be evidenced by an Award Certificate or a written program established by the Board, pursuant to which Performance Awards are awarded under the Plan under uniform terms, conditions and restrictions set forth in such written program.

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**ARTICLE 11** 

**DIVIDEND EQUIVALENTS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 <u>GRANT OF DIVIDEND EQUIVALENTS</u>. The Board is authorized to grant Dividend Equivalents with respect to Full-Value Awards granted hereunder. Dividend Equivalents shall entitle the Participant to receive payments equal to ordinary cash dividends or distributions with respect to all or a portion of the number of Shares subject to a Full-Value Award, as determined by the Board.

**ARTICLE 12** 

**STOCK OR OTHER STOCK-BASED AWARDS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1 <u>GRANT OF STOCK OR OTHER STOCK-BASED AWARDS</u>. The Board is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, as deemed by the Board to be consistent with the purposes of the Plan, including without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, including limited partnership interests in a limited partnership entity of which the Company is general partner that may be exchanged or redeemed for Shares on a one-for-one basis, or any profits interest in such limited partnership entity that may be exchanged or converted into such limited partnership interests, and Awards valued by reference to book value or net asset value of Shares or the value of securities of or the performance of specified Parents or Subsidiaries. The Board shall determine the terms and conditions of such Awards.

**ARTICLE 13** 

**PROVISIONS APPLICABLE TO AWARDS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1 <u>AWARD CERTIFICATES</u>. Each Award shall be evidenced by an Award Certificate. Each Award Certificate shall include such provisions, not inconsistent with the Plan, as may be specified by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.2 <u>FORM OF PAYMENT FOR AWARDS</u>. At the discretion of the Board, payment of Awards may be made in cash, Stock, a combination of cash and Stock, or any other form of property as the Board shall determine. In addition, payment of Awards may include such terms, conditions, restrictions and/or limitations, if any, as the Board deems appropriate, including, in the case of Awards paid in the form of Stock, restrictions on transfer and forfeiture provisions. Further, payment of Awards may be made in the form of a lump sum, or in installments, as determined by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.3 <u>LIMITS ON TRANSFER</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each Award and each right under any Award shall be exercisable only by the holder thereof during such holder's lifetime, or, if permissible under applicable law, by such holder's guardian or legal representative or by a transferee receiving such Award pursuant to a domestic relations order (a "QDRO") as defined in Section 414(p)(1)(B) of the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No Award (prior to the time, if applicable, Shares are delivered in respect of such Award), and no right under any Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a grantee otherwise than by will or by the laws of descent and distribution (or in the case of Restricted Stock, to the Company) or pursuant to a QDRO, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary to receive benefits in the event of the grantee's death shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding subsections (a) and (b) above, to the extent provided in the Award Certificate, Awards may be transferred, without consideration, to a Permitted Transferee. For this purpose, a "Permitted Transferee" in respect of any grantee means any member of the Immediate Family of such grantee, any trust of which all of the primary beneficiaries are such grantee or members of his or her Immediate Family, or any partnership (including limited liability companies and similar entities) of which all of the partners or members are such grantee or members of his or her Immediate Family; and the "Immediate Family" of a grantee means the grantee's spouse, any person sharing the grantee's household (other than a tenant or employee), children, stepchildren, grandchildren, parents, stepparents, siblings, grandparents, nieces and nephews. Such Award may be exercised by such transferee in accordance with the terms of the Award Certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Nothing herein shall be construed as requiring the Company or any Affiliate to honor a QDRO except to the extent required under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.4 <u>BENEFICIARIES</u>. Notwithstanding Section 13.3, a Participant may, in the manner determined by the Board, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant's death. A Permitted Transferee, beneficiary, legal guardian, legal representative, or other person claiming any rights under the Plan is subject to all terms and conditions of the Plan and any Award Certificate applicable to the Participant, except to the extent the Plan and Award Certificate otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Board. If no beneficiary has been designated or survives the Participant, any payment due to the Participant shall be made to the Participant's estate. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant, in the manner provided by the Company, at any time provided the change or revocation is filed with the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.5 <u>STOCK TRADING RESTRICTIONS</u>. All Stock issuable under the Plan is subject to any stop-transfer orders and other restrictions as the Board deems necessary or advisable to comply with federal or state securities laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded. The Board may place legends on any Stock certificate or issue instructions to the transfer agent to reference restrictions applicable to the Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.6 <u>EFFECT OF A CHANGE IN CONTROL</u>. Upon the occurrence of a Change in Control: (i) outstanding Options, SARs and other Awards in the nature of rights that may be exercised shall become fully exercisable, (ii) time-based vesting restrictions on outstanding Awards shall lapse, and (iii) the payout level under outstanding performance-based Awards shall be determined as provided in the applicable Award Certificate. Any Awards shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award Certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.7 <u>DISCRETION TO ACCELERATE AWARDS</u>. The Board may in its sole discretion determine that, upon the termination of service of a Participant all or a portion of such Participant's Options, SARs and other Awards in the nature of rights that may be exercised shall become fully or partially exercisable, that all or a part of the time-based restrictions on all or a portion of the Participant's outstanding Awards shall lapse, and/or that any performance-based criteria with respect to any Awards held by the Participant shall be deemed to be wholly or partially satisfied, in each case, as of such date as the Board may, in its sole discretion, declare. The Board may discriminate among Participants and among Awards granted to a Participant in exercising its discretion pursuant to this Section 13.7.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.8 <u>FORFEITURE EVENTS</u>. Awards under the Plan shall be subject to any compensation recoupment policy that the Company may adopt from time to time that is applicable by its terms to the Participant. In addition, the Board may specify in an Award Certificate that the Participant's rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, (i) termination of employment for cause, (ii) violation of material Company or Affiliate policies, (iii) breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, (iv) other conduct by the Participant that is detrimental to the business or reputation of the Company or any Affiliate, or (v) a later determination that the vesting of, or amount realized from, a Performance Award was based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, whether or not the Participant caused or contributed to such material inaccuracy. Nothing contained herein or in any Award Certificate prohibits the Participant from: (1) reporting possible violations of federal law or regulations, including any possible securities laws violations, to any governmental agency or entity; (2) making any other disclosures that are protected under the whistleblower provisions of federal law or regulations; or (3) otherwise fully participating in any federal whistleblower programs, including but not limited to any such programs managed by the U.S. Securities and Exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.9 <u>SUBSTITUTE AWARDS</u>. The Board may grant Awards under the Plan in substitution for stock and stock-based awards held by employees of another entity who become employees of the Company or an Affiliate as a result of a merger or consolidation of the former employing entity with the Company or an Affiliate or the acquisition by the Company or an Affiliate of property or stock of the former employing corporation. The Board may direct that the substitute awards be granted on such terms and conditions as the Board considers appropriate in the circumstances.

**ARTICLE 14** 

**CHANGES IN CAPITAL STRUCTURE** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.1 <u>MANDATORY ADJUSTMENTS</u>. In the event of a nonreciprocal transaction between the Company and its shareholders that causes the per-share value of the Stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering, or large nonrecurring cash dividend), the authorization limits under Section 5.1 shall be adjusted proportionately, and the Board shall make such adjustments to the Plan and Awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. Action by the Board may include: (i) adjustment of the number and kind of shares that may be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of the exercise price of outstanding Awards or the measure to be used to determine the amount of the benefit payable on an Award; and (iv) any other adjustments that the Board determines to be equitable. Notwithstanding the foregoing, the Board shall not make any adjustments to outstanding Options or SARs that would constitute a modification or substitution of the stock right under Treas. Reg. Section 1.409A-1(b)(5)(v) that would be treated as the grant of a new stock right or change in the form of payment for purposes of Code Section 409A. Without limiting the foregoing, in the event of a subdivision of the outstanding Stock (stock-split), a declaration of a dividend payable in Shares, or a combination or consolidation of the outstanding Stock into a lesser number of Shares, the authorization limits under Section 5.1 shall automatically be adjusted proportionately, and the Shares then subject to each Award shall automatically, without the necessity for any additional action by the Board, be adjusted proportionately without any change in the aggregate purchase price therefor.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.2 <u>DISCRETIONARY ADJUSTMENTS</u>. Upon the occurrence or in anticipation of any corporate event or transaction involving the Company (including, without limitation, any merger, reorganization, recapitalization, combination or exchange of shares, or any transaction described in Section 14.1), the Board may, in its sole discretion, provide (i) that Awards will be settled in cash rather than Stock, (ii) that Awards will become immediately vested and non-forfeitable and exercisable (in whole or in part) and will expire after a designated period of time to the extent not then exercised, (iii) that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection with such transaction, (iv) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Stock, as of a specified date associated with the transaction, over the exercise or base price of the Award, (v) that performance targets and performance periods for Performance Awards will be modified, or (vi) any combination of the foregoing. The Board's determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.3 <u>GENERAL</u>. Any discretionary adjustments made pursuant to this Article 14 shall be subject to the provisions of Section 15.2.

**ARTICLE 15** 

**AMENDMENT, MODIFICATION AND TERMINATION** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.1 <u>AMENDMENT, MODIFICATION AND TERMINATION</u>. The Board may, at any time and from time to time, amend, modify or terminate the Plan without shareholder approval; <u>provided</u>, <u>however</u>, that the Board may condition any other amendment or modification on the approval of shareholders of the Company for any reason, including by reason of such approval being necessary or deemed advisable to satisfy any other tax, securities or other applicable laws, policies or regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.2 <u>AWARDS PREVIOUSLY GRANTED</u>. At any time and from time to time, the Board may amend, modify or terminate any outstanding Award without approval of the Participant; <u>provided</u>, <u>however</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the terms of the applicable Award Certificate, such amendment, modification or termination shall not, without the Participant's consent, reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed in or otherwise settled on the date of such amendment or termination (with the per-share value of an Option or SAR for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment or termination over the exercise or base price of such Award); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No termination, amendment, or modification of the Plan shall adversely affect in any material respect any Award previously granted under the Plan, without the written consent of the Participant affected thereby. An outstanding Award shall not be deemed to be "adversely affected" by a Plan amendment if such amendment would not reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed in or otherwise settled on the date of such amendment (with the per-share value of an Option or SAR for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment over the exercise or base price of such Award).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.3 <u>COMPLIANCE AMENDMENTS</u>. Notwithstanding anything in the Plan or in any Award Certificate to the contrary, the Board may amend the Plan or an Award Certificate, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or Award Certificate to any present or future law relating to plans of this or similar nature (including, but not limited to, Section 409A of the Code), and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 15.3 to any Award granted under the Plan without further consideration or action.

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**ARTICLE 16** 

**GENERAL PROVISIONS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.1 <u>RIGHTS OF PARTICIPANTS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) No Participant or any Eligible Participant shall have any claim to be granted any Award under the Plan. Neither the Company, its Affiliates nor the Board is obligated to treat Participants or Eligible Participants uniformly, and determinations made under the Plan may be made by the Board selectively among Eligible Participants who receive, or are eligible to receive, Awards (whether or not such Eligible Participants are similarly situated).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Nothing in the Plan, any Award Certificate or any other document or statement made with respect to the Plan, shall interfere with or limit in any way the right of the Company or any Affiliate to terminate any Participant's employment or status as an officer, or any Participant's service as a director or consultant, at any time, nor confer upon any Participant any right to continue as an employee, officer, director or consultant of the Company or any Affiliate, whether for the duration of a Participant's Award or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company or any Affiliate and, accordingly, subject to Article 15, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Board without giving rise to any liability on the part of the Company or any of its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) No Award gives a Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.2 <u>WITHHOLDING</u>. The Company or any Affiliate shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company or such Affiliate, an amount sufficient to satisfy federal, state, and local taxes (including the Participant's FICA obligation) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the Plan. The obligations of the Company under the Plan will be conditioned on such payment or arrangements and the Company or such Affiliate will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. Unless otherwise determined by the Board at the time the Award is granted or thereafter, any such withholding requirement may be satisfied, in whole or in part, by withholding from the Award Shares having a Fair Market Value on the date of withholding equal to the amount required to be withheld in accordance with applicable tax requirements (up to the maximum individual statutory rate in the applicable jurisdiction as may be permitted under then-current accounting principles to qualify for equity classification), in accordance with such procedures as the Board establishes. All such elections shall be subject to any restrictions or limitations that the Board, in its sole discretion, deems appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.3 <u>SPECIAL PROVISIONS RELATED TO SECTION 409A OF THE CODE</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) It is intended that the payments and benefits provided under the Plan and any Award shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Code. The Plan and all Award Certificates shall be construed in a manner that effects such intent. Nevertheless, the tax treatment of the benefits provided under the Plan or any Award is not warranted or guaranteed. Neither the Company, its Affiliates nor their respective directors, officers, employees or advisers (other than in his or her capacity as a Participant) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by any Participant or other taxpayer as a result of the Plan or any Award.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding anything in the Plan or in any Award Certificate to the contrary, to the extent that any amount or benefit that would constitute non-exempt "deferred compensation" for purposes of Section 409A of the Code ("<u>Non-Exempt Deferred</u> <u>Compensation</u>") would otherwise be payable or distributable, or a different form of payment (e.g., lump sum or installment) of such Non-Exempt Deferred Compensation would be effected, under the Plan or any Award Certificate by reason of the occurrence of a Change in Control, or the Participant's Disability or separation from service, such Non-Exempt Deferred Compensation will not be payable or distributable to the Participant, and/or such different form of payment will not be effected, by reason of such circumstance unless the circumstances giving rise to such Change in Control, Disability or separation from service meet any description or definition of "change in control event", "disability" or "separation from service", as the case may be, in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). This provision does not prohibit the vesting of any Award upon a Change in Control, Disability or separation from service, however defined. If this provision prevents the payment or distribution of any amount or benefit, or the application of a different form of payment of any amount or benefit, such payment or distribution shall be made at the time and in the form that would have applied absent the non-409A-conforming event.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding anything in the Plan or in any Award Certificate to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Plan or any Award Certificate by reason of a Participant's separation from service during a period in which the Participant is a Specified Employee, then, subject to any permissible acceleration of payment by the Board under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes): (i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following the Participant's separation from service will be accumulated through and paid or provided on the first day of the seventh month following the Participant's separation from service (or, if the Participant dies during such period, within 30 days after the Participant's death) (in either case, the "Required Delay Period"); and (ii) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If, pursuant to an Award, a Participant is entitled to a series of installment payments, such Participant's right to the series of installment payments shall be treated as a right to a series of separate payments and not to a single payment. For purposes of the preceding sentence, the term "series of installment payments" has the meaning provided in Treas. Reg. Section 1.409A-2(b)(2)(iii) (or any successor thereto).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Whenever an Award conditions a payment or benefit on the Participant's execution and non-revocation of a release of claims, such release must be executed and all revocation periods shall have expired within sixty (60) days after the date of termination of the Participant's employment; failing which such payment or benefit shall be forfeited. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment at any time during such 60-day period. If such payment or benefit constitutes Non-Exempt Deferred Compensation, then, subject to subsection (c) above, (i) if such 60-day period begins and ends in a single calendar year, the Company may make or commence payment at any time during such period at its discretion, and (ii) if such 60-day period begins in one calendar year and ends in the next calendar year, the payment shall be made or commence during the second such calendar year (or any later date specified for such payment under the applicable Award), even if such signing and non-revocation of the release occur during the first such calendar year included within such 60-day period. In other words, a Participant is not permitted to influence the calendar year of payment based on the timing of signing the release.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.4 <u>UNFUNDED STATUS OF AWARDS</u>. The Plan is intended to be an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Certificate shall give the Participant any rights that are greater than those of a general creditor of the Company or any Affiliate. In its sole discretion, the Board may authorize the creation of grantor trusts or other arrangements to meet the obligations created under the Plan to deliver Shares or payments in lieu of Shares or with respect to Awards. This Plan is not intended to be subject to ERISA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.5 <u>RELATIONSHIP TO OTHER BENEFITS</u>. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or benefit plan of the Company or any Affiliate unless provided otherwise in such other plan. Nothing contained in the Plan will prevent the Company from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.6 <u>EXPENSES</u>. The expenses of administering the Plan shall be borne by the Company and its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.7 <u>TITLES AND HEADINGS</u>. The titles and headings of the Sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.8 <u>GENDER AND NUMBER</u>. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.9 <u>FRACTIONAL SHARES</u>. No fractional Shares shall be issued and the Board shall determine, in its discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.10 <u>GOVERNMENT AND OTHER REGULATIONS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding any other provision of the Plan, no Participant who acquires Shares pursuant to the Plan may, during any period of time that such Participant is an affiliate of the Company (within the meaning of the rules and regulations of the Securities and Exchange Commission under the 1933 Act), sell such Shares, unless such offer and sale is made (i) pursuant to an effective registration statement under the 1933 Act, which is current and includes the Shares to be sold, or (ii) pursuant to an appropriate exemption from the registration requirement of the 1933 Act, such as that set forth in Rule 144 promulgated under the 1933 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding any other provision of the Plan, if at any time the Board shall determine that the registration, listing or qualification of the Shares covered by an Award upon any securities exchange or under any foreign, federal, state or local law or practice, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Award or the purchase or receipt of Shares thereunder, no Shares may be purchased, delivered or received

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pursuant to such Award unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any condition not acceptable to the Board. Any Participant receiving or purchasing Shares pursuant to an Award shall make such representations and agreements and furnish such information as the Board may request to assure compliance with the foregoing or any other applicable legal requirements. The Company shall not be required to issue or deliver any certificate or certificates for Shares under the Plan prior to the Board's determination that all related requirements have been fulfilled. The Company shall in no event be obligated to register any securities pursuant to the 1933 Act or applicable state or foreign law or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.11 <u>GOVERNING LAW</u>. To the extent not governed by federal law, the Plan and all Award Certificates shall be construed in accordance with and governed by the laws of the State of Georgia.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.12 <u>SEVERABILITY</u>. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.13 <u>NO LIMITATIONS ON RIGHTS OF COMPANY</u>. The grant of any Award shall not in any way affect the right or power of the Company to make adjustments, reclassification or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets. The Plan shall not restrict the authority of the Company, for proper corporate purposes, to draft or assume awards, other than under the Plan, to or with respect to any person. If the Board so directs, the Company may issue or transfer Shares to an Affiliate, for such lawful consideration as the Board may specify, upon the condition or understanding that the Affiliate will transfer such Shares to a Participant in accordance with the terms of an Award granted to such Participant and specified by the Board pursuant to the provisions of the Plan.

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The foregoing is hereby acknowledged as being the Oconee Financial Corporation 2021 Equity Incentive Plan as adopted by the Board on February 15, 2021.

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| OCONEE FINANCIAL CORPORATION |
| By: |
| Name: |
| Title: |

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## Ex1A-6

**<u>Exhibit 6.2</u>** 

**(Employment Agreement between Oconee State Bank and Daniel Graves)**![LOGO](g406793g0208123828138.jpg)

**SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT** 

THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "*Agreement*") is entered by and among Oconee State Bank, a bank chartered under the laws of the State of Georgia (the *"Bank"* or the "*Employer*"), and Daniel Graves (the "*Executive*"), to be effective as of the Effective Date (as defined below).

**BACKGROUND:** 

The Bank desires to employ the Executive as the Senior Vice President, Northeast Georgia Market Executive, of the Bank, on the terms and conditions set forth below, and the Executive desires to accept such employment subject to such terms and conditions.

The Bank and Executive desire to enter into this Agreement to reflect the terms and conditions of the employment relationship between the parties and to amend and restate the Employment Agreement between them, which is superseded in its entirety hereby.

**AGREEMENT:** 

In consideration of the above premises and the mutual agreements hereinafter set forth, effective as of the Effective Date, the parties hereby agree as follows:

**1.**  **<u>Effective Date; Duties</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.1 <u>Effective Date</u>**. The effective date of this Agreement (the "*Effective Date*") shall be the closing date of the transactions contemplated by the Amended and Restated Agreement and Plan of Conversion Merger, dated as of December 15, 2022, by and among Oconee Financial Corporation, a bank holding company organized under the laws of the State of Georgia (the "*Company*"), the Bank and Elberton Federal Savings and Loan Association (the "*Closing*" or the "*EFS Merger*")). In the event that the Closing does not occur for any reason, this Agreement shall be rendered void ab initio and shall be of no force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.2 <u>Position</u>.** The Executive shall be employed as the Senior Vice President, Northeast Georgia Market Executive of the Bank and shall perform and discharge faithfully the duties and responsibilities which may be assigned to the Executive from time to time in connection with the conduct of the businesses. The duties and responsibilities of the Executive shall be commensurate with similar positions at the Bank. The Executive shall report directly to the Executive Vice President, Chief Lending Officer of the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.3 <u>Full-Time Status</u>.** In addition to the duties and responsibilities specifically assigned to the Executive pursuant to <u>Section</u> <u>1.2</u> hereof, the Executive shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) subject to <u>Section</u> <u>1.4</u>, devote substantially all of the Executive's time, energy and skill during regular business hours to the performance of the duties of the Executive's employment (reasonable vacations and reasonable absences due to illness excepted) and faithfully and industriously perform such duties; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) diligently follow and implement all reasonable and lawful management policies and decisions communicated to the Executive by the Employer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.4 <u>Permitted Activities</u>**. The Executive shall devote substantially all of the Executive's entire business time, attention and energies to the Business of the Employer and shall not during the Term be engaged (whether or not during normal business hours) in any other significant business or professional activity, whether or not such activity is pursued for gain, profit or other pecuniary advantage, but as long as the following activities do not interfere with the Executive's obligations to the Employer, this shall not be construed as preventing the Executive from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) investing the Executive's personal assets in any manner which will not require any services on the part of the Executive in the operation or affairs of the entity and in which the Executive's participation is solely that of a passive investor in any corporation, the securities of which are regularly traded provided that such purchase shall not result in him collectively owning beneficially at any time five percent (5%) or more of the equity securities of any Competing Business unless such purchase is approved in writing in advance by the Chief Lending Officer of the Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) participating in civic and professional affairs and organizations and conferences, preparing or publishing papers or books or teaching so long as the Chief Lending Officer of the Bank approves in writing of such activities prior to the Executive's engaging in them; provided further, that the Chief Lending Officer of the Bank may direct the Executive to resign from any such organization and/or cease such activities should the Chief Lending Officer of the Bank reasonably conclude that continued membership and/or activities of the type identified would not be in the best interests of the Employer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) serving as Mayor of Elberton, Georgia, including performing the duties typically associated with such position and campaigning for re-election to such office; provided, however, that this <u>Section</u> <u>1.4(c)</u> shall not be construed as approving any conduct by the Executive that would otherwise be grounds for Termination of Employment by the Employer for Cause pursuant to <u>Section</u> <u>24(f)</u>.

**2. <u>Term</u>.** This Agreement shall remain in effect until the third (3<sup>rd</sup>) anniversary of the Effective Date (the "*Initial Term*"). If the Agreement is in effect at the end of the Initial Term, the Initial Term shall be renewed automatically for successive twelve-month periods (each, a "*Renewed Term*") unless and until one party gives written notice to the other of the intent not to extend this Agreement with such written notice to be given not less than ninety (90) days prior to the end of the Initial Term or any such Renewed Term, as applicable. In the event such notice of non-extension is properly given, this Agreement shall terminate at the end of the remaining Term then in effect, subject to earlier termination in connection with the termination of the Executive's employment pursuant to <u>Section</u> <u>4</u> hereof. In the event that either party provides notice of the termination of the Agreement, but the Executive continues to provide services to the Bank as an employee, such post-expiration employment shall be deemed to be performed on an "at-will" basis and either party may thereafter terminate such employment with or without notice and for any or no reason and without any obligations determined by reference to this Agreement.

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**3. <u>Compensation</u>**. The Employer shall pay the Executive the following during the Term, except as otherwise provided below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1 <u>Annual Base Salary</u>**. The Executive shall be compensated at an annual base of One Hundred Eighty-One Thousand One Hundred Twenty-Five Dollars ($181,125.00) (the "*Annual Base Salary*"). The Executive's Annual Base Salary shall be reviewed by the Bank at least annually for possible increases, as determined by the Bank based on its evaluation of the Executive's performance. The Executive's Annual Base Salary shall be payable in accordance with the Employer's normal payroll practices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2 <u>Annual Incentive Compensation</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) For each calendar year during the Term, the Executive shall be eligible to receive annual bonus compensation, as may be determined by, and based on performance measures established by, the Employer, pursuant to any incentive compensation program as may be adopted from time to time by the Employer (an "*Annual Bonus*"). During the Initial Term, the Annual Bonus paid to the Executive shall be not less than Seventeen Thousand Nine Hundred Fifty Dollars ($17,950.00).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any Annual Bonus earned shall be payable in cash in the year following the year in which the bonus is earned in accordance with the Employer's normal practices for the payment of short-term incentives. The payment of any Annual Bonus shall be subject to any approvals or non-objections required by any regulator of the Employer, and the obligation to pay any such Annual Bonus shall be rendered null and void to the extent the same is then prohibited by any applicable law or regulatory restriction. Any Annual Bonus shall be paid no later than March 15th of the year following the year with respect to which such bonus was based or, if later, on or after the date that the Bank's financial books are closed. To be entitled to any payment of incentive compensation from the Employer, the Executive must be employed by the Employer on the payment date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3 <u>Initial Stock Award Grant</u>**. On or promptly following the Effective Date, the Company shall grant to the Executive a one-time stock incentive award comprised of the following: (i) options to acquire shares of the Company's common stock in an amount equal to two and one-half percent (2.5%) of the number of shares of common stock of the Company to be issued in connection with the EFS Merger, which stock options shall have an exercise price equal to the fair market value of the Company's common stock on the date of grant, and shall vest in five (5) approximately equal installments on the first five (5) anniversaries of the grant date, subject to the Executive's continued employment with the Bank on each vesting date; and (ii) shares of time-based restricted stock in an amount equal to three quarters of one percent (0.75%) of the number of shares of common stock of the Company to be issued in connection with the EFS Merger that vest in five (5) approximately equal installments on the first five (5) anniversaries of the grant date, subject to the Executive's continued employment with the Bank on each vesting date. Such equity awards shall be granted to the Executive at the Closing pursuant to, and subject to the terms and conditions of, the Company's 2021 Equity Incentive Plan and the terms and conditions contained in separate award certificates memorializing the grants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4 <u>Business and Professional Education Expenses; Memberships</u>.** Subject to the reimbursement policies from time to time adopted by the Employer and consistent with the annual budget approved for the period during which an expense was incurred, the Employer specifically agrees to reimburse the Executive for reasonable and necessary business expenses incurred by the Executive in the performance of the Executive's duties hereunder; provided, however, that as a condition of any such reimbursement, the Executive submit verification of the nature and amount of such expenses in accordance with such reimbursement policies and in sufficient detail to comply with rules and regulations promulgated by the United States Department of the Treasury. For purposes of this <u>Section</u> <u>3.4</u>, appropriate expenses include business travel, membership in professional and civic organizations, and professional development. The Executive acknowledges that the Employer makes no representation with respect to the taxability or nontaxability of the benefits provided under this <u>Section</u> <u>3.4</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.5 <u>Paid Leave</u>.** The Executive shall be entitled to paid leave of no less than three (3) weeks per calendar year, subject to proration for partial calendar years, with such paid leave to be taken in accordance with the Employer's policy for paid leave as may be in effect from time to time. All use of the Executive's paid leave shall be determined in accordance with the Employer's paid leave policy as in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.6 <u>Benefits</u>.** In addition to the benefits specifically described in this Agreement, the Executive shall be entitled to such benefits as may be available from time to time to similarly situated officers of the Bank. All such benefits shall be awarded and administered in accordance with the written terms of any applicable benefit plan or, if no written terms exist, the Employer's standard policies and practices relating to such benefit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.7 <u>Withholding</u>.** The Employer may deduct from each payment of compensation hereunder all amounts required to be deducted and withheld in accordance with applicable federal and state income, Federal Insurance Contributions Act and other withholding requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.8 <u>Reimbursement of Expenses; In-Kind Benefits</u>.** All expenses eligible for reimbursements described in this Agreement must be incurred by the Executive during the Term of this Agreement to be eligible for reimbursement. Any in-kind benefits provided by the Employer must be provided during the Term of this Agreement. The amount of reimbursable expenses incurred, and the amount of any in-kind benefits provided, in one taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits provided, in any other taxable year. Each category of reimbursement shall be paid as soon as administratively practicable, but in no event shall any such reimbursement be paid after the last day of the calendar year following the calendar year in which the expense was incurred. Neither rights to reimbursement nor in-kind benefits are subject to liquidation or exchanges for other benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.9 <u>Clawback of Compensation</u>.** The Executive agrees to repay the gross amount of any compensation previously paid or otherwise made available to the Executive under this Agreement that is required to be recovered under any applicable law (including any rule of any exchange or service through which the securities of the Company are then traded), including, but not limited to, the following circumstances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) where such compensation was in excess of what should have been paid or made available because the determination of the amount due was based, in whole or in part, on materially inaccurate financial information of the Employer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) where such compensation constitutes "excessive compensation" within the meaning of 12 C.F.R. Part 30, Appendix A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) where the Executive has committed, is substantially responsible for, or has violated, the respective acts, omissions, conditions, or offenses outlined under 12 C.F.R. Section 359.4(a)(4); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) if the Bank becomes, and for so long as the Bank remains, subject to the provisions of 12 U.S.C. Section 1831o(f), where such compensation exceeds the restrictions imposed on the senior executive officers of such an institution.

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The Executive agrees to return within sixty (60) days, or within any earlier timeframe required by applicable law, any such compensation requiring return under applicable law and properly identified by the Employer by written notice provided pursuant to <u>Section</u> <u>13</u>. If the Executive fails to return such compensation within the applicable time period, the Executive agrees that the amount of such compensation may be deducted from any and all other compensation owed to the Executive by the Employer. If the Executive is then employed by the Employer, the Executive acknowledges that the Employer may take appropriate disciplinary action (up to, and including, Termination of Employment) if the Executive fails to return such compensation. The Executive acknowledges the Employer's rights to engage in any legal or equitable action or proceeding in order to enforce the provisions of this <u>Section</u> <u>3.9</u>. The provisions of this <u>Section</u> <u>3.9</u> shall be modified to the extent, and remain in effect for the period, required by applicable law.

**4. <u>Termination; Suspension or Reduction of Benefits</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.1 <u>Termination of Employment Events</u>**. During the Term, the Executive's Termination of Employment under this Agreement may only occur as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) By the Employer:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) for Cause at any time, provided that the Employer shall give the Executive such notice, cure and other procedural rights described in <u>Section</u> <u>21(f)</u>; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) without Cause at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) By the Executive:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) for any reason (other than pursuant to <u>Section</u> <u>4.1(b)(2)</u>), provided that the Executive shall give the Employer thirty (30) days' prior written notice of the Executive's intent to effect his Termination of Employment; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) for Good Reason, provided that the Executive shall give the Employer the prior written notice, cure and other procedural rights described in <u>Section</u> <u>21(o)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Upon the Executive becoming subject to a Disability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) At any time upon mutual, written agreement of the parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Upon expiration, including non-renewal, of the Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Notwithstanding anything in this Agreement to the contrary, the Term shall end automatically upon the Executive's death.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.2 <u>Change of Control Severance</u>.** If, during the Term and on or within twelve (12) months following a Change of Control, the Executive experiences a Termination of Employment, either (a) by the Employer without Cause pursuant to <u>Section</u> <u>4.1(a)(2);</u> or (b) by the Executive for Good Reason pursuant to <u>Section</u> <u>4.1(b)(2)</u>, then, subject to the Executive's compliance with <u>Section</u> <u>4.4(c) and Sections 5 through 9</u>, the Executive shall receive, as liquidated damages, in lieu of all other claims and payments under this Agreement, severance equal to 1.99 times the sum of (i) the Annual Base Salary at the rate in effect as of the effective date of the Termination of Employment plus (ii) the amount of the Annual Bonus received by the Executive for the Employer's most recently completed fiscal year. Any severance payable pursuant to this <u>Section</u> <u>4.2</u> shall be paid in a lump sum on the first payroll date that is more than sixty (60) days following the date of the Executive's Termination of Employment.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.3 <u>Section 280G</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding any provision of this Agreement to the contrary, if any amount or benefit to be paid or provided under this Agreement or otherwise payable to the Executive by the Employer ("*Covered Payments*") would be an "excess parachute payment," within the meaning of Section 280G of the Code, but for the application of this sentence, ("*Parachute Payments")* then the Covered Payments will be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such Covered Payments, as so reduced, constitutes Parachute Payments; provided, however, that the foregoing reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate Covered Payments to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code (the "*Excise Tax*"), any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes). Whether requested by the Executive or the Employer, the determination of whether any reduction in such Covered Payments is required pursuant to the preceding sentence will be made at the expense of the Employer by independent accountants selected by the Bank (the "*Accountants*"). In the event the Covered Payments are required to be reduced pursuant to this Section, the Covered Payments will be reduced by category in the following order: (a) cancellation of accelerated vesting of equity awards; (b) reduction or elimination of cash severance benefits that are subject to Code Section 409A; (c) reduction or elimination of cash severance benefits that are not subject to Code Section 409A; (d) reduction or elimination of any remaining portion of the Covered Payments that are subject to Code Section 409A; and (e) reduction or elimination of any remaining portion of the Covered Payments that are not subject to Code Section 409A. In the event that acceleration of vesting of equity award compensation is to be cancelled, such acceleration of vesting will be cancelled in the reverse order of the date of grant of the Executive's equity awards. Within each other category, cash payments and payments with respect to any equity award will be reduced pro rata based on the portion of cash or other payment with respect to the Covered Payments, in each case beginning with payments that would otherwise be made last in time; provided that in no event shall the cash portion of the Covered Payments be less than the amount of federal and state income tax withholding owed by the Executive with respect to the Covered Payments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Sections 7</u>, <u>8</u> and <u>9</u> of this Agreement contain covenants of the Executive to refrain from certain activities deemed harmful to the Employer for a set period of time in exchange for the promises contained herein. If the Executive is deemed eligible to receive Covered Payments under this Agreement that could be subject to the Excise Tax, the Employer shall seek a valuation from the Accountants to determine the value of the covenants contained in <u>Sections 7</u>, <u>8</u> and <u>9</u> of this Agreement and such amount shall be allocated to such arrangements and be excluded from treatment as a Parachute Payment. For the avoidance of doubt, it is the intention of this Agreement that the value assigned to the covenants contained in <u>Sections 7</u>, <u>8</u> and <u>9</u> of this Agreement by the Accountants not be considered a Parachute Payment for purposes of this Section 4.3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any determination required under this <u>Section</u> <u>4.3</u> shall be made in writing in good faith by the Accountants. The Employer and the Executive shall provide the Accountants with such information and documents as the Accountants may reasonably request in order to make a determination under this <u>Section</u> <u>4.3</u>. For purposes of making the calculations and determinations required by this <u>Section</u> <u>4.3</u>, the Accountants may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Accountants' determinations shall be final and binding on the Employer and the Executive.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.4 <u>Effect of Termination of Employment</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Upon Executive's Termination of Employment hereunder, the Employer shall have no further obligations to the Executive or the Executive's estate with respect to this Agreement, except for the payment of any amount earned and owing under <u>Section</u> <u>3</u> through the effective date of the termination of the Agreement and, if applicable, any payments set forth in <u>Section</u> <u>4.2</u>, provided, however, that if the Executive's Termination of Employment during the Term is either (a) by the Employer without Cause pursuant to <u>Section</u> <u>4.1(a)(2);</u> or (b) by the Executive for Good Reason pursuant to <u>Section</u> <u>4.1(b)(2)</u>, then, subject to the Executive's compliance with <u>Section</u> <u>4.4(c) and Sections 5, 6, 7, 8 and 9</u>, Executive shall be entitled to receive, in lieu of all other claims and payments under this Agreement, severance equal to the greater of (x) his then-current Annual Base Salary, divided by twelve, then multiplied by the number of months remaining through the end of the then-current Term, or (y) his then-current Annual Base Salary divided by two, payable in a lump sum on the first payroll date that is not more than sixty (60) days following the effective date of the Termination of Employment. Notwithstanding the foregoing, the payments required by this <u>Section</u> <u>4.4(a)</u> shall not be required to be made if the payment described in <u>Section</u> <u>4.2</u> is made to the Executive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Executive agrees that during the Term and for a period of two (2) years thereafter, he will not make any statement (written or oral) that could reasonably be perceived as disparaging to the Employer or any of its officers, directors, or any person or entity that is an affiliate of the Employer; provided, however, that this <u>Section</u> <u>4.4(b)</u> shall not in any way limit the Executive's ability to provide truthful testimony or information in response to a subpoena, court order, or valid request by a government agency, or as otherwise required by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding any other provision of this Agreement to the contrary, as a condition of the Employer's payment of any amount in connection with the Executive's Termination of Employment, the Executive must execute, and not timely revoke during any revocation period provided pursuant to such release, a release and non-disparagement agreement in the form provided by the Employer. The Employer shall provide the release to the Executive in sufficient time so that if the Executive timely executes and returns the release, the revocation period will expire no later than sixty (60) days following the effective date of the Termination of Employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any actual or constructive termination of the Executive's employment which does not rise to the level of a Termination of Employment shall not entitle the Executive to any of the payments or benefits described in <u>Section</u> <u>4</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding any provision in the Agreement to the contrary, to the extent necessary to avoid the imposition of tax on the Executive under Code Section 409A, any payments that are otherwise payable to the Executive within the first six (6) months following the effective date of Termination of Employment, shall be suspended and paid as soon as practicable following the end of the six-month period following such effective date or, if earlier, Executive's death, if, immediately prior to the Executive's Termination of Employment, the Executive is determined to be a "specified employee" (within the meaning of Code Section 409A(a)(2)(B)(i)) of the Employer (or any related "service recipient" within the meaning of Code Section 409A and the regulations thereunder). Any payments suspended by operation of the foregoing sentence shall be paid as a lump sum within thirty (30) days following the end of such six-month period or, if earlier, Executive's death. Payments (or portions thereof) that would be paid latest in time during the six-month period will be suspended first.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.5 <u>Regulatory Limitation</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding anything contained in this Agreement to the contrary, no payments shall be made pursuant to <u>Section</u> <u>3.3 or 4</u> or any other provision herein or otherwise in contravention of the requirements of Section 18(k) of the Federal Deposit Insurance Act (the "*FDIA*") (12 U.S.C. 1828(k)) and Part 359 of the Federal Deposit Insurance Corporation (the "*FDIC*") Rules and Regulations, 12 C.F.R. 359 (collectively, the "*FDIC Golden Parachute Restrictions*"). In the event any such payments become due and payable under this Agreement at a time when such payments would constitute "golden parachute payments," other than "golden parachute payments," for which the concurrence or consent of the appropriate federal banking agency has been received as contemplated by the FDIC Golden Parachute Restrictions, the obligation on the part of the Employer to make any such payments shall become null and void. In addition, nothing in the preceding sentence shall impose an obligation on the part of the Employer to petition the FDIC (and/or other regulatory agency having jurisdiction over the Employer) for its concurrence or consent. For the avoidance of doubt, and notwithstanding anything in this Agreement to the contrary, no golden parachute payments, as defined in Part 359, may be made without prior regulatory approval and in accordance with the procedures set forth in 12 C.F.R. Part 359.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Executive is removed from office and/or permanently prohibited from participating in the conduct of the affairs of any depository institution by an order issued under Section 8(e) or 8(g) of the FDIA (12 U.S.C. 1818(e) and (g)), the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the effective date of such order, except for the payment of Annual Base Salary due and owing under <u>Section</u> <u>3.1</u> on the effective date of said order, and reimbursement under <u>Section</u> <u>3.9</u> of expenses incurred as of the effective date of termination. If the Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under Section 8(e) or 8(g) of the FDIA (12 U.S.C. 1818(e) and (g)), the Employer shall have the right to suspend all obligations of the Employer under this Agreement as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer shall reinstate prospectively any of its obligations which were suspended to the extent permitted by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the FDIC is appointed receiver or conservator under Section 11(c) of the FDIA (12 U.S.C. 1821(c)) of the Bank or any depository institution controlled by the Company, the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the date of such receivership or conservatorship, other than any rights of the Executive that vested prior to such appointment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the Employer is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default, but the vested rights of the parties shall not be affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If the FDIC provides open bank assistance under Section 13(c) of the FDIA (12 U.S.C. 1823(c)) to the Bank or any depository institution controlled by the Company, but excluding any such assistance provided to the industry generally, the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the date of such assistance, other than any rights of the Employee that vested prior to the FDIC action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) If the FDIC requires a transaction under Section 13(f) or 13(k) of the FDIA (12 U.S.C. 1823(f) and (k)) by the Company or any depository institution controlled by the Company, the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the date of such transaction, other than any rights of the Employee that vested prior to the transaction. Notwithstanding the foregoing provisions of this <u>Section</u> <u>4.5(f)</u>, any vested rights of the Executive may be subject to such modifications that are consistent with the authority of the FDIC.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Notwithstanding the timing for the payment of severance amounts described in <u>Section</u> <u>4.2</u>, no such payments shall be made or commence, as applicable, that require the concurrence or consent of the appropriate federal banking agency of the Employer pursuant to 12 C.F.R. Section 359 prior to the receipt of such concurrence or consent. Any payments suspended by operation of this <u>Section</u> <u>4.5(g)</u> shall be paid as a lump sum within thirty (30) days following receipt of the concurrence or consent of the appropriate federal banking agency of the Employer or as otherwise directed by such federal banking agency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) All obligations under this Agreement are further subject to such conditions, restrictions, limitations and forfeiture provisions as may separately apply pursuant to any applicable state banking laws.

**5.**  **<u>Employer Information</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.1 <u>Ownership of Employer Information</u>.** All Employer Information received or developed by the Executive or by the Employer while the Executive is employed by the Employer will remain the sole and exclusive property of the Employer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.2 <u>Obligations of the Executive</u>.** The Executive agrees:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to hold Employer Information in strictest confidence;

(b)not to use, duplicate, reproduce, distribute, disclose or otherwise disseminate Employer Information or any physical embodiments of Employer Information to any unauthorized recipient; and

(c)in any event, not to take any action causing or fail to take any action necessary in order to prevent any Employer Information from losing its character or ceasing to qualify as Confidential Information or a Trade Secret;

provided, however, notwithstanding anything in this Agreement to the contrary, (a) nothing in this Agreement or other agreement prohibits Executive from reporting possible violations of law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the "*Government Agencies*"), or communicating with Government Agencies or otherwise participating in any investigation or proceedings that may be conducted by Government Agencies, including providing documents or other information; (b) Executive does not need the prior authorization of the Employer to take any action described in (a), and Executive is not required to notify the Employer that he has taken any action described in (a); and (c) this Agreement does not limit Executive's right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission. Further, notwithstanding the foregoing, Executive will not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a trade secret that (x) is made (i) in confidence to a federal, state or local official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation or law; or (y) is made in a compliant or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, if Executive is suing the Employer for retaliation based on the reporting of a suspected violation, of law, he may disclose a trade secret to his attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and Executive does not disclose the trade secret except pursuant to court order.

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This <u>Section</u> <u>5</u> shall survive for a period of two (2) years following termination of this Agreement for any reason with respect to Confidential Information, and shall survive termination of this Agreement for any reason for so long as is permitted by applicable law, with respect to Trade Secrets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.3 <u>Delivery upon Request or Termination</u>.** Upon request by the Employer, and in any event upon the Executive's Termination of Employment with the Employer, the Executive will promptly deliver to the Employer all property belonging to the Employer and its Affiliates, including, without limitation, all Employer Information then in the Executive's possession or control. The Executive shall retain no copies thereof after Executive's Termination of Employment with the Employer or termination of this Agreement.

**6.**  **<u>Intellectual Property Rights</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Executive hereby agrees that all Works made, conceived, developed or reduced to practice, in whole or in part, solely by Executive or jointly with others, either during or after the Executive's period of employment with the Employer, if such Works are: (1) made through the use of any of the Employer Information or any of the Employer's equipment, facilities, supplies or time, or (2) result from any work performed by Executive for the Employer or its Affiliates, shall belong exclusively to the Employer and shall be deemed part of the Employer Information for purposes of this Agreement whether or not fixed in a tangible medium of expression. Without limiting the foregoing, Executive agrees that all such Works shall be deemed to be "works made for hire" under the U.S. Copyright Act of 1976, as amended, and that the Employer shall be deemed the author and owner thereof, provided that in the event and to the extent such Works are determined not to constitute "works made for hire" as a matter of law, Executive hereby irrevocably assigns and transfers to the Employer the entire right, title and interest, domestic and foreign, of Executive in and to such Works. The Employer shall have the right to obtain and to hold in its own name, copyrights, registrations or such other protection as may be appropriate to the subject matter, and any extensions and renewals thereof. Executive agrees to give the Employer, and any person designated by the Employer, any assistance the Employer deems necessary or appropriate to perfect the rights defined in this <u>Section</u> <u>6</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Executive will promptly disclose in writing (which may be by e-mail) to the Employer, every Work made, conceived, developed or reduced to practice, in whole or in part, solely by Executive or jointly with others, in connection with the business of the Employer either: (1) during the Term, whether or not Executive believes the Work to have been made, conceived, developed or reduced to practice within the course and scope of the Executive's employment, or (2) after Termination of Employment, if such Work is made through the use of Employer Information or any of the Employer's equipment, facilities, supplies or time, or results from any work performed by Executive for the Employer or its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Executive agrees to: (1) keep and maintain adequate and current records (in the form of notes, drawings, software, object code, source code, manuals, plans, research, specifications, designs, documentation, data, processes, procedures, discoveries, models or in other appropriate forms) of all Works, which records shall be available at all times to the Employer and shall remain the sole property of the Employer; and (2) assist the Employer, both during and subsequent to the Executive's period of employment with the Employer, in obtaining and enforcing for the Employer's own benefit patents, copyrights, mask work rights, trade secret rights and other legal protections in any and all countries for any and all Works made by Executive (in whole or in part), the rights to which belong to or have been assigned to the Employer pursuant to this

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Agreement. Upon request, Executive will execute all applications, assignments, instruments and papers and perform all acts that the Employer or its counsel may deem necessary or desirable to obtain or enforce any and all such patents, copyrights, mask work rights, trade secret rights and other legal protections in such Works and otherwise to protect the interests of the Employer therein. The Employer agrees to bear all expenses which it causes to be incurred by Executive in assigning, obtaining, maintaining and enforcing said patents, copyrights, trade secret rights, mask work rights and other legal protections in accordance with this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Executive understands that utilization of the Works is in the sole discretion of the Employer, and that the Employer is not obligated to develop, market or otherwise use any device or product.

**7. <u>Non-Competition</u>**. The Executive agrees that during the Executive's employment by the Employer hereunder, and for the duration of the Post-Termination Period following any Termination of Employment, regardless of the reason, the Executive will not (except on behalf of or with the prior written consent of the Employer), within the Area, either directly or indirectly, on the Executive's own behalf or in the service or on behalf of others, perform for any Competing Business any services which are the same as or essentially the same as the services the Executive provided for the Employer.

**8. <u>Non-Solicitation of Customers</u>.** The Executive agrees that during the Executive's employment by the Employer hereunder, and for the duration of the Post-Termination Period following any Termination of Employment, regardless of the reason, the Executive will not (except on behalf of or with the prior written consent of the Employer) on the Executive's own behalf or in the service or on behalf of others, solicit, divert or appropriate or attempt to solicit, divert or appropriate, any business from, or within the Area, enter into any business relationship with, any of the Employer's customers, including prospective customers actively sought by the Employer, with whom the Executive has or had Material Contact during the last two (2) years of the Executive's employment with Employer, for purposes of providing products or services that are competitive with those provided by the Employer.

**9. <u>Non-Solicitation of Employees</u>.** The Executive agrees that during the Executive's employment by the Employer hereunder, and for the duration of the Post-Termination Period following any Termination of Employment, regardless of the reason, the Executive will not (except on behalf of or with the prior written consent of the Employer) on the Executive's own behalf or in the service or on behalf of others, solicit or recruit or attempt to solicit or recruit any employee of, or any person associated with, the Employer or its Affiliates, whether or not such employee is a full-time employee or a temporary employee of the Employer, such employment is pursuant to written agreement, for a determined period, or at will

**10. <u>Remedies</u>**. The Executive agrees that the covenants contained in <u>Sections 5 through 9</u> of this Agreement are of the essence of this Agreement; that each of the covenants is reasonable and necessary to protect the business, interests and properties of the Employer, and that irreparable loss and damage will be suffered by the Employer should the Executive breach any of the covenants. Therefore, the Executive agrees and consents that, in addition to all the remedies provided by law or in equity, the Employer shall be entitled to a temporary restraining order and temporary and permanent injunctions to prevent a breach or contemplated breach of any of the covenants. Furthermore, in addition to any other remedies, the Executive agrees that any violation of the covenants in <u>Sections 5 through 9</u> will result in the immediate forfeiture of any remaining payment that otherwise is or may become due under <u>Section</u> <u>3.5 or 4.2</u>, if applicable. The Executive further agrees that should the Executive breach any of the covenants contained in <u>Sections 5 through 9</u> of this Agreement, no further amounts will be paid to the Executive pursuant to <u>Section</u> <u>4</u> and the Executive shall repay to the Employer any amounts previously received by the Executive pursuant to <u>Section</u> <u>4</u> that are attributable to that portion of the payments paid for the period during which the Executive was in breach of any of the covenants. The Employer and the Executive agree that all remedies available to the Employer or the Executive, as applicable, shall be cumulative.

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**11. <u>Severability</u>**. The parties agree that each of the provisions included in this Agreement is separate, distinct and severable from the other provisions of this Agreement and that the invalidity or unenforceability of any Agreement provision shall not affect the validity or enforceability of any other provision of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict between the provision and any applicable law or public policy, the provision shall be redrawn to make the provision consistent with, and valid and enforceable under, the law or public policy.

**12. <u>No Set-Off by the Executive</u>**. The existence of any claim, demand, action or cause of action by the Executive against the Employer whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of any of its rights hereunder.

**13. <u>Notice</u>**. All notices, requests, waivers and other communications required or permitted hereunder shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

If to the Employer: Oconee State Bank

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Attn: CEO

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;35 North Main Street

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Watkinsville, GA 30677

If to the Executive: The address most recently on file with the Bank

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. All such notices, requests, waivers and other communications shall be deemed to have been effectively given: (a) when personally delivered to the party to be notified; (b) two (2) business days after deposit with a national overnight delivery service, postage prepaid, addressed to the party to be notified as set forth above with next-business-day delivery guaranteed; or (c) five (5) business days after deposit in the United States Mail postage prepaid by certified or registered mail with return receipt requested at any time other than during a general discontinuance of postal service due to strike, lockout, or otherwise (in which case such notice, request, waiver or other communication shall be effectively given upon receipt) and addressed to the party to be notified as set forth above. A party may change that party's notice address given above by giving the other party ten (10) days' written notice of the new address in the manner set forth above.

**14. <u>Assignment</u>**. The rights and obligations of the Employer under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Employer, as applicable, including without limitation, a purchaser of all or substantially all the assets of the Employer. If the Agreement is assigned pursuant to the foregoing sentence, the assignment shall be by novation and the Employer shall have no further liability hereunder, and the successor or assign, as applicable, shall become the "Employer" hereunder, but the Executive will not be deemed to have experienced a Termination of Employment by virtue of such assignment. The Agreement is a personal contract and the rights and interest of the Executive may not be assigned by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive and the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

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**15. <u>Waiver</u>**. A waiver by one party to this Agreement of any breach of this Agreement by any other party to this Agreement shall not be effective unless in writing, and no waiver shall operate or be construed as a waiver of the same or another breach on a subsequent occasion.

**16. <u>Mediation</u>.** Except with respect to <u>Sections 5 through 10</u> above, and as provided in this <u>Section</u> <u>13</u>, if any dispute arises out of or relates to this Agreement, or a breach thereof, and if the dispute cannot be settled through direct discussions between the parties, the parties agree to first endeavor to settle the dispute in an amicable manner by mediation under the Commercial Mediation Rules of the American Arbitration Association before resorting to any other process for resolving the dispute.

**17. <u>Applicable Law and Choice of Forum</u>**. This Agreement shall be construed and enforced under and in accordance with the laws of the State of Georgia. The parties agree that any appropriate state court located in Oconee County, Georgia or federal court for the Middle District of Georgia shall have exclusive jurisdiction of any case or controversy arising under or in connection with this Agreement shall be a proper forum in which to adjudicate such case or controversy. The parties consent and waive any objection to the jurisdiction or venue of such courts.

**18. <u>Interpretation</u>**. Words importing any gender include all genders. Words importing the singular form shall include the plural and vice versa. The terms "herein," "hereunder," "hereby," "hereto," "hereof" and any similar terms refer to this Agreement. Any captions, titles or headings preceding the text of any article, section or subsection herein are solely for convenience of reference and shall not constitute part of this Agreement or affect its meaning, construction or effect.

**19. <u>Entire Agreement</u>**. This Agreement embodies the entire and final agreement of the parties on the subject matter stated in this Agreement. No amendment or modification of this Agreement shall be valid or binding upon the Employer or the Executive unless made in writing and signed by all parties. All prior understandings and agreements relating to the subject matter of this Agreement are hereby expressly terminated.

**20. <u>Rights of Third Parties</u>**. Nothing herein expressed is intended to or shall be construed to confer upon or give to any person, firm or other entity, other than the parties hereto and their permitted assigns, any rights or remedies under or by reason of this Agreement.

**21. <u>Survival</u>**. The obligations of the parties pursuant to <u>Sections 3.9, 4.2, 4.4, 5 through 10, 16, 17 and 22</u>, as applicable, shall survive the Executive's Termination of Employment hereunder for the period designated under, or the period otherwise necessary to give effect to, each of those respective sections.

**22. <u>Representation Regarding Restrictive Covenants</u>.** The Executive represents that the Executive is not and will not become a party to any non-competition or non-solicitation agreement or any other agreement which would prohibit the Executive from entering into this Agreement or providing the services for the Employer contemplated by this Agreement on or after the Effective Date. In the event the Executive is subject to any such agreement, this Agreement shall be rendered null and void and the Employer shall have no obligations to the Executive under this Agreement.

**23. <u>Section 409A</u>**. It is the intent of the parties that any payment to which the Executive is entitled under this Agreement be exempt from Section 409A of the Code, to the maximum extent permitted under Section 409A of the Code. However, if any such amounts are considered to be "nonqualified deferred compensation" subject to Section 409A of the Code, such amounts shall be paid and provided in a manner, and at such time and form, as complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance. Neither the Executive nor the Employer shall intentionally take any action to accelerate or delay the payment of any amounts in any

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manner which would not be in compliance with Section 409A of the Code without the consent of the other party. For purposes of this Agreement, all rights to payments shall be treated as rights to receive a series of separate payments to the fullest extent allowed by Section 409A of the Code. To the extent that some portion of the payments under this Agreement may be bifurcated and treated as exempt from Section 409A of the Code under the "short-term deferral" or "separation pay" exemptions, then such amounts may be so treated as exempt from Section 409A of the Code. Executive shall be solely responsible for the tax consequences with respect to all amounts payable under this Agreement. In no event shall the Employer be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Executive on the failure of the Agreement to be exempt from or compliant with Section 409A of the Code.

**24. <u>Definitions</u>**. Whenever used in this Agreement, the following terms and their variant forms shall have the meanings set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **"<u>Affiliate</u>"** shall mean any entity which controls, is controlled by, or is under common control with another entity. For this purpose, "control" means ownership of more than fifty percent (50%) of the ordinary voting power of the outstanding equity securities of an entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **"<u>Agreement</u>"** shall mean this Agreement and any appendices incorporated herein together with any amendments hereto made in the manner described in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "**<u>Area</u>**" shall mean, during the Term and the Post-Termination Period, the geographic area encompassed by Clarke, Elbert, Gwinnett and Oconee Counties, Georgia and a twenty (20) mile radius from each branch, loan production office or other office maintained by the Employer or any of its Affiliates in connection with which Executive personally has business activity (including but not limited to any branch location in Elberton, Georgia.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) **"<u>Board of Directors</u>"** shall mean the board of directors of Company and/or of the Bank, as the context requires and, where appropriate, includes any committee thereof or other designee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) **"<u>Business of the Employer</u>"** shall mean the business conducted by the Employer, which is the business of commercial and consumer banking.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) **"<u>Cause</u>"** shall mean a reasonable and good faith determination by the Board of Directors of the Employer that any of the following has occurred:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a material breach of the terms of this Agreement by the Executive, including, without limitation, failure by the Executive to perform his duties and responsibilities in the manner and to the extent required under this Agreement (including, without limitation, a failure fully to perform his duties and responsibilities under this Agreement resulting from the Executive's time commitments, duties, and responsibilities in public office in the event he is elected to the office of Mayor of Elberton, Georgia), which remains uncured after the expiration of thirty (30) days following the delivery of written notice of such breach to the Executive by the Employer; provided, however, that the Executive shall not have the opportunity to cure if the breach is not susceptible to being cured or such an opportunity would otherwise conflict with applicable federal or state regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) conduct by the Executive that amounts to fraud, dishonesty or willful misconduct in the performance of his duties and responsibilities hereunder;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the Executive being arrested for, charged in relation to (by criminal information, indictment or otherwise), or convicted of any felony or any other crime involving breach of trust or moral turpitude;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) conduct by the Executive that amounts to gross and willful insubordination, gross neglect or inattention to his duties and responsibilities hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) the exhibition of a standard of behavior within the scope of or related to his employment that is materially disruptive to the orderly conduct of the Employer's business operations (including, without limitation, substance abuse, sexual harassment or sexual misconduct, or conduct as a public figure that results or may reasonably result in material harm to the Employer's business or reputation), which remains uncured after the expiration of thirty (30) days following the delivery of written notice of such disruptive behavior to the Executive by the Employer; provided, however, that the Executive shall not have the opportunity to cure if the disruptive behavior is not susceptible to being cured or such an opportunity would otherwise conflict with applicable federal or state regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) (i) a material conflict of interest between the Executive's duties and responsibilities to the Employer and the the Executive's duties and responsibilities in his capacity as Mayor of Elberton, Georgia, or (ii) a material loss of business opportunities to the Employer resulting, in whole or in material part, from the Executive's role as Mayor of Elberton, Georgia, in either case which conflict or loss remains uncured after the expiration of thirty (30) days following the delivery of written notice of such conflict or loss to the Executive by the Employer; provided, however, that the Executive shall not have the opportunity to cure if the conflict or loss is not susceptible to being cured or such an opportunity would otherwise conflict with applicable federal or state regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) the receipt of any form of notice, written or otherwise, that any regulatory agency having jurisdiction over the Employer intends to institute any form of formal or informal regulatory action against the Executive or the Employer; or

(8)Executive's removal and/or permanent prohibition from participating in the conduct of the Employer's affairs by an order issued under Section 8(e) or 8(g) of the FDIA (12 U.S.C. 1818(e) and (g)).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) **"<u>Change of Control</u>"** means the occurrence of any one of the following events on or after the Effective Date: a "change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation" within the meaning of Code Section 409A, provided, however, that for purposes of determining a "substantial portion of the assets of a corporation," "50 percent" shall be used instead of "40 percent." For purposes of the preceding sentence, "a corporation" refers to the Company or the Bank, except that in the case of a change of effective control of a corporation, "a corporation" will refer solely to the Company and "more than 50 percent" shall be used instead of "30 percent." Notwithstanding the foregoing, the following shall not be deemed to result in a Change of Control: (i) any acquisition by any employee benefit plan (or related trust), including but not limited to, an employee stock ownership plan as defined in Code Section 4975(e)(7), sponsored or maintained by the Employer or any corporation controlled by the Employer; or (ii) any merger, consolidation, reorganization share exchange or other transaction as to which the holders of the capital stock of the Employer before the transaction continue after the transaction to hold, directly or indirectly through a holding

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company or otherwise, shares of capital stock of the Employer (or other surviving company) representing more than fifty percent (50%) of the value or ordinary voting power to elect directors of the capital stock of the Employer (or other surviving company). For the avoidance of doubt, the EFS Merger does not constitute a Change of Control for purposes of this Agreement or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) **"<u>Code</u>"** shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **"<u>Competing Business</u>"** shall mean any entity (other than the Employer and its Affiliates) that is conducting business that is the same or substantially the same as the Business of the Employer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) **"<u>Confidential Information</u>"** means data and information: (1) relating to the Business of the Employer, regardless of whether the data or information constitutes a trade secret as that term is defined in Article 1 of Chapter 10 of Title 10 of the Official Code of Georgia; (2) disclosed to the Executive or of which the Executive became aware of as a consequence of the Executive's relationship with the Employer and/or any Affiliates; (3) having value to the Employer and/or any Affiliates; (4) not generally known to competitors of the Employer and/or any Affiliates; and (5) which includes trade secrets, methods of operation, names of customers, price lists, financial information and projections, route books, personnel data, and similar information; provided, however, that such term shall not mean data or information (A) which has been voluntarily disclosed to the public by the Employer and/or any Affiliates, except where such public disclosure has been made by the Executive without authorization from the Employer and/or any Affiliates; (B) which has been independently developed and disclosed by others; or (C) which has otherwise entered the public domain through lawful means.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) **"<u>Determination Date</u>"** means (1) during the Executive's employment, the date for which compliance is being determined, and (2) following Executive's Termination of Employment, the date of Executive's Termination of Employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) **"<u>Disability</u>"** shall mean that the Executive suffers from a physical or mental disability or infirmity that qualifies the Executive for disability benefits under any accident and health plan maintained by the Employer that provides income replacement benefits due to disability or, if the Employer does not maintain such a plan, the Executive's inability to perform the essential functions of the Executive's job for a period of ninety (90) or more days, with or without reasonable accommodation, as a result of a physical or mental disability or infirmity, as reasonably determined by the Employer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) **"<u>Employer Information</u>"** shall mean Confidential Information and Trade Secrets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) **<u>"Initial Term</u>**" shall mean the period of employment provided for in <u>Section</u> <u>2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) **"<u>Good Reason</u>"** shall mean, with respect to a voluntary resignation of employment with the Employer by the Executive, and subject to Section 1.4(c) above:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a material reduction of the Executive's Annual Base Salary from its then current rate, other than a reduction that also is applied to substantially all other executive officers of the Employer if Executive's reduction is substantially proportionate to, or no greater than, the reduction applied to substantially all other executive officers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a material diminution in the Executive's authority, duties or responsibilities;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) an involuntary relocation of the Executive's primary office to a place that is outside the Elberton, Georgia area; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) a material breach of the terms of this Agreement by the Employer.

Notwithstanding the foregoing, for any of the events above to constitute "Good Reason," the Executive must notify the Chief Lending Officer of the Bank in writing of the event within thirty (30) days following the occurrence of the event (or, if later, the Executive's knowledge of occurrence of the event), the event must remain uncured after the expiration of thirty (30) days following the receipt of written notice of such event by the Chief Lending Officer of the Bank from the Executive, and the Executive must resign effective no later than thirty (30) days following the Employer's failure to cure the event. For the avoidance of doubt, the Executive agrees that his change in authority, duties or responsibilities in connection with the EFS Merger does not constitute Good Reason for purposes of this Agreement or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) **"<u>Material Contact</u>**" means the contact between the Executive and each customer or potential customer: (1) with whom or which the Executive dealt on behalf of the Employer and/or any Affiliates; (2) whose dealings with the Employer and/or any Affiliates were coordinated or supervised by the Executive; (3) about whom the Executive obtained Confidential Information in the ordinary course of business as a result of such Executive's association with the Employer and/or any Affiliates; or (4) who receives products or services authorized by the Employer and/or any Affiliates, the sale or provision of which results or resulted in compensation, commissions, or earnings for the Executive within two years prior to the Determination Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) "**<u>Post Termination Period</u>**" shall mean twelve (12) months following the effective date of the Executive's Termination of Employment; provided, however, that if the Executive's Termination of Employment is either (1) by the Employer without Cause pursuant to <u>Section</u> <u>4.1(a)(2);</u> or (2) by the Executive for Good Reason pursuant to <u>Section</u> <u>4.1(b)(2)</u>, then the Post-Termination Period shall be the lesser of (x) twelve (12) months, or (y) the number of months of severance to which the Executive is entitled pursuant to <u>Section</u> <u>4.4</u>, in either case following the effective date of the Executive's Termination of Employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) **"<u>Renewed Term</u>"** shall mean the period of employment provided for in <u>Section</u> <u>2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) **"<u>Term</u>"** shall mean the Initial Term and any Renewed Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) **"<u>Termination of Employment</u>"** shall mean a termination of the Executive's employment where either (1) the Executive has ceased to perform any services for the Employer and all affiliated companies that, together with the Employer, constitute the "service recipient" within the meaning of Code Section 409A (collectively, the "*Service Recipient*") or (2) the level of bona fide services the Executive performs for the Service Recipient after a given date (whether as an employee or as an independent contractor) permanently decreases (excluding a decrease as a result of military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Executive retains a right to reemployment with the Service Recipient under an applicable statute or by contract) to no more than twenty percent (20%) of the average level of bona fide services performed for the Service Recipient (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of service if the Executive has been providing services to the Service Recipient for less than 36 months).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) **"<u>Trade Secrets</u>"** shall mean Employer or Affiliate information including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) "**<u>Works</u>**" shall mean intellectual property and proprietary rights, including without limitation, ideas, designs, concepts, techniques, inventions, discoveries and works of authorship, whether or not patentable or protectible by copyright or as a mask work, and whether or not reduced to practice, including, without limitation, devices, processes, trade secrets, formulas, techniques, compositions of matter, computer software programs, mask works and methods, together with any improvements thereon or thereto, derivative works made therefrom and know how related thereto.

[Signatures on Following Page]

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**IN WITNESS WHEREOF**, the Employer and the Executive have executed and delivered this Agreement as of the date first shown above.

---

| | |
|:---|:---|
| **OCONEE STATE BANK:** | **OCONEE STATE BANK:** |
|  By: | /s/ T. Neil Stevens |
| T. Neil Stevens | T. Neil Stevens |
|  President and Chief Executive Officer | President and Chief Executive Officer |
|  **EXECUTIVE:** | **EXECUTIVE:** |
|  /s/ Daniel Graves | /s/ Daniel Graves |
|  Daniel Graves | Daniel Graves |

---

***Signature Page to Daniel Graves Employment Agreement***

## Ex1A-7

**<u>Exhibit 7.1</u>** 

(Amended and Restated Agreement and Plan of Merger Conversion)

***Execution Version***

**AMENDED AND RESTATED** 

**AGREEMENT AND PLAN OF** 

**MERGER CONVERSION** 

**THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER CONVERSION** (this "***Agreement***") is entered into as of this 15th day of December 2022, by and among Oconee Financial Corporation ("***Oconee***"), a Georgia corporation, Oconee State Bank (the "***Bank***"), a Georgia state chartered commercial bank and the wholly owned subsidiary of Oconee, and Elberton Federal Savings and Loan Association ("***Elberton***"), a federal mutual savings association. This Agreement amends and restates in its entirety that certain Agreement and Plan of Merger Conversion, dated as of June 1, 2021, by and between the parties (the "***Original Agreement***").

**WHEREAS**, the parties desire to amended and restate the Original Agreement in its entirety as set forth in this Agreement;

**WHEREAS**, Elberton desires to convert to the stock form of organization to facilitate a simultaneous merger with and into the Bank;

**WHEREAS**, the Boards of Directors of the Bank and Elberton have adopted an Amended and Restated Plan of Merger Conversion (the "***Plan of Conversion***");

**WHEREAS**, each director and executive officer of Elberton has entered into an agreement pursuant to which he or she has agreed to cast his or her votes in favor of this Agreement and the transactions contemplated hereby;

**WHEREAS**, in connection with the transactions contemplated by this Agreement, Oconee and the Bank have entered into an amended and restated employment agreement with R. Daniel Graves, dated as of the date hereof, which shall become effective only and automatically immediately after the Merger Effective Time;

**WHEREAS**, in connection with the transactions contemplated by this Agreement, Oconee will enter into a stock option agreement and a restricted stock award agreement with each of Kyle Branan, Phil Pitts, Robert Paul and Jimmy Hill, which shall become effective only and automatically immediately after the Merger Effective Time; and

**WHEREAS**, Oconee, the Bank and Elberton intend by this Agreement to set forth the terms and conditions of a "merger," satisfying the terms and conditions of Ga. Code Ann. §§ 7-1-530-7-1-537 and other applicable law.

**NOW, THEREFORE**, in consideration of the premises and of the mutual covenants, agreements, representations and warranties herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Oconee, the Bank and Elberton hereby agree as follows:

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**ARTICLE I** 

**DEFINITIONS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.01 Definitions**. Any term used herein and not defined shall have the meaning given to such term in the Plan of Conversion. As used in this Agreement, the following terms shall have the indicated meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)** *Agreement* means this Agreement dated the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)** *Applications* means the applications or notices to be filed with the OCC, the FDIC, the GDBF and, unless waived, the FRB for the regulatory approvals that are required by applicable law in connection with the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(3)** *Bank* has the meaning ascribed to it in the Preamble of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(4)** *Bank Advisory Board* has the meaning ascribed to it in Section 5.05(d) of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(5)** *Call Report* means each of the Consolidated Reports of Condition and Income of an insured depository institution as set forth on the appropriate reporting forms of the Federal Financial Institutions Examination Council.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(6)** *Closing Date* means such date as Oconee and the Bank, in consultation with Elberton, select within 15 days after the occurrence of the following: (i) the expiration of all applicable periods in connection with all approvals from Regulatory Authorities; (ii) the satisfaction or waiver of all conditions to the consummation of the Merger Conversion; and (iii) the execution and filing with all Regulatory Authorities of all documents necessary to effect the Merger Conversion; or on such earlier or later date as may be agreed by the parties and reflected in any such filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(7)** *Conversion Stock* means the Elberton Common Stock to be authorized and issued by Elberton in its stock form as part of the Merger Conversion in exchange for the Merger Conversion Consideration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(8)** *Costs* has the meaning ascribed to it in Section 5.05(b) of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(9)** *Claims* has the meaning ascribed to it in Section 5.05(b) of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(10)** *Elberton* means, as the context requires, either Elberton Federal Savings and Loan Association in its current form as a federal mutual savings association or in its converted form as a federal stock savings association.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(11)** *Elberton Common Stock* means the common stock, par value $1.00 per share, to be authorized by Elberton as part of the Merger Conversion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(12)** *Elberton Disclosure Schedule* means, collectively, the disclosure schedules delivered by Elberton pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(13)** *Elberton Financials* means (i) the financial statements of Elberton as of December 31, 2020 and December 31, 2021 and (ii) the interim financial statements of Elberton as of and for each calendar quarter thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(14)** *Elberton Regulatory Reports* means all reports, registrations, documents and statements, together with any amendments required to be made with respect thereto, that Elberton was required to file or otherwise submit since December 31, 2020, and will be required to submit prior to the Closing Date with or to the OCC, the FDIC or any other Regulatory Authority pursuant to the laws, rules or regulations of the United States, the OCC, the FDIC or any other Regulatory Authority.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(15)** *Environmental Laws* means (i) any federal, state and local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any governmental entity, relating to (a) the protection, preservation or restoration of the environment (including, without limitation, all water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety, or (b) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Material, in each case as amended and as now in effect and includes, without limitation, the federal Comprehensive Environmental Response Act, Comprehensive Environmental and Liability Act, Water Pollution Control Act of 1972, the federal Clean Air Act, the federal Clean Water Act, the federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the federal Solid Waste Disposal Act, the federal Toxic Substances Control Act, the federal Insecticide, Fungicide and Rodenticide Act, the federal Occupational Safety and Health Act of 1970, and any similar state or local laws each as amended and as now in effect; and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Material.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(16)** *ERISA* means the Employee Retirement Income Security Act of 1974, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(17)** *Exchange Act* means the Securities Exchange Act of 1934, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(18)** *FDIC* means the Federal Deposit Insurance Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(19)** *FRB* means the Board of Governors of the Federal Reserve System.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(20)** *GAAP* means generally accepted accounting principles in the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(21)** *GDBF* means the Georgia Department of Banking and Finance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(22)** *Hazardous Material* means any substance, waste or other material presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law, and includes, without limitation, any oil or other petroleum product, toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, solid waste or petroleum or any derivative or by-product thereof, radon, radioactive material, asbestos, asbestos containing material, urea formaldehyde, foam insulation, lead and polychlorinated biphenyl.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(23)** *Indemnified Parties* has the meaning ascribed to it in Section 5.05(b) of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(24)** *IRC* means the Internal Revenue Code of 1986, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(25)** *IRS* means the Internal Revenue Service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(26)** *Knowledge* means, as to a party, the actual knowledge of any senior executive officer of such party.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(27)** *Material Adverse Effect* means, with respect to an entity, any condition, event, change or occurrence that is reasonably likely to have a material adverse effect upon (i) the financial condition, properties, assets, business or results of operations of such entity, taken as a whole or (ii) the ability of such entity to perform its obligations under, and to consummate the transactions contemplated by, this Agreement and the Plan of Conversion; provided, however, that Material Adverse Effect shall not be deemed to include the impact of any of the following, either alone or in combination: (a) changes in laws and regulations or interpretations thereof that are generally applicable to the banking or savings industries; (b) changes in GAAP or regulatory accounting principles that are generally applicable to the banking or savings industries; (c) changes in global, national or regional political conditions or general economic or market conditions in the United States or the State of Georgia, including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, and price levels or trading volumes in the United States or foreign securities markets affecting other companies in the financial services industry; (d) general changes in the credit markets or general downgrades in the credit markets; (e) actions or omissions of a party required by this Agreement or taken with the prior informed written consent of the other party or parties in contemplation of the transactions contemplated hereby; (f) any outbreak or escalation of hostilities or declared or undeclared acts of war or terrorism; (g) any epidemic, pandemic or disease outbreak (including the Covid-19 virus and its mutations); (h) the impact of this Agreement and the transactions contemplated hereby on relationships with customers or employees (including the loss of personnel subsequent to the date of this Agreement); or (i) changes in regulatory standing that cannot be disclosed pursuant to applicable laws or regulations (provided, however, that the underlying cause(s) of any such change may constitute a Material Adverse Effect); except to the extent that the effects of such changes in the foregoing (a) through (d), (f) and (g) disproportionately adversely affect such entity, taken as a whole, as compared to other similarly-sized companies or institutions in the industry in which such entity operates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(28)** *Member* means any person or entity that qualifies as a member of Elberton pursuant to its mutual Charter or Bylaws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(29)** *Merger Conversion* means the transactions whereby Elberton will (i) convert to a federal stock savings association, and (ii) immediately thereafter merge with and into the Bank, which shall be the Resulting Institution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(30)** *Merger Conversion Consideration* shall mean $1.00 in cash, without interest, for each share of Conversion Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(31)** *Merger Effective Time* has the meaning ascribed to it in Section 2.04 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(32)** *OCC* means the Office of the Comptroller of the Currency of the Department of the Treasury and any successor thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(33)** *Oconee* has the meaning ascribed to it in the Preamble of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(34)** *Oconee Common Stock* means the common stock, par value $2.00 per share, of Oconee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(35)** *Oconee Disclosure Schedule* means, collectively, the disclosure schedules delivered by Oconee and the Bank to Elberton pursuant to this Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(36)** *Oconee Financials* means (i) the audited financial statements of Oconee as of December 31, 2020 and December 31, 2021 and (ii) the unaudited interim financial statements of Oconee as of and for each calendar quarter thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(37)** *Oconee Subsidiary* means each direct and indirect Subsidiary of Oconee, including the Bank (together, the "***Oconee Subsidiaries***").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(38)** *Original Agreement* has the meaning set forth in the Preamble.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(39)** *Plan of Conversion* means the Plan of Conversion (as it may from time to time be amended, restated or supplemented hereafter) adopted by Elberton and the Bank and to be filed with the OCC, a copy of which plan is attached hereto as <u>Exhibit B</u>, pursuant to which Elberton will (i) convert to a federal stock savings association, and (ii) immediately thereafter merge with and into the Bank which shall be the Resulting Institution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(40)** *Regulation A Offering Statement* means the Regulation A Offering Statement to be filed by Oconee with the SEC for the offering of Oconee Common Stock to certain eligible account holders and other Members of Elberton in a subscription offering pursuant to the exemption from registration provided by Section 3(b) of the Securities Act and Regulation A promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(41)** *Regulatory Agreement* has the meaning ascribed to it in Section 3.12(b) of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(42)** *Regulatory Authority* means any agency or department of any federal, state or local government, including, without limitation, the OCC, and any successor thereto, the GDBF, the FRB, the FDIC and the SEC or the staff thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(43)** *Resulting Institution* means the Bank which shall be the resulting institution in the merger with Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(44)** *Rights* means warrants, options, rights, convertible securities and other capital stock equivalents which obligate an entity to issue its securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(45)** *SEC* means the Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(46)** *Securities Act* means the Securities Act of 1933, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(47)** *Subsidiary* means any corporation, 50% or more of the capital stock of which is owned, either directly or indirectly, by another entity, except any corporation the stock of which is held in the ordinary course of the lending activities of a bank or savings association.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(48)** *Tax Return* means any return, report, information return or document (including any related or supporting information) required to be filed or otherwise provided with respect to Taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(49)** *Taxes* means all taxes, charges, fees, levies, penalties or other assessments imposed or required to be collected by any United States federal, state, local or foreign taxing authority or political subdivision thereof, including, but not limited to, income, excise, property, sales, transfer, franchise, payroll, withholding, social security or other taxes, including any interest, penalties, fines, assessments or additions attributable thereto.

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**ARTICLE II** 

**ACQUISITION, MERGER AND CONVERSION** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.01 Merger Conversion**. Subject to the terms and conditions of this Agreement and the Plan of Conversion and the required regulatory approvals, Elberton shall convert to a federal stock savings association, and immediately subsequent thereto, merge with and into the Bank with the Bank as the Resulting Institution. Deposit account holders of and borrowers from Elberton shall receive the right to subscribe to the shares of Oconee Common Stock issued by Oconee in connection with the Merger Conversion in accordance with the Plan of Conversion and OCC regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.02 Liquidation Account**. At the Merger Effective Time (as defined in Section 2.04 below), the Bank shall establish on its books a liquidation account in accordance with the Plan of Conversion and applicable OCC regulations for the benefit of, and in order to ensure a limited priority claim in the event of the liquidation of the Bank for, certain depositors of Elberton who shall become depositors of the Bank as a result of the transactions contemplated by this Agreement and the Plan of Conversion and who, following the Closing Date, remain as depositors of the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.03 Acquisition of Conversion Stock**. Subject to the satisfaction or waiver of the terms and conditions of this Agreement and the Plan of Conversion, Oconee shall acquire 1,000 shares of Conversion Stock, or all of the shares to be issued by Elberton in its conversion as provided for in the Plan of Conversion, in exchange for the Merger Conversion Consideration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.04 Merger of Elberton into the Bank**. Immediately following Oconee's acquisition of all of the Conversion Stock issued by Elberton and the closing of the offering of Oconee Common Stock pursuant to the Plan of Conversion, Elberton shall be merged with and into the Bank, with the Bank as the Resulting Institution, in accordance with the applicable laws of the State of Georgia and the United States and the applicable regulations of the OCC, the FDIC, the FRB and the GDBF. The name of the Resulting Institution shall be Oconee State Bank. The merger of Elberton with and into the Bank shall become effective upon the filing of the Certificate of Merger with the GDBF (the "***Merger Effective Time***"). At the Merger Effective Time, all of the shares of Conversion Stock that are issued and outstanding shall be canceled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.05 Deposit Accounts**. At the Merger Effective Time, all deposit accounts of Elberton shall be and become deposit accounts in the Resulting Institution without change in their respective terms, maturities, minimum required balances or withdrawal values. At the Merger Effective Time and at all times thereafter until such account ceases to be a deposit account of the Resulting Institution, each deposit account of Elberton shall be considered for interest or liquidation purposes as if it had been a deposit account of the Resulting Institution at the time such deposit account was opened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.06 Transfer of Assets and Assumption of Liabilities**. At the Merger Effective Time, all of the assets and properties of every kind and character (real, personal and mixed, tangible and intangible, chose in action) rights and credits then owned by or that would inure to Elberton, shall immediately, by operation of law and without any conveyance or transfer and without any further act or deed on the part of Oconee, the Bank or Elberton, be vested in and become the properties of the Resulting Institution, which shall have, hold and enjoy the same in its own right as fully and to the same extent as the same were possessed, held and enjoyed by Elberton immediately before the consummation of the Merger Conversion. At the Merger Effective Time, the Resulting Institution shall assume and succeed to all of the rights, obligations, duties and liabilities of Elberton, including, without limitation, liabilities for all deposits, debts, obligations and contracts of Elberton, matured or unmatured, whether accrued, absolute, contingent and otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or records of Elberton.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.07 Principal Place of Business; Detached Facilities**. At and after the Merger Effective Time, the sole current office of Elberton at 6 East Church Street, Elberton, Georgia 30635 shall be held as a branch office by the Bank. The principal place of business of each of Oconee and the Bank shall continue to be at 35 North Main Street, Watkinsville, Georgia 30677 after the Merger Effective Time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.08 Board of Directors and Executive Officers of Resulting Institution**. At and after the Merger Effective Time, the directors and executive officers of the Resulting Institution shall be those persons who served as directors and executive officers, respectively, of the Bank immediately before the Merger Effective Time, and Robert Paul shall be added as a director of Oconee and the Resulting Institution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.09 Certificate of Incorporation and Bylaws of Resulting Institution**. At and after the Merger Effective Time, the Certificate of Incorporation and Bylaws of the Bank shall be and remain the Certificate of Incorporation and Bylaws of the Resulting Institution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.10 Approval by Boards of Directors**. At least a majority of the board of directors of Elberton and a majority of the board of directors of the Bank and Oconee shall approve the Merger Conversion as evidenced by the Plan of Conversion and this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.11 Approval by Members and Sole Stockholder**. Upon approval of the Plan of Conversion and the required Applications by the applicable Regulatory Authorities, this Agreement and the Plan of Conversion shall be duly submitted to the Members of Elberton for their approval by the requisite vote of the Members and to Oconee as sole stockholder of the Bank. Elberton shall use its best efforts to obtain the required approval of the Plan of Conversion by its Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.12 Best Efforts to Effect Transactions**. Subject to the terms and conditions of this Agreement, each of Oconee and Elberton agrees to use its best efforts to take, or cause to be taken, all actions necessary, proper or advisable to consummate and make effective the Merger Conversion and any other transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.13 Compliance with Banking Laws**. The acquisition of Elberton by Oconee through the Merger Conversion shall be accomplished in accordance with this Agreement, the Plan of Conversion and all applicable federal and state statutes and regulations, including those of the GDBF, the FDIC, the FRB and the OCC. The consummation of the transactions contemplated by this Agreement is specifically conditioned upon receipt of all necessary regulatory approvals or non-objections.

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**ARTICLE III** 

**REPRESENTATIONS AND WARRANTIES OF ELBERTON** 

Elberton hereby represents and warrants to Oconee and the Bank that, except as set forth in the Elberton Disclosure Schedule, which has previously been delivered to Oconee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.01 Organization.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) General**. Elberton is a federal mutual savings association, and, upon completion of the conversion to stock form, will be a federal stock savings association, in each case, duly organized, validly existing and in good standing under the laws of the United States. Elberton has no direct or indirect Subsidiaries. Elberton has all requisite power and authority and is duly qualified and licensed to conduct its business and operations as now being conducted and to own, lease and operate the properties and assets now owned or leased by it as presently operated. Elberton is qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which qualification is necessary under applicable law, except, to the extent that any failures to so qualify would not, in the aggregate, have a Material Adverse Effect with respect to Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Capital Structure**. As of the date of this Agreement, Elberton does not have any authorized or outstanding capital stock, and there are no outstanding Rights to acquire the capital stock of Elberton. Upon completion of its conversion to stock form, Elberton will have authorized capital consisting of 1,000 shares of Elberton Common Stock and all outstanding shares of Elberton Common Stock will be validly issued, fully paid and non-assessable and held of record and beneficially by Oconee. Elberton will convey to Oconee good and marketable title to the Conversion Stock free and clear of any and all security interests, liens, encumbrances, restrictions, claims or other defects of title. The issuance of the Conversion Stock will not be subject to preemptive rights of any person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Deposit Insurance**. The deposits of Elberton are insured by the FDIC to the maximum extent provided by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) Minute Books**. The minute books of Elberton accurately record, in all material respects, all material corporate actions of its Board of Directors (including committees thereof) and Members, and such minute books, together with all other books and records of Elberton, have been, and are being, maintained, in all material respects, in accordance with applicable legal requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e) Charter and Bylaws**. Elberton has delivered to Oconee true and correct copies of the Charter and the Bylaws of Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.02 Affiliations**. Except as disclosed in the Elberton Disclosure Schedule, Elberton does not own any equity interest, directly or indirectly, in any other company or control any other company, except for equity interests held in the investment portfolio of Elberton, equity interests held by Elberton in a fiduciary capacity and equity interests held in connection with the mortgage, home equity and other loan activities of Elberton. There are no subscriptions, options, warrants, calls, commitments, agreements or other Rights outstanding and held by Elberton with respect to any other company's capital stock. Except as disclosed in the Elberton Disclosure Schedule, Elberton is not a party to any transaction with any member of the Elberton Board of Directors or any officer of Elberton. Any and all such transactions set forth in the Elberton Disclosure Schedule comply in all material respects with applicable laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.03 Authority: No Violation.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Authority**. Elberton has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and by the Plan of Conversion. The execution and delivery of this Agreement by Elberton and the consummation by Elberton of the transactions contemplated hereby and by the Plan of Conversion have been duly and validly approved by the Board of Directors of Elberton, and no other corporate proceedings, other than the approval of this Agreement and the Plan of Conversion by the Members of Elberton by the requisite vote, on the part of

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Elberton are necessary for the due authorization of the Agreement and the consummation of the transactions contemplated hereby and by the Plan of Conversion. Subject to receipt of all required approvals of Regulatory Authorities, this Agreement constitutes the valid and binding obligation of Elberton, enforceable against Elberton in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) No Conflict or Breach**. Except as disclosed in the Elberton Disclosure Schedule, neither the execution and delivery of this Agreement by Elberton nor the consummation of the transactions contemplated hereby and by the Plan of Conversion, will (i) conflict with or result in a breach of any provision of the Charter or Bylaws of Elberton, (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Elberton or to any of their properties or assets or (iii) violate, conflict with, result in a breach of any provisions of, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration or the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of Elberton under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement, commitment or other instrument or obligation to which Elberton is a party or by which Elberton or any of its properties or assets may be bound or affected, except for such violations, conflicts, breaches or defaults under clause (ii) or (iii) above, none of which, either individually or in the aggregate, will have a Material Adverse Effect on Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.04 Consents and Approvals**. No consents or approvals of, notices to, exemptions or waivers by, or filings or registrations with, any public body or authority are necessary, and no consents or approvals of any third parties are necessary, in connection with the execution, delivery and performance of this Agreement by Elberton and the consummation by Elberton of the transactions contemplated hereby and by the Plan of Conversion, except for (i) the filing of the required Applications with and the approval or non-objection of the OCC, the FDIC, the GDBF and, if not waived, the FRB; (ii) the filing by Oconee with the SEC of a Regulation A Offering Statement, of which the Proxy Statement/Prospectus that is to be mailed to eligible Members of Elberton is a part; (iii) the adoption of the Plan of Conversion by the requisite vote of the Members of Elberton; (iv) the filing of the Certificate of Merger with the GDBF; and (v) such other filings, authorizations and approvals as may be set forth in the Elberton Disclosure Schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.05 Regulatory Reports and Financial Statements.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Elberton Regulatory Reports**. Elberton has previously delivered, and, as soon as available, will deliver to Oconee the Elberton Regulatory Reports set forth in the Elberton Disclosure Schedule; provided, however, that Elberton shall have no obligation to disclose any "confidential supervisory information" or similar information that is prohibited from disclosure under applicable law. The Elberton Regulatory Reports have been, and will be, prepared in accordance with applicable regulatory accounting principles and practices applied on a consistent basis throughout the periods covered by such reports, and fairly present, and will fairly present, the financial position, results of operations and changes in retained earnings of Elberton as of and for the periods ended on the dates thereof, in accordance with applicable regulatory accounting principles applied on a consistent basis (except for the omission of notes to unaudited statements, year-end adjustments to interim results and changes to generally accepted accounting principles). All Elberton Regulatory Reports are, and will be, true and correct in all material respects and were, or will be, filed on a timely basis.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Elberton Financials**. Elberton has previously delivered to Oconee the Elberton Financials set forth in the Elberton Disclosure Schedule. As soon as available, Elberton will furnish Oconee with the Elberton Financials for the fiscal years and/or calendar quarters ending after the date hereof. The annual financial statements of Elberton have been, and will be, prepared in accordance with GAAP applied on a consistent basis throughout the periods covered by such statements. The quarterly Call Reports of Elberton, and any other form of quarterly report, are true and correct in all material respects and accurately reflect the financial condition of Elberton as of and for the periods ending on the dates thereof. The Elberton Financials fairly present, or will fairly present, the financial position, results of operations and cash flows of Elberton as of and for the periods ending on the dates thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) No Undisclosed Liabilities**. At the date of any balance sheet included or to be included in the Elberton Regulatory Reports, Elberton did not have, and will not have, any liabilities or obligations which are not reflected or reserved against therein or disclosed in a footnote thereto, except for liabilities and obligations which are not material in the aggregate and which are incurred in the ordinary course of business consistent with past practice, and except for liabilities and obligations which are disclosed in the Elberton Disclosure Schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.06 Taxes**. All federal, state, local and foreign Tax Returns and estimates required to be filed by or on behalf of Elberton have been, or will be, timely filed, or requests for extension shall have been granted and not have expired, and all such filed Tax Returns are complete and accurate in all material respects. All Taxes shown or required to be shown on Tax Returns filed or required to be filed (as determined without regard to extensions) by or on behalf of Elberton have been, or will be, timely paid in full, or adequate provision has been made for any such Taxes in the Elberton Financials and in the quarterly Call Reports. There is no audit examination, deficiency or refund litigation with respect to any Taxes of Elberton that could result in a determination that would have a Material Adverse Effect on Elberton. All Taxes, interest, additions and penalties due with respect to completed and settled examinations or concluded litigation relating to it have been paid in full or adequate provision has been made for any such Taxes in the Elberton Financials and in the quarterly Call Reports. Elberton has not executed an extension or waiver of any statute of limitations on the assessment or collection of any material Taxes due that is currently in effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.07 No Material Adverse Effect**. Since December 31, 2021, except as disclosed in the Elberton Disclosure Schedule, Elberton has not incurred any material liability, except in the ordinary course of its business consistent with past practice, nor has there been any change in the financial condition, properties, business or results of operations of Elberton, which, individually or in the aggregate, has had, or is reasonably likely to have, a Material Adverse Effect on Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.08 Anti-takeover Provisions**. Except as provided by 12 C.F.R. § 192.525, there are no anti-takeover provisions in the Elberton Charter or Bylaws, OCC rules and regulations, or other applicable federal or state laws, rules or regulations that will apply to or otherwise adversely affect this Agreement or the transactions contemplated herein.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.09 Contracts.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) General**. Except as disclosed in the Elberton Disclosure Schedule, or as otherwise specified herein, Elberton is not a party to or subject to: (i) any employment, consulting or severance contract or arrangement with any officer, director or employee of Elberton, except for "at will" arrangements; (ii) any plan, arrangement or contract providing for bonuses, pensions, deferred compensation, retirement payments, profit sharing or similar arrangements for or with the officers, directors or employees of Elberton; (iii) any collective bargaining with any labor union relating to employees of Elberton; (iv) any indebtedness disclosed in the Elberton Disclosure Schedule, any instrument evidencing or related to indebtedness for borrowed money, whether directly or indirectly, by way of purchase money obligation, conditional sale, lease purchase, guaranty or otherwise, in respect of which Elberton is an obligor to any person, which instrument evidences or relates to indebtedness other than deposits, repurchase agreements, bankers acceptances and "treasury tax and loan" accounts established in the ordinary course of business and transactions in "federal funds" or which contain financial covenants or other restrictions (other than those relating to the payment of principal and interest when due) which would be applicable on or after the Closing Date to Oconee, the Bank or Elberton; (v) any contract, plan or arrangement which provides for payments or benefits in certain circumstances which, together with other payments or benefits payable to any participant therein or party thereto, might render any portion of any such payments or benefits subject to disallowance of deduction therefor as a result of the application of IRC Section 280G; (vi) any contract, plan, arrangement or instrument that is material to the financial condition, results of operations, business or prospects of Elberton; (vii) any agreement containing covenants that limit the ability of Elberton to engage in any particular line of business or to compete in any line of business or with any person, or that involve any restriction on the geographic area in which, or method by which, Elberton may carry on its business (other than as may be required by law or any regulatory agency); (viii) any contract, agreement or commitment pursuant to which Elberton may become obligated to invest in or contribute capital to any entity; or (ix) any contract or agreement, or amendment thereto, not described above that involved payments during the last fiscal year or which could reasonably be expected to involve payments of more than $10,000 or the termination of which would require a payment by Elberton in excess of $10,000. Copies of all documents set forth in the Elberton Disclosure Schedule have been delivered to Oconee as provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) No Breach or Default**. All the contracts, plans, arrangements and instruments identified in the Elberton Disclosure Schedule are duly and validly executed and delivered by Elberton and, to the Knowledge of Elberton, duly executed and delivered by the other parties thereto, and Elberton has not materially breached any provision of, or defaulted in any material respect under any term of, any such contract, plan, arrangement or instrument, and no party to any such contract, plan, arrangement or instrument will have the right to terminate any or all of the provisions of any such contract, plan, arrangement or instrument as a result of the transactions contemplated by this Agreement. Except as otherwise described in the Elberton Disclosure Schedule, no plan, employment agreement, severance agreement or similar agreement or arrangement to which Elberton is a party or under which it may be liable (i) contains provisions which permit an employee or independent contractor to terminate it without cause and continue to accrue future benefits thereunder; (ii) provides for acceleration in the vesting of benefits thereunder upon the occurrence of a change in ownership or control of Elberton; or (iii) provides for benefits which may cause the disallowance of a federal income tax deduction under IRC Section 280G.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.10 Ownership of Property; Insurance Coverage.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Title to Assets**. Elberton has, and will have as to property acquired after the date hereof, good and, as to real property, marketable title to all assets and properties owned by it or used by it in the conduct of its business, whether real or personal, tangible or intangible, including assets and property reflected in the balance sheets contained in the Elberton Regulatory Reports and in the Elberton Financials or acquired subsequent thereto (except to the extent that such assets and properties have been disposed

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of for fair value, in the ordinary course of business, since the date of such balance sheets), subject to no encumbrances, liens, mortgages, security interests or pledges, except (i) those items that secure liabilities for borrowed money and that are described in the Elberton Disclosure Schedule and (ii) statutory liens for amounts not yet delinquent or which are being contested in good faith. Elberton, as lessee, has the right under leases of properties (whether real or personal) used by it in the conduct of its businesses to occupy and/or use such properties occupied and/or used by it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Insurance**. Elberton is presently insured for reasonable amounts with financially sound and reputable insurance companies, against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured. All of the insurance policies and bonds maintained by Elberton are in full force and effect, Elberton is not in default thereunder and all material claims thereunder have been filed in due and timely fashion. To the Knowledge of Elberton, such insurance coverage is adequate and will be available in the future under terms and conditions substantially similar to those in effect on the date thereof. A description of all currently maintained insurance is set forth in the Elberton Disclosure Schedule. Elberton has not received notice from any insurance carrier that (i) such insurance will be canceled or that coverage thereunder will be reduced or eliminated or (ii) premium costs with respect to such insurance will be substantially increased.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.11 Legal Proceedings**. Except as disclosed in the Elberton Disclosure Schedule, Elberton is not a party to, and there are not pending, or, to its Knowledge, threatened, legal, administrative, arbitration or other proceedings, claims, actions or governmental investigations or inquiries of any nature (i) against Elberton or its officers and directors; (ii) to which Elberton's assets are subject; (iii) challenging the validity or propriety of any of the transactions contemplated by this Agreement; or (iv) that could adversely affect the ability of Elberton to perform its obligations under this Agreement, except for any proceedings, claims actions, investigations or inquiries which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on Elberton. There is no injunction, order, judgment, decree, or regulatory restriction imposed upon Elberton or its assets, which has had, or could reasonably be expected to have, a Material Adverse Effect on Elberton. No director or officer of Elberton currently is being indemnified or is seeking to be indemnified, with respect to a previous, current or threatened claim, by Elberton pursuant to applicable law or its governing documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.12 Compliance with Applicable Law.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) General**. Elberton holds all licenses, franchises, permits and authorizations necessary for the lawful conduct of its business under, and has complied in all material respects with, applicable laws, statutes, orders, rules and regulations of any federal, state or local governmental authority relating to it, other than where such failure to hold or failure to comply would neither result in a limitation in any material respect on the conduct of Elberton's business nor otherwise have, or be reasonably likely to have, a Material Adverse Effect on Elberton. All of such licenses, franchises, permits and authorizations are in full force and effect, and no suspension or cancellation of any of them is pending or, to Elberton's Knowledge, threatened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) No Notices**. Except as disclosed in the Elberton Disclosure Schedule and with respect to any item disclosure of which is prohibited by law, Elberton has not received any notification or communication from any Regulatory Authority (i) asserting that it is not in substantial compliance with any of the statutes, regulations or ordinances which such Regulatory Authority enforces, which noncompliance has or could reasonably be expected to have a Material Adverse Effect on Elberton, (ii) threatening to revoke any license, franchise, permit or governmental authorization which is material to

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it, (iii) requiring or threatening to require it, or indicating that it may be required, to enter into a cease and desist order, agreement or memorandum of understanding or any other agreement restricting or limiting, or purporting to restrict or limit in any manner, its operations or (iv) directing, restricting or limiting, or purporting to direct, restrict or limit in any manner, its operations (any such notice, communication, memorandum, agreement or order described in this sentence shall be referred to herein as a "***Regulatory Agreement***"). Elberton has not consented to or entered into any Regulatory Agreement that has not been satisfied and terminated as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.13 Employees.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** Elberton is and during the past four (4) years has been in compliance, except for such noncompliance which, individually or in the aggregate, would not, or would not reasonably be expected to, have a Material Adverse Effect on Elberton, with all applicable laws governing the employment of labor, including, without limitation, all contractual commitments and all such laws relating to discrimination or harassment in employment; terms and conditions of employment; termination of employment; wages; overtime classification; hours; meal and rest breaks; employee leave requirements; child labor; occupational safety and health; plant closings; employee whistle-blowing; immigration and employment eligibility verification; employee privacy; defamation; background checks and other consumer reports regarding employees and applicants; employment practices; negligent hiring or retention; affirmative action and other employment-related obligations on federal contractors and subcontractors; classification of employees, consultants and independent contractors; labor relations; collective bargaining; unemployment insurance; the collection and payment of withholding and/or social security taxes and any similar tax; employee benefits; and workers' compensation (collectively, "*Employment Matters*").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** There are no, and in the past four (4) years there have been no, pending, or to the Knowledge of Elberton, threatened legal proceedings against or relating to Elberton by or before any other governmental authority relating to any Employment Matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** Elberton is not a party to, or bound by, any labor agreement, collective bargaining agreement, work rules or practices, or any other labor-related agreement or arrangement with any labor union, trade union or labor organization (collectively, a "***Collective Bargaining Agreement***"). No employees of Elberton are represented by any labor union, trade union or labor organization with respect to their employment with Elberton. No labor union, trade union, labor organization or group of employees of Elberton has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending, or to Elberton's Knowledge threatened, in writing to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority. To Elberton's Knowledge, there are no union organizing activities with respect to any employees of Elberton. There has been no actual, or to Elberton's Knowledge, threatened material arbitrations, material grievances, labor disputes, strikes, lockouts, slowdowns or work stoppages against or affecting Elberton. Elberton is not engaged in, nor during the past four years has engaged in, any unfair labor practice, as defined in the National Labor Relations Act or other applicable laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** To Elberton's Knowledge, (i) no employee or independent contractor of Elberton is in material violation of any term of any employment contract, consulting contract, non-disclosure agreement, common law non-disclosure obligation, non-competition agreement, non-solicitation agreement, proprietary information agreement or any other agreement relating to confidential or

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proprietary information, intellectual property, competition, or related matters; and (ii) the continued employment by Elberton of its employees, and the performance of the contracts with Elberton by its independent contractors, will not result in any such violation. Elberton has not received any notice alleging that any such violation has occurred within the past four (4) years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)** To Elberton's Knowledge, no executive officer, group leader, manager or advisor of Elberton intends to terminate his or her employment with Elberton, nor does Elberton have a present intention to terminate the employment of any executive officer, group leader, manager or advisor of Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)** In the last four (4) years, (i) to Elberton's Knowledge, no allegations of sexual harassment have been made against any employee or independent contractor of Elberton, and (ii) Elberton has not entered into any settlement agreements related to allegations of sexual harassment or misconduct by any employee or independent contractor of Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.14 Benefit Plans**. Elberton has previously delivered to Oconee true and complete copies of all employee pension benefit plans, profit sharing plans, deferred compensation and supplemental income plans, supplemental executive retirement plans, employment agreements, annual or long-term incentive plans, settlement plans, policies and agreements, group insurance plans, supplemental life insurance arrangements, post-retirement medical and other insurance benefits, long-term care policies, and all other employee welfare benefit plans, policies, agreements and arrangements, all of which are set forth in the Elberton Disclosure Schedule, maintained or contributed to for the benefit of the employees or former employees (including retired employees) and any beneficiaries thereof or directors or former directors of Elberton. Neither Elberton nor any pension plan maintained by Elberton has incurred, directly or indirectly, any liability under Title IV of ERISA (including to the Pension Benefit Guaranty Corporation) or to the IRS with respect to any pension plan qualified under IRC Section 401(a), except liabilities to the Pension Benefit Guaranty Corporation pursuant to ERISA Section 4007, all of which have been fully paid, nor has any reportable event under ERISA Section 4043(b) occurred with respect to any such pension plan. With respect to each such plan that is subject to Title IV of ERISA, the present value of the accrued benefits under such plan, based upon the actuarial assumptions used for funding purposes in the plan's most recent actuarial report, did not, as of its latest valuation date, exceed the then current value of the assets of such plan allocable to such accrued benefits. Elberton has not incurred nor is it subject to any liability under ERISA Section 4201 for a complete or partial withdrawal from a multi-employer plan. Except as provided under or otherwise contemplated by this Agreement or as disclosed in the Elberton Disclosure Schedule, neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will (i) entitle any current or former employee or director of Elberton to any compensation or benefit, (ii) accelerate the time of payment or vesting, (iii) trigger any payment or funding of any compensation or benefits or other material obligation, or (iv) result in any breach or violation of, or default under, or limit the right to amend, modify or terminate any such Elberton plan. All "employee benefit plans," as defined in ERISA Section 3(3), have been maintained and operated in all material respects in compliance with ERISA and the IRC, including Section 409A of the IRC, and Elberton and its agents and affiliates have not breached any duties imposed thereunder. Except as disclosed in the Elberton Disclosure Schedule, Elberton does not have any material liability under any such plan. Elberton has correctly computed and timely made all contributions, premium payments and payments of other amounts for which it is responsible. To the Knowledge of Elberton, except as disclosed in the Elberton Disclosure Schedule, no prohibited transaction (which shall mean any transaction prohibited by ERISA Section 406 and not exempt under ERISA Section 408) has occurred with respect to any employee benefit plan maintained by Elberton that would be taxed under IRC Section 4975. Elberton

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provides continuation coverage under group health plans for separating employees and "qualified beneficiaries" in accordance with the provisions of IRC Section 4980B(f). Such group health plans are in compliance with Section 1862(b)(1) of the Social Security Act. Except as disclosed in the Elberton Disclosure Schedule, there is no existing or, to the Knowledge of Elberton, contemplated, audit of any Elberton compensation and benefit plans by the IRS, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other governmental authority. In addition, there are no pending or, to the Knowledge of Elberton, threatened claims by, on behalf of or with respect to any Elberton compensation and benefit plan, or by or on behalf of any individual participant or beneficiary of any such plan, alleging any violation of ERISA or any other applicable laws, or claiming benefits (other than claims for benefits not in dispute and expected to be granted promptly in the ordinary course of business), nor to the Knowledge of Elberton is there any basis for such claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.15 Brokers and Finders**. Except as disclosed in the Elberton Disclosure Schedule, neither Elberton nor any of its officers, directors, employees or agents has employed any broker, finder or financial advisor, or incurred any liability for any fee or commission to any such person, in connection with the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.16 Environmental Matters**. Except as disclosed in the Elberton Disclosure Schedule, to Elberton's Knowledge, Elberton is not in violation of any Environmental Law at any properties it owns or operates (a "***Violation***"), and no properties owned or operated by Elberton, for which Elberton could be subject to any liability under any Environmental Law, are in or contain such condition or conditions, including the presence of any Hazardous Materials thereon, thereat or thereunder, that would constitute a basis of liability under any Environmental Law (a "***Condition***"), except for Violations or Conditions that, individually or in the aggregate, would not have, or not reasonably likely to have, a Material Adverse Effect on Elberton. Except as disclosed in the Elberton Disclosure Schedule, there are no actions, suits or proceedings, or demands, claims, notices or investigations (including, without limitation, notices, demand letters or requests for information from any environmental agency) instituted, pending or, to Elberton's Knowledge, threatened relating to any actual or potential Condition or Violation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.17 Business of Elberton**. Except as disclosed in the Elberton Disclosure Schedule, since December 31, 2019, Elberton has conducted its business only in the ordinary course and has not taken any action that would otherwise be prohibited by the provisions of Section 5.01 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.18 Loan Portfolio**. The allowance for loan losses reflected, and to be reflected, in the Elberton Regulatory Reports, and shown, and to be shown, on the balance sheets contained in the Elberton Regulatory Reports are, and will be, calculated in accordance with GAAP and regulatory accounting principles in all material respects as applied to insured depository institutions, and in the reasonable opinion of management of Elberton, reasonably likely to be adequate in all material respects to provide for all possible losses, net of recoveries relating to loans previously charged off, on loans outstanding of Elberton and other extensions of credit, and no Regulatory Authority has required or requested Elberton to increase any allowance for loan losses. Elberton has disclosed to Oconee in writing prior to the date hereof the amounts of all loans, leases, advances, credit enhancements, other extensions of credit, commitments and interest-bearing assets of Elberton that have been classified as "Other Loans Specifically Monitored," "Special Mention," "Substandard," "Doubtful," "Loss," "Classified," "Criticized," "Credit Risk Assets," "Concerned Loans" or words of similar import, and Elberton shall, promptly after the end of any month between the date hereof and the Closing Date, inform Oconee of any additional loans so classified at any time after the date hereof. The "Real Estate Owned" included in any nonperforming assets of Elberton is carried net of reserves at the lower of cost or market value based on current independent appraisals. The Elberton Disclosure Schedule sets forth a complete and correct list of all loans from Elberton to any present insider (as such term is defined in FRB Regulation O) .

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.19 Information to be Supplied**. The information supplied, or to be supplied, by Elberton for inclusion in the Applications will, at the time such documents are filed with any Regulatory Authority, be accurate in all material aspects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.20 Reorganization**. As of the date hereof, Elberton is aware of no reason why the Merger Conversion will fail to qualify as a reorganization under Section 368(a) of the IRC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.21 Representations True and Correct**. No representations made by Elberton in this Agreement or in the Elberton Disclosure Schedule contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading. None of the information contained in the Elberton Financials, the Elberton Regulatory Reports or any other documents or reports provided by or for Elberton to Oconee contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.22 Proxy Statement/Prospectus**. At the time the Proxy Statement/Prospectus is mailed to eligible Members of Elberton, such Proxy Statement/Prospectus solely with respect to the information relating specifically to and prepared by Elberton, will (a) comply in all material respects with the applicable rules and regulations of the OCC; and (b) not contain any statement that, at the time and in light of the circumstances under which it is made, (i) is false or misleading with respect to any material fact, or omits to state any material fact required to be stated therein, or (ii) is necessary in order to make the statements therein not false or misleading, or is necessary to correct any statement in an earlier communication with respect to such matters that has become false or misleading.

**ARTICLE IV** 

**REPRESENTATIONS AND WARRANTIES OF OCONEE AND THE BANK** 

Oconee and the Bank hereby represent and warrant to Elberton that, except as set forth in the Oconee Disclosure Schedule, which has previously been delivered to Elberton:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.01 Organization.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) General**. Oconee is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia. Oconee has all requisite power and authority and is duly qualified and licensed to conduct its business and operations as now being conducted and to own, lease and operate the properties and assets now owned or leased by it as presently operated. Oconee is qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which qualification is necessary under applicable law, except to the extent that any failures to so qualify would not, in the aggregate, have a Material Adverse Effect on Oconee and the Oconee Subsidiaries, taken as a whole.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Capitalization of Oconee**. The authorized capital stock of Oconee consists of 1,500,000 shares of Oconee Common Stock, par value $2.00 per share. As of the date hereof, 895,999 shares of Oconee Common Stock are issued and outstanding. The outstanding capital stock and other securities of Oconee (i) are duly authorized, validly issued, fully paid and nonassessable, (ii) are free and clear of any liens, claims, security interests and encumbrances of any kind, (iii) have not been issued in violation of the preemptive rights of any person or entity or in violation of any applicable federal or state laws, and (iv) are not subject to any restrictions or limitations prohibiting or restricting transfers except as provided

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under federal or state securities laws. There are no irrevocable proxies with respect to securities of Oconee and there are no outstanding or authorized subscriptions, options, warrants, calls, rights or other agreements or commitments of any kind restricting the transfer of, requiring the issuance or sale of or otherwise relating to any securities of Oconee to any person or entity. The shares of Oconee Common Stock to be offered to qualifying Members of Elberton pursuant to this Agreement in connection with the Merger Conversion have been duly authorized, and at the Merger Effective Time, the shares of Oconee Common Stock issued to such Members will be validly issued, fully paid and nonassessable and will not be issued in violation of the preemptive rights of any person. Oconee does not have any outstanding commitment or obligation to repurchase, reacquire or redeem any of its outstanding capital stock or other securities of Oconee. There are no voting trusts, voting agreements, buy-sell agreements or other similar arrangements affecting Oconee Common Stock or other securities of Oconee. There are no restrictions applicable to the payment of dividends or distributions on the Oconee Common Stock or securities of the Bank except pursuant to applicable laws and regulations, and all dividends or distributions declared before the date of this Agreement have been paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Capitalization of the Bank**. The authorized capital stock of the Bank consists of 300,000 shares of common stock, par value $10.00 per share, which will continue to be the authorized capital stock of the Resulting Institution following the Merger Effective Time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) Oconee Subsidiaries**. The Oconee Disclosure Schedule lists each direct and indirect Subsidiary of Oconee, including the Bank (each individually a "***Oconee Subsidiary***" and together, the "***Oconee Subsidiaries***"). Each of the Oconee Subsidiaries is duly organized, validly existing and in good standing under the laws of the respective jurisdiction under which it is organized, as set forth in the Oconee Disclosure Schedule. Each Oconee Subsidiary has all requisite power and authority and is duly qualified and licensed to conduct its business and operations as now being conducted and to own, lease and operate the properties and assets now owned or leased by it as presently operated. Each Oconee Subsidiary is qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which qualification is necessary under applicable law, except to the extent that any failures to so qualify would not, in the aggregate, have a Material Adverse Effect on Oconee and the Oconee Subsidiaries, taken as a whole. The outstanding capital stock and other securities of the Oconee Subsidiaries (including the Bank) (i) are duly authorized, validly issued, fully paid and nonassessable, (ii) are free and clear of any liens, claims, security interests and encumbrances of any kind, (iii) have not been issued in violation of the preemptive rights of any person or entity or in violation of any applicable federal or state laws, and (iv) are not subject to any restrictions or limitations prohibiting or restricting transfers except as provided under federal or state securities laws. There are no irrevocable proxies with respect to securities of the Oconee Subsidiaries and there are no outstanding or authorized subscriptions, options, warrants, calls, rights or other agreements or commitments of any kind restricting the transfer of, requiring the issuance or sale of or otherwise relating to any securities of the Oconee Subsidiaries to any person or entity. Oconee is, and as of the Closing Date will be, the lawful record and beneficial owner of all of the outstanding securities of the Oconee Subsidiaries, free and clear of any liens, claims, encumbrances, security interests or restrictions of any kind (other than transfer restrictions imposed by applicable federal and state banking or securities laws).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e) Deposit Insurance**. The deposits of the Bank are insured by the FDIC to the maximum extent provided by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f) Minute Books**. The minute books of each of Oconee and the Bank accurately record, in all material respects, all material corporate actions of its Board of Directors (including committees thereof) and shareholders, and such minute books, together with all other books and records of each of Oconee and the Bank, have been, and are being, maintained, in all material respects, in accordance with applicable legal requirements.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.02 Authority: No Violation.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Authority**. Each of Oconee and the Bank has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and by the Plan of Conversion. The execution and delivery of this Agreement by each of Oconee and the Bank and the consummation by them of the transactions contemplated hereby and by the Plan of Conversion have been duly and validly approved by the Boards of Directors of Oconee and the Bank, and no other corporate proceedings on the part of Oconee or the Bank are necessary for the due authorization of the Agreement and the consummation of the transactions contemplated hereby and by the Plan of Conversion. Subject to receipt of all required approvals of Regulatory Authorities, this Agreement constitutes the valid and binding obligation of Oconee and the Bank, enforceable against Oconee and the Bank in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) No Conflict or Breach**. Neither the execution and delivery of this Agreement by Oconee and the Bank nor the consummation of the transactions contemplated hereby and by the Plan of Conversion, will (i) violate, conflict with or result in a breach of any provision of the Articles of Incorporation or Bylaws of Oconee or the Articles of Incorporation, Articles of Association, Charter or other organizing document or Bylaws of any Oconee Subsidiary, (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Oconee or any Oconee Subsidiary or to any of their properties or assets or (iii) violate, conflict with, result in a breach of any provisions of, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration or the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of Oconee or any Oconee Subsidiary under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement, commitment or other instrument or obligation to which Oconee or any Oconee Subsidiary is a party or by which Oconee or any Oconee Subsidiary or any of their properties or assets may be bound or affected, except for such violations, conflicts, breaches or defaults under this clause (iii), none of which, either individually or in the aggregate, will have a Material Adverse Effect on Oconee and the Oconee Subsidiaries, taken as a whole, or Oconee's ability to perform any of its obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.03 Financial Statements.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Oconee Financials**. Oconee has previously delivered to Elberton the Oconee Financials set forth in the Oconee Disclosure Schedule. As soon as available, Oconee will furnish Elberton with the Oconee Financials for the fiscal years and/or calendar quarters ending after the date hereof. The annual financial statements of Oconee have been, and will be, prepared in accordance with GAAP applied on a consistent basis throughout the period covered by such statements. The quarterly financial statements of Oconee are true and correct in all material respects and accurately reflect the financial condition of Oconee. The Oconee Financials fairly present, or will fairly present, the financial position, results of operations and cash flows of Oconee as of and for the periods ending on the dates thereof. As of the dates of the Oconee Financials referred to above, Oconee did not have any liabilities, fixed or contingent, which are material and are not fully shown or provided for in such Oconee Financials or otherwise disclosed in

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this Agreement, or in any of the documents delivered to Elberton. Since December 31, 2019, no event has occurred or circumstance arisen that, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect on Oconee and the Oconee Subsidiaries, taken as a whole. The quarterly Call Reports of the Bank, and any other form of quarterly report, are true and correct in all material respects and accurately reflect the financial condition of the Bank as of and for the periods ending on the dates thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) No Undisclosed Liabilities**. As of the date of any balance sheet included or to be included in the Oconee Financials, Oconee did not have, and will not have, any liabilities or obligations which are not reflected or reserved against therein or disclosed in a footnote thereto, except for liabilities and obligations which are not material in the aggregate and which are incurred in the ordinary course of business consistent with past practice, and except for liabilities and obligations which are disclosed in the Oconee Disclosure Schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.04 Taxes**. All federal, state, local and foreign Tax Returns and estimates required to be filed by or on behalf of Oconee have been, or will be, timely filed, or requests for extension shall have been granted and not have expired, and all such filed Tax Returns are complete and accurate in all material respects. All Taxes shown or required to be shown on Tax Returns filed or required to be filed (as determined without regard to extensions) by or on behalf of Oconee have been, or will be, timely paid in full, or adequate provision has been made for any such Taxes in the Oconee Financials. There is no audit examination, deficiency or refund litigation with respect to any Taxes of Oconee that could result in a determination that would have a Material Adverse Effect on Oconee and the Oconee Subsidiaries, taken as a whole. All Taxes, interest, additions and penalties due with respect to completed and settled examinations or concluded litigation relating to it have been paid in full, or adequate provision has been made for any such Taxes in the Oconee Financials. Oconee has not executed an extension or waiver of any statute of limitations on the assessment or collection of any material Taxes due that is currently in effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.05 Consents and Approvals**. No consents or approvals of, notices to, exemptions or waivers by, or filings or registrations with, any public body or authority are necessary, and no consents or approvals of any third parties are necessary, in connection with the execution, delivery and performance of this Agreement by Oconee and the consummation by Oconee of the transactions contemplated hereby and by the Plan of Conversion, except for (i) the filing of the required Applications with and the approval or non-objection of the GDBF, the FDIC, the OCC and, unless waived, the FRB; (ii) the filing with the SEC of the Regulation A Offering Statement; (iii) any approvals under the securities or blue sky laws of the various states; (iv) the adoption of this Agreement by the sole stockholder of the Bank; (v) the filing of the Certificate of Merger with the GDBF; and (vi) such other filings, authorizations and approvals as may be set forth in the Oconee Disclosure Schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.06 Legal Proceedings**. Except as disclosed in the Oconee Disclosure Schedule, neither Oconee nor any Oconee Subsidiary is a party to, and there are not pending, or, to their Knowledge, threatened, legal, administrative, arbitration or other proceedings, claims, actions or governmental investigations or inquiries of any nature (i) against Oconee or any Oconee Subsidiary or their officers and directors; (ii) to which Oconee's or any Oconee Subsidiary's assets are subject; (iii) challenging the validity or propriety of any of the transactions contemplated by this Agreement; or (iv) which could adversely affect the ability of Oconee to perform its obligations under this Agreement, except for any proceedings, claims, actions, investigations or inquiries which, individually or in the aggregate, could not be reasonably expected to have Material Adverse Effect on Oconee and the Oconee Subsidiaries, taken as a whole.

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There is no injunction, order, judgment, decree, or regulatory restriction imposed upon Oconee, the Oconee Subsidiaries or the assets of Oconee or the Oconee Subsidiaries, which has had, or could reasonably be expected to have, a Material Adverse Effect on Oconee or the Oconee Subsidiaries, taken as a whole. No director or officer of Oconee or an Oconee Subsidiary currently is being indemnified or seeking to be indemnified, with respect to a previous, current or threatened claim, by Oconee or an Oconee Subsidiary pursuant to applicable law or their governing documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.07 Insurance**. Oconee is presently insured for reasonable amounts with financially sound and reputable insurance against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured. All the insurance policies and bonds maintained by Oconee are in full force and effect, Oconee is not in default thereunder, and all material claims thereunder have been filed in due and timely fashion. To the Knowledge of Oconee management, such insurance coverage is adequate and will be available in the future under terms and conditions substantially similar to those in effect on the date thereof. A description of all currently maintained insurance is set forth in the Oconee Disclosure Schedule. Oconee has not received notice from carrier that (i) such insurance will be canceled or that coverage thereunder will be reduced or eliminated or (ii) premium cost of such insurance will be substantially increased.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.08 Compliance with Applicable Law**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) General**. Each of Oconee and the Bank holds all licenses, franchises, permits and authorizations necessary for the lawful conduct of its business under, and has complied in all material respects with, applicable laws, statutes, orders, rules and regulations of any federal, state or local governmental authority relating to it, other than where such failure to hold or failure to comply would neither result in a limitation in any material respect on the conduct of Oconee's or the Bank's business nor otherwise have a Material Adverse Effect on Oconee and the Bank, taken as a whole. All of such licenses, franchises, permits and authorizations are in full force and effect, and no suspension or cancellation of any of them is pending or, to the best of Oconee's Knowledge, threatened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) No Notices**. Except as disclosed in the Oconee Disclosure Schedule, Oconee has not received any notification or communication from any Regulatory Authority (i) asserting that it is not in substantial compliance with any of the statutes, regulations or ordinances which such Regulatory Authority enforces, which noncompliance has or could reasonably be expected to have a Material Adverse Effect on Oconee and the Oconee Subsidiaries, taken as a whole, (ii) threatening to revoke any license, franchise, permit or governmental authorization which is material to it, (iii) requiring or threatening to require it, or indicating that it may be required, to enter into a cease and desist order, agreement or memorandum of understanding or any other agreement restricting or limiting, or purporting to restrict or limit in any manner its operations or (iv) directing, restricting or limiting, or purporting to direct, restrict or limit in any manner its operations. Except as disclosed in the Oconee Disclosure Schedule, Oconee has not consented to or entered into any Regulatory Agreement that has not been satisfied and terminated as of the date hereof. There is no fact or circumstance relating to Oconee or any of its Subsidiaries that would materially impede or delay receipt of any required regulatory approval of this Agreement and the Plan of Conversion and transactions contemplated hereby and thereby, and Oconee has no reason to believe that it shall not be able to obtain all requisite regulatory and other approvals or consents (if any) which it is required to obtain in order to consummate such transactions.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** Each of Oconee and the Bank has timely filed all reports, registrations and statements, together with any amendments required to be made thereto, that are required to be filed with any Regulatory Authority or any other applicable authority, organization or governmental body, including, without limitation, with respect to Oconee's OTCQX listing, and such reports, registrations and statements as finally amended or corrected, are true and complete in all material respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** Oconee is in material compliance with Appendix C to 12 C.F.R. Part 225 – Small Bank Holding Company and Savings and Loan Holding Company Policy Statement. Oconee is "well capitalized" (as that term is defined in 12 C.F.R. § 225.2(r)) and "well managed" (as that term is defined is 12 C.F.R. § 225.2(s)). The Bank is "well capitalized" (as that term is defined in 12 C.F.R. § 324.403(b)).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.09 Environmental Matters**. Except as disclosed in the Oconee Disclosure Schedule, to the best of Oconee's Knowledge, Oconee is not in violation of any Environmental Law at any properties it owns or operates (a "***Violation***"), and no properties owned or operated by Oconee for which Oconee could be subject to any liability under any Environmental Law, are in or contain such condition or conditions, including the presence of any Hazardous Materials thereon, thereat or thereunder, that would constitute a basis of liability under any Environmental Law (a "***Condition***"), except for Violations or Conditions that, individually or in the aggregate, would not have a Material Adverse Effect on Oconee and the Oconee Subsidiaries, taken as a whole. Except as disclosed in the Oconee Disclosure Schedule, there are no actions, suits or proceedings, or demands, claims, notices or investigations (including, without limitation, notices, demand letters or requests for information from any environmental agency) instituted, pending or, to the best of Oconee's Knowledge, threatened relating to any actual or potential Condition or Violation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.10 Benefit Plans**. Oconee has previously delivered to Elberton true and complete copies of all employee pension benefit plans, profit sharing plans, deferred compensation and supplemental income plans, supplemental executive retirement plans, employment agreements, annual or long-term incentive plans, settlement plans, policies and agreements, group insurance plans, supplemental life insurance arrangements, post-retirement medical and other insurance benefits, long-term care policies, and all other employee welfare benefit plans, policies, agreements and arrangements, all of which are set forth in the Oconee Disclosure Schedule, maintained or contributed to for the benefit of the employees or former employees (including retired employees) and any beneficiaries thereof or directors or former directors of Oconee. Neither Oconee nor any pension plan maintained by Oconee has incurred, directly or indirectly, any liability under Title IV of ERISA (including to the Pension Benefit Guaranty Corporation) or to the IRS with respect to any pension plan qualified under IRC Section 401(a), except liabilities to the Pension Benefit Guaranty Corporation pursuant to ERISA Section 4007, all of which have been fully paid, nor has any reportable event under ERISA Section 4043(b) occurred with respect to any such pension plan. With respect to each such plan that is subject to Title IV of ERISA, the present value of the accrued benefits under such plan, based upon the actuarial assumptions used for funding purposes in the plan's most recent actuarial report, did not, as of its latest valuation date, exceed the then current value of the assets of such plan allocable to such accrued benefits. Oconee has not incurred nor is it subject to any liability under ERISA Section 4201 for a complete or partial withdrawal from a multi-employer plan. Except as disclosed in the Oconee Disclosure Schedule, neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will (i) entitle any current or former employee or director of Oconee to any compensation or benefit, (ii) accelerate the time of payment or vesting, (iii) trigger any payment or funding of any compensation or benefits or other material obligation, or (iv) result in any breach or violation of, or default under, or limit the right to amend, modify or terminate any such Oconee plan. All "employee benefit plans," as defined in ERISA Section 3(3), have been maintained and operated in all material respects in compliance with ERISA and the IRC, including Section 409A of the IRC, and Oconee and its agents and affiliates have not breached any duties imposed

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thereunder. Except as disclosed in the Oconee Disclosure Schedule, Oconee does not have any material liability under any such plan. Oconee has correctly computed and timely made all contributions, premium payments and payments of other amounts for which it is responsible. To the Knowledge of Oconee, except as disclosed in the Oconee Disclosure Schedule, no prohibited transaction (which shall mean any transaction prohibited by ERISA Section 406 and not exempt under ERISA Section 408) has occurred with respect to any employee benefit plan maintained by Oconee that would be taxed under IRC Section 4975. Oconee provides continuation coverage under group health plans for separating employees and "qualified beneficiaries" in accordance with the provisions of IRC Section 4980B(f). Such group health plans are in compliance with Section 1862(b)(1) of the Social Security Act. Except as disclosed in the Oconee Disclosure Schedule, there is no existing or, to the Knowledge of Oconee, contemplated, audit of any Oconee compensation and benefit plans by the IRS, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other governmental authority. In addition, there are no pending or, to the Knowledge of Oconee, threatened claims by, on behalf of or with respect to any Oconee compensation and benefit plan, or by or on behalf of any individual participant or beneficiary of any such plan, alleging any violation of ERISA or any other applicable laws, or claiming benefits (other than claims for benefits not in dispute and expected to be granted promptly in the ordinary course of business), nor to the Knowledge of Oconee is there any basis for such claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.11 Information to be Supplied**. The information supplied, or to be supplied, by Oconee for inclusion in the Applications will, at the time such documents are filed with any Regulatory Authority, be accurate in all material aspects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.12 Brokers and Finders**. Except as disclosed in the Oconee Disclosure Schedule, neither Oconee, nor the Bank, nor any of their respective officers, directors, employees or agents has employed any broker, finder or financial advisor, or incurred any liability for any fee or commission to any such person, in connection with the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.13 SEC Status; Securities Issuances**. Neither Oconee nor any Oconee Subsidiaries is subject to the registration provisions of Section 12 of the Exchange Act nor the rules and regulations of the SEC promulgated under Section 12 of the Exchange Act, other than anti-fraud provisions of such act. All issuances of securities by Oconee and any Oconee Subsidiaries have been registered under the Securities Act and all other applicable laws or were exempt from any such registration requirements under applicable laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.14 Representations True and Correct**. No representations made by Oconee and the Bank in this Agreement or in the Oconee Disclosure Schedule contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading. None of the information contained in any documents or reports provided by or for Oconee and the Bank to Elberton contains any untrue statements of a material fact or omits to state a material fact necessary to make the statements therein not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.15 Proxy Statement/Prospectus**. At the time the Proxy Statement/Prospectus is mailed to eligible Members of Elberton and at all times subsequent to such mailing, up to and including the time of completion of the sale of Oconee Common Stock to be sold in the Merger Conversion, such Proxy Statement/Prospectus (including any supplements thereto), with respect to all information relating specifically to Oconee or the Bank, will (i) comply in all material respects with applicable provisions of the Securities Act and the Exchange Act and the rules and regulations thereunder and the applicable rules and regulations of the OCC; and (ii) not contain any statement that, at the time and in light of the

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circumstances under which it is made, (a) is false or misleading with respect to any material fact, or omits to state any material fact required to be stated therein, or (b) is necessary in order to make the statements therein not false or misleading, or is necessary to correct any statement in an earlier communication with respect to such matters that has become false or misleading.

**ARTICLE V** 

**COVENANTS OF THE PARTIES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.01 Conduct of Businesses**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Ordinary Course**. From the date of this Agreement to the Closing Date, each of Elberton, Oconee and the Bank will conduct its business and engage in transactions only in the ordinary course of business and consistent with past practice, except as otherwise required or permitted by this Agreement or required by applicable law or with the prior written consent of the other party, which consent shall not be unreasonably withheld, delayed or conditioned. Each of Elberton, Oconee and the Bank will use its best efforts to (1) maintain and preserve intact its business organization, properties, assets, leases, employees and advantageous business relationships and retain the services of its officers and key employees; (2) take no action that would adversely affect or delay the ability of Elberton, Oconee or the Bank to obtain any necessary approvals, consents or waivers of the Regulatory Authorities required for the transactions contemplated hereby and by the Plan of Conversion or to perform its covenants and agreements on a timely basis under this Agreement and the Plan of Conversion; and (3) take no action that is reasonably likely to have a Material Adverse Effect on such party. Without limiting the foregoing, from the date of this Agreement to the Closing Date, except as otherwise consented to or approved by Oconee in writing or as permitted or required by this Agreement or the Plan of Conversion, Elberton will not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(i)*** *Employment and Compensation*. Hire or promise to hire any new employee, independent contractor or consultant or grant any severance or termination pay to (other than pursuant to the existing plans and policies of Elberton disclosed in Section 3.09(a) or 3.14 of the Elberton Disclosure Schedule or pursuant to Section 5.01(a)), or enter into or amend any employment, consulting or severance agreement with, any employee, officer, director, independent contractor or consultant of Elberton, or increase the rate of base, incentive or other compensation or benefits of, or pay any bonus to, the directors, officers and employees of Elberton; provided, however, that Elberton may award merit increases in compensation to each non-management employee in the ordinary course of business consistent with past practices in an amount not to exceed 3.0% of the annual salary of such non-management employee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(ii)*** *Extraordinary Transactions*. Merge or consolidate with any other corporation or other entity; sell or lease all or any substantial portion of the assets or business of Elberton; make any acquisition of all or any substantial portion of the business or assets of any other person, firm, association, corporation or business organization other than in connection with the collection of any loan or credit arrangement between Elberton and any other person; enter into a purchase and assumption transaction with respect to deposits and liabilities; permit the revocation or surrender by Elberton of its certificate of authority to maintain; or file an application for the relocation of, its existing offices or file an application for a certificate of authority to establish a new branch office;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(iii)*** *Liens, Indebtedness and Other Matters*. Sell or otherwise dispose of any asset of Elberton other than in the ordinary course of business consistent with past practice; subject any asset of Elberton to a lien, pledge, security interest or other encumbrance (other than in connection with deposits, repurchase agreements, bankers acceptances, "treasury tax and loan" accounts established in the ordinary course of business, transactions in "federal funds" and any lien, pledge, security interest or other encumbrance incurred in the ordinary course of business consistent with past practice which does not have or could not reasonably be expected to have a Material Adverse Effect on Elberton); modify in any material respect the manner in which Elberton has heretofore conducted its business; enter into any new line of business or incur any indebtedness for borrowed money (or guarantee any indebtedness for borrowed money), except in the ordinary course of business consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(iv)*** *Representations and Warranties*. Take any action which would result in any of the representations and warranties of Elberton set forth in this Agreement becoming untrue as of any date after the date hereof (applying the standard set forth in Section 6.02(a)) or in any of the conditions set forth in Article VI hereof not being satisfied;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(v)*** *Accounting Matters*. Change any method, practice or principle of accounting, or change any assumption method of calculation of, depreciation of any type of asset or establishment of any reserve or increase the provision loan losses, unless required by applicable law or regulation or the direction of Elberton's regulatory authority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(vi)*** *Modification of Agreements*. Waive, release, grant or transfer any rights of value or modify or change in any material respect any existing agreement to which Elberton is a party, other than in the ordinary course of business and consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(vii)*** *Employee Benefits Plans*. Except as provided by Sections 5.01(a)(i) or 5.05, implement any pension, retirement, profit sharing, bonus, welfare benefit or similar plan or arrangement that was not in effect on the date of this Agreement, or amend any existing plan or arrangement, except as required by law or to the extent such amendments do not result in an increase in cost;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(viii)*** *Amendment of Organizational Documents*. Amend the Charter or Bylaws of Elberton, except as may be required to effect the Merger Conversion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(ix)*** *Affiliate Transactions*. Engage in any transaction with an affiliate, within the meaning of Sections 23A and 23B of the Federal Reserve Act and Regulation W thereunder; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(x)*** *Change in Policies*. Change its lending, investment, deposit or asset and liability management or other banking policies in any material respect, except as may be required by applicable law or regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Specific Prohibitions**. For purposes of this Section 5.01, it shall not be considered in the ordinary course of business for Elberton to do any of the following: (i) make any capital expenditure of $25,000 or more not disclosed in Section 5.01(b) of the Elberton Disclosure Schedule without the prior written consent of Oconee, which consent shall not be unreasonably withheld, delayed or conditioned; (ii) make any sale, assignment, transfer, pledge, hypothecation or other disposition of any assets having a book or market value, whichever is greater, in the aggregate in excess of $25,000, other than pledges of assets to secure government deposits, sales of assets in the normal course of business or issuance of loans; (iii) make any transaction in securities or repurchase agreements, except investments made in the ordinary course of business and conforming to Elberton's investment policy in effect on December 31, 2020; (iv) undertake or enter into any lease, contract or other commitment for its account involving payment of more than $25,000 annually, or containing a material financial commitment and extending beyond six months from the date hereof, other than in the normal course of providing credit to customers

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as part of its banking business, and agreements for professional services incurred in connection with the transactions contemplated by this Agreement; (v) invest in any investment securities other than United States government agencies with a term of one (1) year or less or federal funds; or (vi) originate or acquire any loans or extensions of credit in excess of $400,000, except for any lending commitments outstanding on the date hereof, and except that Oconee shall be deemed to have approved such loan or commitment if it does not object to Elberton within two business clays following Oconee's receipt of notice that Elberton intends to enter into such loan or commitment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Certain Oconee Covenants**. Without limiting the obligations set forth in Section 5.01, as applicable to Oconee and the Bank, from the date of this Agreement to the Closing Date, except as otherwise consented to or approved by Elberton in writing or as permitted or required by this Agreement or the Plan of Conversion, each of Oconee and the Bank will not: (i) take any action which would result in any of the representations and warranties of Oconee and/or the Bank set forth in this Agreement becoming untrue as of any date after the date hereof (applying the standard set forth in Section 6.01(a)) or in any of the conditions set forth in Article VI hereof not being satisfied; (ii) amend the Articles of Incorporation, Certificate of Organization (or similar organizational document) or Bylaws of Oconee or any Oconee Subsidiary, except as may be required to effect the Merger Conversion; or (iii) issue, reserve for issuance, grant, sell or authorize the issuance, or obligate itself to issue or sell, any shares of its capital stock or other securities or any subscriptions, warrants, rights or options to acquire, or any securities convertible into, any shares of its capital stock, except for such issuances, reserves for issuances, grants or sales that are related to and necessary to affect the transactions contemplated by this Agreement and the Plan of Conversion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.02 Access; Confidentiality**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Reasonable Access**. From the date of this Agreement through the Closing Date, Elberton, on one hand, and Oconee and the Bank, on the other hand, shall each afford to the other party (at such party's expense) and its authorized agents and representatives, reasonable access to their respective properties, assets, books and records and personnel, at reasonable hours following reasonable notice; and the officers of Elberton or Oconee and the Bank, as the case may be, will furnish any party making such investigation with such financial and operating data and other information with respect to their respective businesses, properties, assets, books and records and personnel as the party making such investigation shall from time to time reasonably request. Neither Elberton, on one hand, nor Oconee and the Bank, on the other hand, shall be required to provide access to or disclose confidential supervisory information or information where such access or disclosure would jeopardize the attorney-client privilege of the institution in possession or control of such information or would contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement. The parties hereto will make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the proceeding sentence apply.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Conduct of Investigation**. Oconee, the Bank and Elberton agree to conduct such investigation and discussions hereunder in a manner so as not to interfere unreasonably with normal operations and customer and employee relationships of the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Confidentiality**. All information furnished pursuant to this Agreement by each of Elberton, Oconee or the Bank to the other shall be treated as the sole property of the furnishing party. If the transactions contemplated by this Agreement shall not be consummated, each party will, and will cause its agents to, return all documents, records or other materials containing, reflecting, referring to or

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prepared on the basis of such information to be kept confidential, except to the extent such information becomes public through no fault of Oconee, the Bank or Elberton, as the case may be, or any of their representatives or agents and except to the extent disclosure of any such information is legally required. Each party shall give prompt prior notice to the other of any contemplated disclosure where such disclosure is legally required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.03 Regulatory Matters and Consents**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Applications**. Oconee, the Bank and Elberton will promptly prepare all Applications and make all filings for, and use their best efforts to obtain as promptly as practicable after the date hereof, all necessary permits, consents, approvals, waivers and authorizations of all Regulatory Authorities necessary or advisable to consummate the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Required Information**. Each of Oconee and the Bank, on one hand, and Elberton, on the other hand, will furnish the other with all information concerning itself as may be necessary or advisable in connection with any Application or filing made by or on behalf of either party to any Regulatory Authority in connection with the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Communications**. Oconee and the Bank, on one hand, and Elberton, on the other hand, will each promptly furnish the other with copies of written communications addressed to, or received by it from any Regulatory Authority in connection with the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) Cooperation**. Oconee and the Bank, on one hand, and Elberton, on the other hand, will cooperate with each other in the preparation of all information and materials reasonably requested by the other party or necessary to effectuate the Merger Conversion, including: (i) the preparation and mailing of proxy materials and stock offering materials to the Members of Elberton and others upon receipt of required regulatory approvals; (ii) the filing of all Applications and other required or reasonably requested materials with the Regulatory Authorities, with such Applications to be filed within 30 days of the date hereof; (iii) the taking of all actions reasonably necessary to obtain all required regulatory approvals; and (iv) with respect to Oconee and the Bank, if necessary, obtaining a comfort letter from its accounting firm for use in connection with the Merger Conversion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.04 Elberton Members' Meeting**. As soon as reasonably practicable after receipt of the required regulatory approvals, Elberton will take all actions necessary to call, give notice of, and hold a meeting of its Members for the purpose of considering and voting on approval and adoption of this Agreement and the transactions contemplated hereby, including the Merger Conversion. The Board of Directors of Elberton will use its best efforts to obtain a vote approving and adopting this Agreement from its Members. The Elberton Board of Directors will recommend that Elberton Members vote for approval and adoption of this Agreement. The Proxy Statement/Prospectus to be distributed to Elberton Members shall include a statement to the effect that Elberton's Board of Directors has recommended that its Members vote in favor of the approval and adoption of this Agreement. Neither the Elberton Board of Directors nor any committee thereof shall withdraw, amend, modify or propose or resolve to withdraw, amend or modify, in a manner adverse to Oconee, the recommendation of the Elberton Board of Directors that its Members vote in favor of the approval and adoption of this Agreement or make any statement or take any action in connection with the Elberton Members' meeting inconsistent with such recommendation, unless, upon advice of counsel, the Board determines in good faith that its fiduciary duties otherwise require.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.05 Employment Issues and Related Matters**. Oconee hereby agrees that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Employees**. Elberton employees who become full time (other than those designated as temporary) employees of the Bank will be eligible to participate in the same benefit plans and compensatory programs that are generally afforded to other employees of the Bank who hold similar positions, subject to the terms and conditions under which those plans and programs are made available to employees of the Bank; provided, however, that employment with Elberton shall be treated as employment with the Bank for purposes of determining eligibility and vesting (but not benefit accrual) under all benefit plans and programs. For purposes of participation in Oconee bonus plans, profit sharing plans and arrangements, and similar benefits, Elberton employees shall receive credit for length of service accrued with Elberton for purposes of determining eligibility and vesting (but not benefit accrual). For purposes of vacation benefits, service accrued with Elberton shall be credited for determining an employee's eligibility and length of vacation under the Oconee and the Bank's vacation plan, and any vacation taken prior to the Closing Date will be subtracted under the Oconee plan from the employee's vacation entitlement for the calendar year in which the Closing Date occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Indemnification**. From and after the Closing Date, Oconee shall indemnify and hold harmless each present and former director, officer and employee of Elberton determined as of the Closing Date (the "***Indemnified Parties***") against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages or liabilities (collectively, "***Costs***") incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the Closing Date, whether asserted or claimed prior to, at or after the Closing Date (collectively, "***Claims***"), to the fullest extent to which such Indemnified Parties were entitled under OCC regulations and the Charter and Bylaws of Elberton as in effect on the date hereof; provided, however, that all rights to indemnification in respect to any claim asserted or made within such period shall continue until the final disposition of such claim.

Any Indemnified Party wishing to claim indemnification under this Section 5.05(b), upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify Oconee, but the failure to so notify shall not relieve Oconee of any liability it may have to such indemnified Party if such failure does not materially prejudice Oconee. In the event of any such claim, action, suit, proceeding or investigation (whether arising before or after the Closing Date), (i) Oconee shall have the right to assume the defense thereof, and Oconee shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if Oconee elects not to assume such defense, or counsel for the Indemnified Parties advises that there are issues which raise conflicts of interest between Oconee and the Indemnified Parties, the Indemnified Parties may retain counsel which is reasonably satisfactory to Oconee, and Oconee shall pay, promptly as statements therefore are received, the reasonable fees and expenses of such counsel for the Indemnified Parties (which may not exceed one firm in any jurisdiction, unless the use of one counsel for such Indemnified Parties would present such counsel with a conflict of interest), (ii) the indemnified Parties will cooperate in the defense of any such matter, and (iii) Oconee shall not be liable for any settlement effected without its prior written consent, which consent shall not be withheld unreasonably.

In the event that Oconee or any of its respective successors or assigns (i) consolidates with or merges into any other person or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each such case, the successors and assigns of such entity shall assume the obligations set forth in this Section 5.05(b), which obligations are expressly intended to be for the irrevocable benefit of, and shall be enforceable by, each of the Indemnified Parties.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Insurance**. Prior to the Closing Date, Elberton shall purchase (and pay or accrue for) for a period of not less than four (4) years after the Merger Effective Time, past acts and extended reporting period insurance coverage for no less than the four-year period immediately preceding the Merger Effective Time under its (i) current directors and officers insurance (or comparable coverage), (ii) employment practices liability insurance, (iii) current financial institutions bond (or comparable coverage), (iv) errors and omissions insurance and/or bankers professional liability insurance, (v) mortgage errors and omissions liability insurance, (vi) cyber security or comparable coverage, and (vii) fiduciary liability insurance for each of the directors and officers of the Elberton and the Bank currently covered under comparable policies held by the Elberton or the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) Advisory Board**. The Bank shall, effective as of the Closing Date, cause each non-employee director of Elberton, if such persons are willing to serve, to be elected or appointed as members of an Advisory Board to the Bank (the "***Bank Advisory Board***") to be established by the Bank, the function of which shall be to assist the Bank to maintain current Elberton customer relationships. The Bank Advisory Board will be maintained for a period of at least three years and the Bank shall pay each active member of the Bank Advisory Board fees equaling the director fees currently paid by Elberton to its directors, subject to such terms, conditions and requirements as the Bank determines in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e) Retirement Plans or Arrangements**. If requested by Oconee, Elberton agrees to terminate, as of the Closing Date, any of the retirement plans or arrangements which have been disclosed in the Elberton Disclosure Schedule. Subject to the immediately preceding sentence, as soon as practicable after the execution of this Agreement, the parties will take such action in a manner reasonably acceptable to Oconee to provide that such plans or arrangements will terminate after satisfaction of the terms and conditions of this Agreement upon the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.06 No Solicitation**. Elberton shall not nor shall it permit any officer, director or employee of Elberton, or any investment banker, attorney, accountant or other representative retained by Elberton to, directly or indirectly, solicit, encourage, initiate or engage in discussions or negotiations with, or respond favorably to requests for information, inquiries, or other communications from any person other than Oconee concerning the fact of, or the terms and conditions of, this Agreement, or concerning any acquisition of Elberton, or any assets or business of Elberton, except (a) that Elberton's officers and directors may respond to inquiries from customers and Regulatory Authorities in the ordinary course of business, and (b) the foregoing shall not prohibit Elberton or its representatives from informing any person or entity of the restrictions of this Section 5.06 or from contacting any person or entity who has made an inquiry or proposal concerning any acquisition of Elberton, or any assets or business of Elberton, solely for the purpose of seeking clarification of the terms and conditions thereof so as to determine whether such proposal is, or could reasonably be expected to lead to, a proposal that, upon advice of counsel, the Board of Directors of Elberton determines in good faith requires a change in recommendation in accordance with Section 5.04.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.07 Disclosure Obligations**. Oconee and Elberton shall each promptly advise the other party of any change or event having a Material Adverse Effect on it or which it believes would or would be reasonably likely to cause or constitute a material breach of any of its representations, warranties or covenants contained herein. Oconee and Elberton shall each update any schedule provided pursuant to this Agreement as promptly as practicable after the occurrence of an event or fact which, if such event

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or fact had occurred prior to the date of this Agreement, would have been disclosed on such schedule. The delivery of such additional schedules by a party shall not relieve such party from any breach or violation of this Agreement and shall not have any effect for the purposes of determining the satisfaction of the conditions set forth in Sections 6.01 and 6.02 hereof, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.08 Reorganization**. Neither Oconee, the Bank nor Elberton shall knowingly take any action that would, or is reasonably likely to, prevent or impede the Merger Conversion from qualifying as a reorganization under Section 368(a) of the IRC or to cause the loss of any Elberton net operating losses that may be carried forward.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.09 Elberton Undertakings**. Elberton shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Mutual-to-Stock Conversion**. Take all actions necessary with the appropriate Regulatory Authorities and otherwise use its best efforts to cause the conversion of Elberton from a federal mutual savings association to a federal stock savings association;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Delivery of Financial Statements**. Deliver to Oconee, as soon as practicable after the end of each fiscal year and/or calendar quarter, the applicable quarterly Call Report, which quarterly Call Report shall fairly reflect Elberton's financial condition and results of operations for the period presented;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Taxes**. File all federal, state, and local tax returns required to be filed by Elberton on or before the date such returns are due (including any extensions) and pay all taxes shown to be due on such return on or before the date such payment is due; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) Phase I Environmental Audit**. Permit Oconee, if Oconee elects to do so, at Oconee's own expense, to cause a "Phase I environmental audit" to be performed within thirty (30) days after the date hereof, at any physical location owned, leased or occupied by Elberton on the date hereof. Oconee shall provide Elberton with a copy of the report of such "Phase I environmental audit," if conducted. In the event that such "Phase I environmental audit" reveals a Violation or Condition that would have a Material Adverse Effect, Oconee may, without any further obligation hereunder, terminate this Agreement within thirty (30) days after receipt of such report, or elect, at its own expense, to perform a "Phase II environmental audit." Oconee shall provide Elberton with a copy of the report of such "Phase II environmental audit," if conducted. In the event that such "Phase II environmental audit" reveals a Violation or Condition that would have a Material Adverse Effect, Oconee may, without any further obligation hereunder, terminate this Agreement within thirty (30) days after receipt of such report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.10 Public Announcements**. Oconee and Elberton shall mutually agree upon the form and substance of any press release or public communication (including social or digital media) related to this Agreement and the transactions contemplated hereby and upon the form and substances of other public disclosures related thereto, including without limitation, communications to Elberton depositors, Elberton internal announcements and customer disclosures, but nothing contained herein shall prohibit either party from making any disclosure that is required by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.11 Taking of Necessary Actions**. Subject to the terms and conditions herein provided, and in addition to any specific agreements contained herein, each party hereto shall use commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement upon all of the terms and conditions set forth herein.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.12 Issuance of Oconee Common Stock; Regulation A Offering Statement.** The shares of Oconee Common Stock to be offered to qualifying Members of Elberton pursuant to this Agreement in connection with the Merger Conversion shall, on the issuance and delivery to such Members pursuant to this Agreement, be duly authorized, validly issued, fully paid and nonassessable and shall not be issued in violation of the preemptive rights of any person. As soon as practicable after the date of this Agreement, Oconee shall file with the SEC under the Securities Act the Regulation A Offering Statement, of which the Proxy Statement/Prospectus that is to be mailed to eligible Members of Elberton is a part, and shall use it best efforts to cause the Regulation A Offering Statement to become qualified. During the period from the date of public announcement of this Agreement through the last trading day that is used to calculate the Purchase Price under the Plan of Conversion, Oconee shall not, and Oconee shall cause its affiliates to not, engage in any repurchases, acquisitions or similar trades of Oconee Common Stock.

**ARTICLE VI** 

**CONDITIONS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.01 Conditions to Elberton's Obligations under this Agreement**. The obligations of Elberton hereunder shall be subject to satisfaction at or prior to the Closing Date of each of the following conditions, unless waived by Elberton pursuant to Section 8.03 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Representations, Warranties and Covenants**. The obligations of Oconee and the Bank required by this Agreement to be performed by Oconee or the Bank at or prior to the Closing Date shall have been duly performed and complied with in all respects, except where the failure to perform or comply with such obligations would not, individually or in the aggregate, constitute a Material Adverse Effect on Oconee and the Bank, taken as a whole. The representations and warranties of Oconee and the Bank set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except with respect to those representations and warranties specifically made as of an earlier date, in which case such representations and warranties must have been true and correct as of such earlier date), except where the failure of any representations and warranties to be so true and correct would not, either individually or in the aggregate, constitute a Material Adverse Effect on Oconee and the Bank, taken as a whole.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Approval by Members and Sole Stockholder**. This Agreement and the Plan of Conversion shall have been duly approved by the affirmative vote of the Members of Elberton in accordance with applicable OCC regulations and of the sole stockholder of the Bank in accordance with Georgia law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Approvals of Regulatory Authorities**. All approvals of Regulatory Authorities required in connection with the transactions contemplated hereby shall have been received, including, without limitation, the approvals of the Regulatory Authorities referred to in Section 4.05 hereof, which approvals, in the good faith judgment of Elberton's Board of Directors as so advised in writing by outside legal counsel, shall not impose any condition or requirement that would, directly or indirectly, materially adversely affect the terms of the Merger Conversion as they relate to Elberton, its directors or employees; and all notice and waiting periods required thereunder shall have expired or been terminated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) No Litigation or Injunction**. There shall be no suit, action, or other proceeding initiated by any governmental agency seeking to enjoin the consummation of the transactions contemplated hereby or by the Plan of Conversion. There shall not be in effect any order, decree or injunction of a court or agency of competent jurisdiction that enjoins or prohibits consummation of the transactions contemplated hereby or by the Plan of Conversion.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e) No Material Adverse Change**. There shall not have occurred any Material Adverse Effect with respect to Oconee and the Bank, taken as a whole, since December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f) Regulation A Offering Statement Qualified**. The Regulation A Offering Statement shall have been qualified by the SEC under the Securities Act and shall not have been deemed abandoned, withdrawn or otherwise unqualified.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g) Officer's Certificate**. Oconee shall have delivered to Elberton a certificate, dated the Closing Date and signed, without personal liability, by its president and chief executive officer, to the effect that the conditions set forth in subsections (a)-(f) of this Section 6.01 have been satisfied, to the best knowledge of the officer executing the same.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.02 Conditions to Oconee's Obligations under this Agreement**. The obligations of Oconee hereunder shall be subject to satisfaction at or prior to the Closing Date of each of the following conditions, unless waived by Oconee pursuant to Section 8.03 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Representations, Warranties and Covenants**. The obligations of Elberton required by this Agreement to be performed by Elberton at or prior to the Closing Date shall have been duly performed and complied with in all respects, except where the failure to perform or comply with such obligations would not, individually or in the aggregate, constitute a Material Adverse Effect on Elberton. The representations and warranties of Elberton set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except with respect to those representations and warranties specifically made as of an earlier date, in which case such representations and warranties must have been true and correct as of such earlier date), except where the failure of any representations and warranties to be so true and correct would not, either individually or in the aggregate, constitute a Material Adverse Effect on Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Approval by Members and Sole Stockholder**. This Agreement and the Plan of Conversion shall have been duly approved by the affirmative vote of the Members of Elberton in accordance with applicable OCC regulations and of the sole stockholder of the Bank in accordance with Georgia law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Approvals of Regulatory Authorities**. All approvals of Regulatory Authorities required in connection with the transactions contemplated hereby shall have been received, including, without limitation, the approvals of the Regulatory Authorities referred to in Section 3.04 hereof, which approvals, in the good faith judgment of Oconee's Board of Directors as so advised in writing by outside legal counsel, shall not impose (i) any term or condition that could reasonably be expected to have a Material Adverse Effect on Oconee and the Oconee Subsidiaries, taken as a whole, or (ii) any condition or requirement that would, directly or indirectly, materially impair the value of Elberton to Oconee, and all notice and waiting periods required thereunder shall have expired or been terminated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) Regulation A Offering Statement Qualified**. The Regulation A Offering Statement shall have been qualified by the SEC under the Securities Act and shall not have been deemed abandoned, withdrawn or otherwise unqualified.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e) 280G Issues**. Oconee shall be satisfied in its sole discretion, either through mutually agreeable pre-Closing amendments or otherwise, that Elberton shall have taken any and all reasonably necessary steps such that the Merger Conversion will not trigger any "excess parachute payment" (as defined in Section 280G of the IRC) under any employment, severance or change in control agreement, benefit plans, or similar arrangements between Elberton and any officer, director, or employee thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f) No Litigation or Injunction**. There shall be no suit, action, or other proceeding initiated by any governmental agency seeking to enjoin the consummation of the transactions contemplated hereby or by the Plan of Conversion. There shall not be in effect any order, decree or injunction of a court or agency of competent jurisdiction that enjoins or prohibits consummation of the transactions contemplated hereby or by the Plan of Conversion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g) No Material Adverse Change**. There shall not have occurred any Material Adverse Effect with respect to Elberton since December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h) Sale of Subordinated Note**. Elberton shall have divested that certain 6.00% Fixed-to-Floating Rate Subordinated Note Due 2030 made by Oconee and held by Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i) Officer's Certificate**. Elberton shall have delivered to Oconee a certificate, dated the Closing Date and signed, without personal liability, by its president and chief executive officer to the effect that the conditions set forth in subsections (a)-(c) and (e)-(h) of this Section 6.02 have been satisfied, to the best knowledge of the officer executing the same.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(j) Tax Opinion**. Oconee shall have received an opinion of counsel to Oconee that the Merger Conversion shall qualify as one or more tax-free reorganizations under the provisions of Section 368(a) of the IRC for federal tax income purposes.

**ARTICLE VII** 

**TERMINATION, WAIVER AND AMENDMENT** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.01 Termination**. This Agreement may be terminated and the Merger Conversion abandoned on or at any time prior to the Closing Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Mutual Consent**. By the mutual written consent of the parties hereto, if the Board of Directors of each of Elberton and Oconee so determines by vote of a majority of the members of its entire Board; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Unilateral Termination**. By Oconee or Elberton:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(i)*** if there shall have been any material breach of any representation, warranty, covenant or other obligation of Oconee, on the one hand, or Elberton, on the other hand, and such breach cannot be, or shall not have been, remedied within thirty (30) days after receipt by such other party of notice in writing specifying the nature of such breach and requesting that it be remedied; *provided*, however, that neither party shall have the right to terminate this Agreement pursuant to this Section 7.01(b)(i), unless the breach of the representation, warranty or covenant would entitle the party receiving such representation or warranty or benefited by such covenant not to consummate the transactions contemplated hereby under Section 6.01(a) (in the case of a breach of a representation or warranty or covenant by Oconee) or Section 6.02(a) (in the case of a breach of a representation or warranty or covenant by Elberton);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(ii)*** if the Closing Date shall not have occurred prior to August 31, 2023, which date shall be subject to extension by mutual consent, unless the failure of such occurrence shall be due to the failure of the party seeking to terminate this Agreement to perform or observe its obligations set forth in this Agreement required to be performed or observed by such party on or before the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(iii)*** if final action has been taken by a Regulatory Authority whose approval is required in connection with this Agreement and the Plan of Conversion and the transactions contemplated hereby and thereby, which final action (a) has become unappealable and/or (b) does not approve or object to this Agreement (in whole or in part) or the Plan of Conversion or the transactions contemplated hereby or thereby;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(iv)*** if the approval of the Members of Elberton required for the consummation of the Merger Conversion shall not have been obtained by reason of the failure to obtain the required vote at a duly held meeting of Members, or at any adjournment or postponement thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(v)*** if the Plan of Conversion terminates in accordance with its terms, as set forth in Article IX thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(vi)*** if any court of competent jurisdiction or other governmental authority shall have issued an order, decree, or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(vii)*** in the event that any of the conditions precedent to the obligations of Oconee, on the one hand, or Elberton, on the other hand, to consummate the transactions contemplated by this Agreement cannot be satisfied or fulfilled by the date specified in Section 7.01(b)(ii) (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained herein).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Oconee Termination**. By Oconee if: (i) the Elberton Board of Directors does not publicly recommend in the Proxy Statement/Prospectus for the Elberton Members' meeting the approval and adoption of this Agreement or (ii) if, after making such recommendation, the Elberton Board of Directors withdraws, qualifies or revises such recommendation in a manner adverse to Oconee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.02 Termination Fee**. In the event this Agreement is terminated by Oconee pursuant to Section 7.01(c) hereof or by either party pursuant to Section 7.01(b)(iv) after Elberton's Board of Directors fails to recommend (or changes its recommendation) that the Members of Elberton vote in favor of the transactions contemplated by this Agreement and the Plan of Conversion or within 12 months after this Agreement is terminated Elberton shall enter into an agreement to be acquired by or merge with another person or entity or to otherwise undergo a change in control with another person or entity, Elberton shall pay to Oconee a termination fee of $100,000 plus an amount equal to the documented expenses incurred by Oconee in connection with this Agreement and the transactions contemplated herein, subject to a maximum aggregate amount of $750,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.03 Effect of Termination**. If this Agreement is terminated pursuant to Section 7.01 hereof, this Agreement shall forthwith become void (other than Section 5.02(c) and Section 8.01 hereof, which shall remain in full force and effect), and there shall be no further liability on the part of Oconee or Elberton to the other except as expressly provided in this Article VII; *provided, however*, notwithstanding anything to the contrary herein, no party hereto shall be relieved or released from any liabilities or damages arising out of a willful breach of any provision contained in this Agreement.

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**ARTICLE VIII** 

**MISCELLANEOUS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.01 Expenses**. Except as provided in Section 7.02 hereof, each party will pay its own expenses in connection with the preparation of this Agreement. If the transactions contemplated by this Agreement are not consummated, each party hereto shall bear and pay all costs and expenses incurred by it in connection with this Agreement and the transactions contemplated hereby including filing fees, legal fees, accounting fees and other expenses; provided, however, that in the event of a termination of this Agreement resulting from a willful breach of a representation, warranty, covenant or undertaking, the party committing such breach shall be liable for the other party's expenses without prejudice to any other rights or remedies as may be available to the non-breaching party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.02 Non-Survival of Representations, Warranties and Covenants**. All representations, warranties, agreements and covenants shall terminate on the Closing Date, except to the extent specifically provided in Sections 5.02(c) ("*Confidentiality*"), 5.05 ("*Employment Issues and Related Matters*") and 8.01 ("*Expenses*"). No representation, warranty or covenant shall be interpreted or construed to confer rights upon any third party, except the covenants of Oconee contained in Section 5.05(b) ("*Indemnification*") hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.03 Amendment, Extension and Waiver**. Subject to applicable law, at any time prior to the consummation of the transactions contemplated by this Agreement, the parties may (i) amend, restate or supplement this Agreement; (ii) extend the time for the performance of any of the obligations or other acts of either party hereto; (iii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto; or (iv) waive compliance with any of the agreements or conditions contained in Articles V and VI hereof or otherwise. This Agreement may not be amended, except by an instrument in writing signed by duly authorized officers on behalf of the parties hereto. Any agreement on the part of a party hereto to any extension or waiver shall be valid only if set forth in an instrument in writing signed by a duly authorized officer on behalf of such party, but such waiver or failure to insist on strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.04 Entire Agreement**. This Agreement, including the documents and other writings referred to herein or delivered pursuant hereto, contains the entire agreement and understanding of the parties with respect to its subject matter. This Agreement supersedes all prior arrangements and understandings between the parties, both written and oral with respect to its subject matter. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors; provided, however, that nothing in this Agreement, except as provided in Section 5.05(b), expressed or implied, is intended to confer upon any party, other than the parties hereto and their respective successors, any rights, remedies, obligations or liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.05 No Assignment**. Neither party hereto may assign any of its rights or obligations hereunder to any other person without the prior written consent of the other party hereto.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.06 Notices**. All notices or other communications hereunder shall be in writing and shall be deemed given if delivered personally, mailed by prepaid registered or certified mail (return receipt requested), sent by overnight national delivery service or sent by email, addressed as follows or addressed to such other address as may be specified by any party in a notice delivered pursuant to this Section 8.06:

If to Oconee or the Bank:

Oconee Financial Corp.

35 North Main Street

Watkinsville, Georgia 30677

Attention: T. Neil Stevens

President and Chief Executive Officer

Email: <u>nstevens@oconeestatebank.com</u>

With a copy to:

Alston & Bird LLP

One Atlantic Center

1201 West Peachtree Street, Suite 4900

Atlanta, Georgia 30309

Attention: Mark Kanaly

Email: <u>mark.kanaly@alston.com</u>

If to Elberton:

Elberton Federal Savings and Loan Association

Six Church Street

Elberton, Georgia 30635

Attention: R. Daniel Graves

President and Chief Executive Officer

Email: <u>rdg@elberton.net</u>

With a copy to:

Fenimore, Kay & Harrison, LLP

191 Peachtree Street, NE, Suite 849

Atlanta, Georgia 30303

Attention: Jonathan S. Hightower

Email: <u>JHightower@fkhpartners.com</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.07 Captions**. The captions contained in this Agreement are for reference purposes only and are not part of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.08 Counterparts**. This Agreement may be executed in any number of counterparts (including by means of telecopied signature pages, electronic transmission in portable document format (.pdf) or other electronic signature methods, including but not limited to Docusign<sup>™</sup>), and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute one instrument. Telecopied signatures or signatures delivered by electronic transmission shall have the same effect as originals.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.09 Severability**. In case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein, unless the deletion of such provision or provisions would result in such a material change as to cause continued performance of this Agreement as contemplated herein to be unreasonable or materially and adversely frustrate the objectives of the parties as expressed in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.10 Governing Law**. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Georgia, without reference to its conflicts of laws principles, and with the laws of the United States, as applicable.

*[Signature Page Follows]* 

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IN WITNESS WHEREOF, Oconee, the Bank and Elberton have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written.

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| | |
|:---|:---|
| **OCONEE FINANCIAL CORPORATION** | **OCONEE FINANCIAL CORPORATION** |
| By: | /s/ T. Neil Stevens |
| T. Neil Stevens<br> President and Chief Executive Officer | T. Neil Stevens<br> President and Chief Executive Officer |

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| | |
|:---|:---|
| **OCONEE STATE BANK** | **OCONEE STATE BANK** |
| By: | /s/ T. Neil Stevens |
| T. Neil Stevens<br> President and Chief Executive Officer | T. Neil Stevens<br> President and Chief Executive Officer |

---

---

| | |
|:---|:---|
| **ELBERTON FEDERAL SAVINGS AND LOAN ASSOCIATION** | **ELBERTON FEDERAL SAVINGS AND LOAN ASSOCIATION** |
| By: | /s/ R. Daniel Graves |
|  R. Daniel Graves<br> President and Chief Executive Officer | R. Daniel Graves<br> President and Chief Executive Officer |

---

***Signature Page to Amended and Restated Agreement and Plan of Merger Conversion***

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**<u>EXHIBIT A</u>**

**PLAN OF CONVERSION MERGER OF** 

**ELBERTON FEDERAL SAVINGS & LOAN** 

**ASSOCIATION WITH** 

**OCONEE STATE BANK** 

**I.**  **<u>GENERAL</u>** 

On May 27, 2021, the Boards of Directors of Elberton Federal Savings & Loan Association ("Elberton"), Oconee Financial Corporation ("Oconee") and Oconee State Bank (the "Bank"), respectively, adopted and approved this Plan of Conversion Merger (the "Plan") and the related Agreement and Plan of Conversion Merger (as amended and restated as of December 15, 2022, the "Agreement"), subject to regulatory and Member approvals, whereby Elberton proposes to convert from a federally-chartered mutual savings association to a federally-chartered stock savings association, pursuant to the rules and regulations of the Office of the Comptroller of the Currency and any successor thereto (the "OCC"). This Plan and the Agreement provide that Elberton shall merge with and into the Bank concurrently with Elberton's conversion to stock form and the issuance of shares of common stock of Oconee to depositors and borrowers of Elberton and the community served by Elberton, pursuant to the terms and conditions of this Plan and the Agreement (the "Conversion Merger").

The Board of Directors of Elberton has concluded, in consultation with its advisors, that the Conversion Merger is in the best interests of Elberton, the depositors and borrowers of Elberton, and the community served by Elberton. The Conversion Merger will further the interests of the depositors and borrowers of Elberton and the community served by Elberton by promoting a program of sound growth, increasing funds and capital available for lending, and providing additional resources for expansion of services, as well as by providing an enhanced opportunity for attracting and retaining qualified personnel. In making these determinations, the Board of Directors of Elberton concluded that Elberton does not have the management or financial resources to pursue a standard mutual-to-stock conversion and that the Conversion Merger is the best means to serve the interests of the Members of Elberton. The Board of Directors of the Bank as well as the Board of Directors of its parent holding company, Oconee, have determined that the Conversion Merger is in the best interests of the Bank and the shareholders of Oconee.

This Plan and the Agreement are subject to the receipt of the approval or non-objection of the OCC, the FDIC, the GDBF and, if not waived, the FRB and, with respect to the Plan, the approval of the Members of Elberton.

**II.**  **<u>DEFINITIONS</u>** 

<u>Acting In Concert.</u> The phrase "Acting in Concert" means (i) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement or understanding; or (ii) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. A Person which acts in concert with another Person ("other party") shall also be deemed to be acting in concert with any Person who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated and participants or beneficiaries of any such tax-qualified employee stock benefit plan will not be deemed to be acting in concert solely as a result of their common interests as participants or beneficiaries. When Persons act together for such purpose, their group is deemed to have acquired their stock. The determination of whether a group is Acting in Concert shall be made solely by the Boards of

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Directors of Oconee and Elberton or Officers delegated by such Boards and may be based on any evidence upon which the Boards or such delegatee chooses to rely, including, without limitation, joint account relationships or the fact that such Persons share a common address (whether or not related by blood or marriage) or have filed joint Schedules 13D or Schedules 13G with the SEC with respect to other companies. Directors of Elberton, Oconee and the Bank shall not be deemed to be Acting in Concert solely as a result of their membership on any such board or boards.

<u>Aggregate Subscription Amount</u>. As to each subscriber in the Subscription Offering and each purchaser in the Community Offering, the total dollar amount submitted by such subscriber or purchaser in payment for the total number of shares of Oconee Conversion Stock covered by the subscription or purchase order submitted by such subscriber or purchaser.

<u>Affiliate</u>. A Person who, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the Person specified.

<u>Agreement</u>. The Agreement and Plan of Conversion Merger by and among Elberton, the Bank and Oconee to which this Plan is an exhibit.

<u>Articles of Merger</u>. The articles of merger to be filed with the Georgia Secretary of State to effect the Bank Merger.

<u>Associate</u>. The term "associate," when used to indicate a relationship with any Person, means (i) any corporation or organization (other than Elberton, the Bank, Oconee or a majority- owned subsidiary of Oconee) of which such Person is an officer, director or partner or is, directly or indirectly, the beneficial owner of ten percent or more of any class of equity securities, (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, provided, however, that such term will not include any tax-qualified employee stock benefit plan of Oconee or the Bank in which such person has a substantial beneficial interest or serves as a trustee in a similar fiduciary capacity, and (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same home as such Person or who is a Director or Officer of Elberton, the Bank, Oconee or any subsidiary of Oconee.

<u>Bank</u>. Oconee State Bank, a Georgia-chartered commercial bank headquartered in Watkinsville, Georgia.

<u>Bank Merger</u>. The merger of Elberton with and into the Bank.

<u>Community Offering</u>. The offering of any shares unsubscribed in the Subscription Offering to Persons as may be selected by Oconee and Elberton in their sole discretion.

<u>Conversion Merger</u>. The change of Elberton's Charter and Bylaws to those of a federally-chartered stock savings association, the Bank Merger, and the issuance and sale by Oconee of the Oconee Conversion Stock, all as provided for in this Plan and in the Agreement.

<u>Community Resident</u>. The term "Community Resident" has the meaning set forth in <u>Section V.C</u>.

<u>Deposit Account</u>. Any withdrawable or repurchaseable account or deposit in Elberton, including Savings Accounts and demand accounts, as defined in 12 C.F.R. 161.16, provided that the term Deposit Account shall not include any escrow accounts maintained at Elberton.

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<u>Director</u>. A director of Elberton, Oconee or the Bank, as the sense of the context provides.

<u>Eligibility Record Date</u>. The close of business on [•].

<u>Eligible Account Holder</u>. Any Person holding a Qualifying Deposit in Elberton on the Eligibility Record Date.

<u>Eligible Oconee Shareholders</u>. The term "Eligible Oconee Shareholders" has the meaning set forth in Section V.C.

<u>Estimated Valuation Range</u>. The range of the estimated proforma market value of Elberton as determined by the Independent Appraiser prior to the Subscription Offering and as it may be amended from time to time thereafter.

<u>FDIC</u>. The Federal Deposit Insurance Corporation.

<u>FRB</u>. The Board of Governors of the Federal Reserve System.

<u>GDBF</u>. The Georgia Department of Banking and Finance.

<u>Independent Appraiser</u>. An independent investment banking or financial consulting firm that is experienced and expert in the area of thrift institution appraisals and that is retained by Elberton to prepare an appraisal of the proforma market value of Elberton.

<u>Liquidation Account</u>. The account established by the Oconee representing the liquidation interests to be received by Eligible Account Holders and Supplemental Eligible Account Holders in exchange for their interest in Elberton in connection with the Conversion Merger.

<u>Market Maker</u>. A dealer (i.e., any Person who engages directly or indirectly as agent, broker or principal in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another Person) who, with respect to a particular security, (i) regularly publishes bona fide, competitive bid and offer quotations in a recognized inter-dealer quotation system; or (ii) furnishes bona fide competitive bid and offer quotations on request; and (iii) is ready, willing, and able to effect transactions in reasonable quantities at his quoted prices with other brokers or dealers.

<u>Member</u>. Any Person or entity that qualifies as a member of Elberton pursuant to its mutual Charter and Bylaws.

<u>OCC</u>. The Office of the Comptroller of the Currency of the Department of Treasury and any successor thereto.

<u>Oconee</u>. Oconee Financial Corporation, a Georgia corporation that is the sole stockholder of the Bank and that, upon completion of the Conversion Merger, shall own all of the outstanding common stock of the Resulting Institution.

<u>Oconee Common Stock</u>. Shares of common stock, par value $2.00 per share, of Oconee.

<u>Oconee Conversion Stock</u>. Shares of Oconee Common Stock to be offered, issued and sold by Oconee as a part of the Conversion Merger.

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<u>Offering Statement</u>. The Offering Statement on Form 1-A to be filed by Oconee with the SEC pursuant to which the Oconee Conversion Stock will be offered in the Subscription Offering and the Community Offering in accordance with this Plan.

<u>Officer</u>. The chairman of the board, president, chief executive officer, vice president, secretary and treasurer or principal financial officer, comptroller or principal accounting officer and any other person performing similar functions with respect to any organization, whether incorporated or unincorporated.

<u>Order Forms</u>. Forms to be used to exercise Subscription Rights in the Subscription Offering and to submit purchase orders in the Community Offering.

<u>Other Member</u>. Any person who is a Member of Elberton (other than Eligible Account Holders or Supplemental Eligible Account Holders) as of the Voting Record Date.

<u>Person</u>. An individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust (including Individual Retirement Accounts and KEOGH Accounts), any unincorporated organization, or a government or political subdivision thereof.

<u>Plan</u>. This Plan of Conversion Merger of Elberton, Oconee and the Bank, including any amendment approved as provided in this Plan.

<u>Purchase Price</u>. The price per share, determined as provided in Section V of the Plan, at which Oconee Conversion Stock will be issued and sold in the Conversion Merger.

<u>Qualifying Deposit</u>. The aggregate balance of all Deposit Accounts of an (i) Eligible Account Holder of $50 or more in Elberton at the close of business on the Eligibility Record Date or (ii) a supplemental Eligible Account Holder of $50 or more in Elberton on the Supplemental Eligibility Record Date.

<u>Resulting Institution</u>. The Bank, which shall be the Resulting Institution in the Bank Merger.

<u>Elberton</u>. Elberton Federal Savings and Loan Association, a federally-chartered mutual savings association headquartered in Elberton, Georgia, which, pursuant to the terms hereof, will consummate the Conversion Merger.

<u>Savings Account</u>. The term Savings Account includes savings accounts, as defined in 12 C.F.R. Section 161.42, in Elberton, and includes certificates of deposit.

<u>SEC</u>. The United States Securities and Exchange Commission.

<u>Special Meeting</u>. The Special Meeting of Members of Elberton, including any adjournments thereof, to be called for the purpose of considering and voting upon this Plan.

<u>Subscription Offering</u>. The offering of shares of Oconee Conversion Stock for subscription and purchase pursuant to Section V.B of the Plan.

<u>Subscription Rights</u>. Non-transferable, non-negotiable, personal rights of Eligible Account Holders, Supplemental Eligible Account Holders and Other Members, to subscribe for shares of Oconee Conversion Stock in the Subscription Offering.

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<u>Supplemental Eligibility Record Date</u>. The last day of the calendar quarter preceding approval of this Plan by the OCC.

<u>Supplemental Eligible Account Holder</u>. Any person holding a Qualifying Deposit in Elberton (other than an Officer or Director and their associates) on the Supplemental Eligibility Record Date.

<u>Voting Record Date</u>. The date fixed by the Board of Directors of Elberton in accordance with Elberton's Bylaws and OCC regulations for determining the Members eligible to vote at the Special Meeting.

**III.**  **<u>STEPS PRIOR TO SUBMISSION OF PLAN OF MERGER CONVERSION TO THE MEMBERS FOR APPROVAL</u>** 

Prior to submission of this Plan to its Members for approval, Elberton must receive the approval of the OCC of its application to convert to the stock form of organization and to concurrently merge with and into the Bank. The following steps must be taken prior to receipt of such regulatory approval:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Board of Directors of Elberton shall adopt the Plan by not less than a two-thirds vote.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Elberton shall notify its Members of the adoption of the Plan by publishing a statement in a newspaper having a general circulation in the community in which Elberton maintains its office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Copies of the Plan adopted by the Board of Directors of Elberton shall be made available for inspection at the office of Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Elberton will promptly cause an Application for Approval of Conversion on Form AC to be prepared and filed with the OCC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. The Bank will promptly cause an Interagency Bank Merger Application to be prepared and filed with the GDBF and the FDIC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. Oconee will promptly request a waiver from the FRB of the application requirements of the Bank Holding Company Act of 1956, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. Oconee will promptly cause an Offering Statement on Form 1-A pursuant to the Securities Act of 1933, as amended, to be prepared and filed with the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. At the time and in the manner prescribed by regulations of the OCC, Elberton, the Bank and Oconee, as applicable, shall post in their offices and publish in newspapers of general circulation notices of the filing of the applications made by each of them.

**IV.**  **<u>CONVERSION MERGER PROCEDURE</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Following approval or non-objection of the applications for approval of the Conversion Merger or notices by the OCC, the FDIC, the GDBF and, if not waived, the FRB, this Plan will be submitted by Elberton to a vote of its Members at the Special Meeting. The Members must approve the Plan by a majority of the total outstanding votes eligible to be cast at the Special Meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Oconee Conversion Stock will be offered simultaneously in the Subscription Offering to the Eligible Account Holders, Supplemental Eligible Account Holders and Other Members in the respective priorities set forth in Section V.B of this Plan. The Subscription Offering may be commenced as early as the mailing of the Proxy Statement for the Special Meeting.

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Any shares of Oconee Conversion Stock not subscribed for in the Subscription Offering may be offered for sale in the Community Offering, as provided in Section V.C of this Plan, if necessary and feasible. The Subscription Offering may be commenced prior to the Special Meeting and, in that event, the Community Offering may also be commenced prior to the Special Meeting. The offer and sale of Oconee Conversion Stock prior to the Special Meeting shall, however, be conditioned upon approval of the Plan by the Members.

The period for the Subscription Offering and the Community Offering will be [TBD], unless extended by Oconee and Elberton. Oconee and Elberton may jointly seek one or more extensions if necessary to complete the sale of all shares of Oconee Conversion Stock. In connection with any such extensions, subscribers and other purchasers will be permitted to increase, decrease or rescind their subscriptions or purchase orders to the extent required by the OCC in approving the extensions. Completion of the sale of all shares of Oconee Conversion Stock is required within 24 months after the date of the Special Meeting, unless a longer period is permitted by governing laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Upon consummation of the sale of at least the required minimum of Oconee Conversion Stock, Oconee will purchase from Elberton all of the capital stock to be issued by Elberton in its conversion in exchange for the consideration set forth in the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. After all of the foregoing actions, events and determinations have taken place, the Conversion Merger shall be effected by the filing of Articles of Merger with the Georgia Secretary of State with respect to the merger of Elberton with and into the Bank.

**V.** **STOCK OFFERING** 

For purposes of this Section V, the Directors and Officers of Oconee, the Bank and Elberton shall not be deemed to be Associates or a group acting in concert solely as a result of their serving in such capacities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A. Total Dollar Amount of Shares and Purchase Price of Oconee Conversion Stock** 

All shares of Oconee Conversion Stock sold in the Conversion Merger shall be sold at the same price per share. The total dollar amount for which all shares will be sold in the Conversion Merger shall be no less than 15% below the Estimated Valuation Range and no more than 15% above the Estimated Valuation Range.

The Purchase Price will be a price equal to, but not less than 85% of, the twenty-day average of the daily arithmetic mean of the closing bid and closing asked quotations on the OTCQX market operated by the OTC Markets Group, Inc. of Oconee Common Stock commencing one week prior to the date of the Subscription Offering, rounded to the nearest cent (with any amount equal to $0.005 rounded to the next higher $0.01).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B. Subscription Rights** 

Non-transferable Subscription Rights to purchase shares of Oconee Conversion Stock will be issued without payment therefor to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members of Elberton as set forth below.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Preference Category No. l: Eligible Account Holders</u>

Each Eligible Account Holder shall receive non-transferable Subscription Rights to subscribe for shares of Oconee Conversion Stock in an amount equal to the greater of 5.0% of the shares of Oconee Conversion Stock sold in the Conversion Merger or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of Oconee Conversion Stock to be issued in the Conversion Merger by a fraction of which the numerator is the amount of the Qualifying Deposit of the Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders in Elberton in each case on the Eligibility Record Date. If sufficient shares are not available, shares shall be allocated first to permit each subscribing Eligible Account Holder, to the extent possible, to purchase the lesser of 100 shares or the number of shares subscribed for, and thereafter be allocated among each subscribing Eligible Account Holder whose subscription remains unsatisfied on a pro rata basis in the same proportion that his Qualifying Deposit bears to the total Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unsatisfied, provided that no fractional shares shall be issued.

Non-transferable Subscription Rights to purchase Oconee Conversion Stock received by Directors and Officers of Elberton and their Associates, based on their increased deposits in Elberton in the one-year period preceding the Eligibility Record Date, shall be subordinated to all other subscriptions involving the exercise of non-transferable Subscription Rights of Eligible Account Holders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Preference Category No. 2: Supplemental Eligible Account Holders</u>

In the event that the Eligibility Record Date is more than 15 months prior to the date of the latest amendment to the Application filed prior to OCC approval as described in the "Supplemental Eligibility Record Date" definition in 12 C.F.R. § 192.25, then, and only in that event, each Supplemental Eligible Account Holder shall receive non-transferable Subscription Rights to subscribe for shares of Oconee Conversion Stock in an amount equal to the greater of 5.0% of the shares of Oconee Conversion Stock sold in the Conversion Merger or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of Oconee Conversion Stock to be issued in the Conversion Merger by a fraction of which the numerator is the amount of the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders in Elberton in each case on the Supplemental Eligibility Record Date. Subscription Rights received pursuant to this category shall be subordinated to all Subscription Rights received by Eligible Account Holders pursuant to Category No. 1 above.

In the event of an oversubscription for shares under the provisions of this subparagraph, the shares available shall be allocated first to permit each subscribing Supplemental Eligible Account Holder to the extent possible, to purchase a number of shares sufficient to make his total allocation equal to the lesser of the amount subscribed for or 100 shares, and thereafter among each subscribing Supplemental Eligible Account Holder pro rata in the same proportion that his Qualifying Deposit bears to the total Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unsatisfied, provided that no fractional shares shall be issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Preference Category No. 3: Other Members</u>

Each Other Member shall receive non-transferable Subscription Rights to subscribe for shares of Oconee Conversion Stock remaining after satisfying the subscriptions provided for under Category Nos. 1 and 2 above, subject to the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Each Other Member shall be entitled to subscribe for an amount of shares equal to the greater of 5.0% of the shares of Oconee Conversion Stock sold in the Conversion Merger to the extent that Oconee Conversion Stock is available.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. In the event of an oversubscription for shares under the provisions of this subparagraph, the shares available shall be allocated among the subscribing Other Members so as to permit each such Other Member, to the extent possible, to purchase a number of shares which will make his or her total allocation equal to the lesser of the number of shares subscribed for or 100 shares. Any remaining shares shall be allocated among subscribing Other Members whose orders remain unfilled on a pro rata basis in the same proportion as each such Other Member's subscription bears to the total subscriptions of all such subscribing Other Members, provided that no fractional shares shall be issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C. Community Offering** 

The amount, if any, of Oconee Conversion Stock not subscribed for in the Subscription Offering may be offered for sale in a Community Offering. The Community Offering will involve an offering of the unsubscribed amount of shares of Oconee Conversion Stock directly to the general public. Shares will be available for purchase by members of the general public to whom a Prospectus is delivered by Oconee or on its behalf, with preference given first to natural persons, including trusts of natural persons, residing in Elberton, Georgia or Elbert County, Georgia ("Community Resident"), and then to shareholders of record of Oconee on the last day of the month immediately preceding the effectiveness of the Offering Statement filed by Oconee to register the shares of Oconee Conversion Stock ("Eligible Oconee Shareholders"). The Community Offering, if any, shall be for a period of [TBD] unless extended by Oconee and Elberton, and shall commence concurrently with, during or promptly after the Subscription Offering.

Oconee may use an investment banking firm or firms on a best efforts basis to sell Oconee Conversion Stock in the Subscription Offering and the Community Offering. Oconee may pay a commission or other fee to such investment banking firm or firms as to the shares sold by such firm or firms in the Subscription Offering and the Community Offering and may also reimburse such firm or firms for expenses incurred in connection with the sale. The Oconee Conversion Stock will be offered and sold in the Community Offering, in accordance with OCC regulations, so as to achieve the widest distribution of the Oconee Conversion Stock.

Oconee, in its sole and absolute discretion, may reject, in whole or in part, purchase orders received from any Person under this section.

In the event of an oversubscription for shares of Oconee Conversion Stock in the Community Offering, the available shares shall be allocated first to each Community Resident whose order is accepted in an amount equal to the lesser of 100 shares or the number of shares subscribed for by each such Community Resident, if possible. Thereafter, unallocated shares shall be allocated among the Community Residents whose accepted orders remain unsatisfied on an equal number of shares per order basis until all available shares have been allocated, provided that no fractional shares shall be issued. If there are any shares remaining after all accepted orders by Community Residents have been satisfied, such remaining shares shall be allocated first to Eligible Oconee Shareholders who purchase in the Community Offering, applying the same allocation described above for Community Residents, and if any shares remain, thereafter to other members of the general public who purchase in the Community Offering, applying the same allocation methodology as described above.

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The amount of Conversion Stock that any Person may purchase in the Community Offering shall be 5.0% of the shares of Oconee Conversion Stock sold in the Conversion Merger, provided further that, to the extent applicable, and subject to the preferences set forth this Section V.C and the limitations on purchases of Oconee Conversion Stock set forth in this Section V.C and Section V.D of this Plan, orders for Conversion Stock in the Community Offering shall first be filled to a maximum of 2% of the total number of shares of Oconee Conversion Stock sold in the Conversion Merger and thereafter any remaining shares shall be allocated on an equal number of shares per order basis until all available shares have been allocated, provided no fractional shares shall be issued.

In the event that any insignificant residue of shares of Oconee Conversion Stock is not sold in the Subscription Offering, Community Offering, Oconee and Elberton shall use their best efforts to obtain other purchasers for such shares in such manner and upon such conditions as may be satisfactory to the OCC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D. Additional Limitations Upon Purchases of Shares of Oconee Conversion Stock** 

The following additional limitations shall be imposed on all purchases of Oconee Conversion Stock in the Conversion Merger:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. In addition to the other restrictions and limitations set forth herein, the maximum amount of Oconee Conversion Stock which any Person, together with any Associate or group of Persons acting in concert, may, directly or indirectly, subscribe for or purchase in the Offerings shall not exceed 5.0% of the shares of Oconee Conversion Stock sold in the Conversion Merger.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Directors and Officers of Elberton and their Associates may not purchase in all categories in the Conversion Merger an aggregate of more than 35.0% of Oconee Conversion Stock, including any shares which may be issued in the event of an increase in the maximum of the Estimated Valuation Range to reflect changes in market, financial and economic conditions after commencement of the Subscription Offering and prior to completion of the Conversion Merger.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. No Person may purchase fewer than 25 shares of Oconee Conversion Stock in the Conversion Merger, to the extent such shares are available; provided, however, that if the Purchase Price is greater than $20.00 per share, such minimum number of shares shall be adjusted so that the Aggregate Subscription Amount for such minimum shares will not exceed $500.00.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. In addition to the other restrictions and limitations set forth herein, the maximum aggregate amount of Oconee Conversion Stock which any Person, together with any Associate or group of Persons acting in concert may, directly or indirectly, subscribe for or purchase in the Offerings, when combined with any shares of Oconee Common Stock already owned by such Person(s), shall not exceed 9.9% of the total number of shares of Oconee Common Stock to be outstanding upon consummation of the Conversion Merger.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Subject to any required regulatory approval and the requirements of applicable laws and regulations, but without further approval of the Members, Elberton and Oconee may decrease the individual or the aggregate purchase limitations set forth herein or, as provided herein, increase such limitations to a percentage which does not exceed 9.99% of the total shares of Oconee Conversion Stock sold in the Conversion Merger, whether prior to, during or after the Subscription Offering or Community Offering. In the event that an individual purchase limitation is increased after commencement of the Subscription Offering or any other offering, Elberton and Oconee shall permit any Person who subscribed for the maximum number of shares of Oconee Conversion Stock in the Subscription Offering or, in the discretion of Oconee and Elberton, the Community Offering, and who indicated a desire to be resolicited

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on the Order Form, to purchase an additional number of shares, so that such Person shall be permitted to subscribe for the then maximum number of shares permitted to be subscribed for by such Person, subject to the rights and preferences of any Person who has priority Subscription Rights. In the event of a resolicitation of such subscribers, Elberton and Oconee shall have the right, in their sole discretion, to require such persons to supply immediately available funds for the purchase of additional shares of Oconee Conversion Stock. Such persons will be prohibited from paying with cash or a personal check, but Elberton and Oconee may allow payment by wire transfer. In the event that any of the individual or aggregate purchase limitations are decreased after commencement of the Subscription Offering or any other offering, the orders of any Person who subscribed for more than the new purchase limitation shall be decreased by the minimum amount necessary so that such Person shall be in compliance with the then maximum number of shares permitted to be subscribed for by such Person. The maximum purchase limitations may be increased to 9.99%, provided that orders for Oconee Conversion Stock exceeding 5.0% of the shares of Oconee Conversion Stock sold in the Conversion Merger shall not exceed in the aggregate 10.0% of the total shares of Oconee Conversion Stock sold in the Conversion Merger.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Elberton and Oconee shall have the right to take all such action as they may, in their sole discretion, deem necessary, appropriate or advisable in order to monitor and enforce the terms, conditions, limitations and restrictions contained in this Section V.D and elsewhere in this Plan and the terms, conditions and representations contained in the Order Form, including, but not limited to, the absolute right (subject only to any necessary regulatory approvals or concurrences) to reject, limit or revoke acceptance of any subscription or order and to delay, terminate or refuse to consummate any sale of Oconee Conversion Stock which they believe might violate, or is designed to, or is any part of a plan to, evade or circumvent such terms, conditions, limitations, restrictions and representations. Any such action shall be final, conclusive and binding on all persons, and the Elberton and Oconee and their respective Boards shall be free from any liability to any Person on account of any such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E. Restrictions and Other Characteristics of Oconee Conversion Stock Being Sold** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. *Transferability*. Shares of Oconee Conversion Stock purchased in the Conversion Merger will be transferable without restriction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. *Voting Rights*. Upon completion of the Conversion Merger, neither holders of deposit accounts nor borrower Members of Elberton will have voting rights in the Resulting Institution or Oconee. Exclusive voting rights as to the Resulting Institution will be vested in Oconee, as the sole stockholder of the Resulting Institution. Voting rights as to Oconee will be held exclusively by the stockholders thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F. Exercise of Subscription Rights; Order Forms** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. If the Subscription Offering occurs concurrently with the solicitation of proxies for the Special Meeting, the prospectus and Order Form may be sent to each Eligible Account Holder, Supplemental Eligible Account Holder and Other Elberton Member, at his last known address as shown on the records of Elberton as of the Voting Record Date. However, Elberton may, and if the Subscription Offering commences after the Special Meeting, Elberton shall, furnish a prospectus and Order Form only to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members who have returned to Elberton by a specified date prior to the commencement of the Subscription Offering a post card or other written communication requesting a prospectus and Order Form. In such event, Elberton shall provide a postage-paid post card for this purpose and make appropriate disclosure in its proxy statement for the solicitation of proxies to be voted at the Special Meeting and/or letter sent in lieu of the proxy statement to those Eligible Account Holders, and Supplemental Eligible Account Holders who are not Members on the Voting Record Date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Each Order Form will be preceded or accompanied by a prospectus describing Oconee and the Resulting Institution and the shares of Oconee Conversion Stock being offered for subscription and containing all other information required by the OCC or the SEC or otherwise necessary to enable Persons to make informed investment decisions regarding the purchase of Oconee Conversion Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The Order Forms (or accompanying instructions) used for the Subscription Offering will contain, among other things, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. A clear and intelligible explanation of the Subscription Rights granted under the Plan to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members of Elberton;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. A specified expiration date by which Order Forms must be returned to and actually received by Elberton, Oconee or their representative for purposes of exercising Subscription Rights, which date will be not less than 20 days and not more than 45 days after the Order Forms are initially mailed to potential subscribers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. A statement of the minimum and maximum number of shares of Oconee Conversion Stock that may be subscribed for under the Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. A specifically designated blank space for indicating the number of shares and the aggregate dollar amount of shares being subscribed for;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. A set of detailed instructions as to how to complete the Order Form, including a statement as to the available alternative methods of payment for the shares being subscribed for;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Specifically designated blank spaces for dating and signing the Order Form;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. An acknowledgment that the subscriber has received the prospectus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. A statement of the consequences of failing to properly complete and return the Order Form, including a statement that the Subscription Rights will expire on the expiration date specified on the Order Form unless such expiration date is extended by Oconee and Elberton, and that the Subscription Rights may be exercised only by delivering the Order Form, properly completed and executed, to Oconee, Elberton or their representative by the expiration date, together with required payment of the Aggregate Subscription Amount for all Oconee Conversion Stock subscribed for;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. A statement that the Subscription Rights are non-transferable and that all shares of Oconee Conversion Stock subscribed for upon exercise of Subscription Rights must be purchased on behalf of the Person exercising the Subscription Rights for his own account; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. A statement that, after receipt by Oconee, Elberton or their representative, a subscription may not be modified, withdrawn or cancelled without the consent of Oconee or Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**G. Method of Payment** 

In the Subscription Offering and the Community Offering, payment for all shares of Oconee Conversion Stock subscribed for must be received in full by Oconee, Elberton or their representatives, together with properly executed and completed Order Forms. Payment may be made in cash (if presented in Person), by personal check, bank check or money order, or, if the subscriber has a Deposit Account in Elberton (including a certificate of deposit), the subscriber may authorize Elberton to withdraw the amount of the Aggregate Subscription Amount from the subscriber's account.

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If a subscriber authorizes Elberton to withdraw the amount of the Aggregate Subscription Amount from his account, the funds will continue to earn interest, but may not be used by the subscriber until all Oconee Conversion Stock has been sold or this Plan is terminated, whichever is earlier. Elberton will allow subscribers to purchase shares by withdrawing funds from certificate accounts without the assessment of early withdrawal penalties. In the case of early withdrawal of only a portion of such account, the certificate evidencing such account shall be cancelled if the remaining balance of the account is less than the applicable minimum balance requirement, in which event the remaining balance will earn interest at the Bank's passbook rate. This waiver of the early withdrawal penalty is applicable only to withdrawals made in connection with the purchase of Oconee Conversion Stock under this Plan. Interest will also be paid, at not less than the Bank's then current passbook rate, on all orders paid in cash, by check or money order, from the date payment is received until consummation or termination of the Conversion Merger. Payments made in cash, by check or money order will be placed by the Bank and Elberton in a segregated account established specifically for this purpose at the Bank.

In the event of an unfilled amount of any subscription order, Oconee or Elberton will make an appropriate refund or cancel an appropriate portion of the related withdrawal authorization. If for any reason the Conversion Merger is not consummated, subscribers will have refunded to them all payments made and all withdrawal authorizations will be cancelled in the case of subscription payments authorized from accounts at Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**H. Undelivered, Defective or Late Order Forms; Insufficient Payment** 

The Boards of Directors of Oconee and Elberton shall have the absolute right, in their sole discretion, to reject any Order Form submitted in either the Subscription Offering or the Community Offering, including but not limited to, any Order Forms that (i) are not delivered or are returned by the United States Postal Service (or the addressee cannot be located) or are not mailed pursuant to a "no mail" order placed in effect by the account holder; (ii) are not received back by Oconee, Elberton or their representative, or are received after the termination date specified thereon; (iii) are defectively completed or executed; (iv) are not accompanied by the total required payment for the shares of Oconee Conversion Stock subscribed for (including cases in which the subscribers' Deposit Accounts are insufficient to cover the authorized withdrawal for the required payment); or (v) are submitted by or on behalf of a Person whose representations the Boards of Directors of Oconee or Elberton believe to be false or who they otherwise believe, either alone or acting in concert with others, is violating, evading or circumventing, or intends to violate, evade or circumvent, the terms and conditions of this Plan. In such event, the Subscription Rights, if any, of the Person to whom such rights have been granted will not be honored and will be treated as though such Person failed to return the completed Order Form within the time period specified therein. Elberton and Oconee may, but will not be required to, waive any irregularity relating to any Order Form or require submission of corrected Order Forms or the remittance of full payment for subscribed shares by such date as Elberton and Oconee may specify. The interpretation by Oconee and Elberton of the terms and conditions of this Plan and of the proper completion of the Order Form will be final, subject to the authority of the OCC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**I. Members in Non-Qualified States or in Foreign Countries** 

Oconee will make reasonable efforts to comply with the securities laws of all states in the United States in which Persons entitled to subscribe in the Subscription Offering for Oconee Conversion Stock pursuant to the Plan reside. However, no such Person will be issued subscription rights or be permitted to

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purchase shares of Oconee Conversion Stock in the Subscription Offering if such Person resides in a foreign country or in a state of the United States with respect to which any of the following apply: (1) a small number of Persons otherwise eligible to subscribe for shares under the Plan reside in such state; (2) the issuance of subscription rights or the offer or sale of shares of Oconee Conversion Stock to such Persons would require Oconee, under the securities laws of such state, to register as a broker, dealer, salesman or agent or to register or otherwise qualify its securities for sale in such state; or (3) such registration or qualification would be impracticable for reasons of cost or otherwise.

**VI.**  **<u>CERTIFICATE OF INCORPORATION AND BYLAWS OF RESULTING INSTITUTION</u>** 

As part of the Conversion Merger, the Certificate of Incorporation and Bylaws of the Bank will become the Certificate of Incorporation and Bylaws of the Resulting Institution.

**VII.**  **<u>STATUS OF DEPOSIT ACCOUNTS AND LOANS SUBSEQUENT TO THE MERGER CONVERSION</u>** 

Each Deposit Account holder shall retain, without payment, a withdrawable Deposit Account or Accounts in the Resulting Institution, equal in amount to the withdrawable value of such account holder's Deposit Account or Accounts in Elberton prior to the Conversion Merger. All Deposit Accounts will continue to be insured by the FDIC up to the applicable limits of insurance coverage, and shall be subject to the same terms and conditions (except as to voting and liquidation rights) as such Deposit Account in Elberton at the time of the Conversion Merger. All loans shall retain the same status after the Conversion Merger as these loans had prior to the Conversion Merger (except as to voting rights, if any).

**VIII.**  **<u>LIQUIDATION ACCOUNT</u>** 

For purposes of granting to Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain Deposit Accounts at the Resulting Institution a priority in the event of a complete liquidation of the Resulting Institution, the Resulting Institution will, at the time of the Conversion Merger, establish a liquidation account in an amount equal to the net worth of Elberton as shown on its latest statement of financial condition contained in the final prospectus used in connection with the Conversion Merger or, if no such statement is included, the net worth of Elberton as reflected in its Call Report for the same quarter as the latest statement of financial condition of Oconee contained in such final prospectus. The creation and maintenance of the liquidation account will not operate to restrict the use or application of any of the regulatory capital accounts of the Resulting Institution; provided, however, that such regulatory capital accounts will not be voluntarily reduced below the required dollar amount of the liquidation account. Each Eligible Account Holder and Supplemental Eligible Account Holder shall, with respect to the Deposit Account held, have a related inchoate interest in a portion of the liquidation account balance ("subaccount balance"). All Deposit Accounts having the same social security number will be aggregated for purposes of determining the initial subaccount balance with respect to such Deposit Accounts, except as otherwise provided in this Section.

The initial subaccount balance of a Deposit Account held by an Eligible Account Holder or Supplemental Eligible Account Holder shall be determined by multiplying the opening balance in the liquidation account by a fraction of which the numerator is the amount of the Qualifying Deposit in the Deposit Account on the Eligibility Record Date or the Supplemental Eligibility Record Date and the denominator is the total amount of the Qualifying Deposits in Elberton of all Eligible Account Holders and Supplemental Eligible Account Holders on such record dates. Such initial subaccount balance shall not be increased, and it shall be subject to downward adjustment as provided below. For Deposit Accounts in existence at both the Eligibility Record Date and the Supplemental Eligibility Record Date, if any, separate initial subaccount balances shall be determined on the basis of the Qualifying Deposits in such Deposit Accounts on each such record date.

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If the deposit balance in any Deposit Account of an Eligible Account Holder or Supplemental Eligible Account Holder at the close of business on any annual closing date subsequent to the record date is less than the lesser of (i) the deposit balance in such Deposit Account at the close of business on any other annual closing date subsequent to the Eligibility Record Date or the Supplemental Eligibility Record Date or (ii) the amount of the Qualifying Deposit in such Deposit Account on the Eligibility Record Date or Supplemental Eligibility Record Date, the subaccount balance shall be reduced in an amount proportionate to the reduction in such deposit balance. In the event of a downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any increase in the deposit balance of the related Deposit Account. If all funds in such Deposit Account are withdrawn, the related subaccount balance shall be reduced to zero.

In the event of a complete liquidation of the Resulting Institution (and only in such event), each Eligible Account Holder and Supplemental Eligible Account Holder shall be entitled to receive a liquidation distribution from the liquidation account in the amount of the then-current adjusted subaccount balances for Deposit Accounts then held before any liquidation distribution may be made to stockholders. No merger, consolidation, bulk purchase of assets with assumptions of Deposit Accounts and other liabilities, or similar transactions with another institution the accounts of which are insured by the FDIC, shall be considered to be a complete liquidation. In such transactions, the liquidation account shall be assumed by the surviving institution.

The creation and maintenance of the Liquidation Account shall not operate to restrict the use or application of the equity accounts of Oconee or the Bank, except that neither Oconee nor the Bank shall declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its equity to be reduced below (i) the amount required for the Liquidation Account or (ii) the regulatory capital requirements of Oconee (to the extent applicable) or the Bank.

**IX.**  **<u>AMENDMENT OR TERMINATION OF PLAN</u>** 

If necessary or desirable, this Plan may be amended at any time prior to submission of the Plan and proxy materials to the Members of Elberton by a two-thirds vote of each of the Board of Directors of Elberton and the Board of Directors of the Bank. After submission of the Plan and proxy materials to the Members, this Plan may be amended by a two-thirds vote of each of the Boards of Directors of Elberton and the Bank only with the concurrence of the OCC. Any amendments to this Plan made after approval by the Members with the concurrence of the OCC and shall not necessitate further approval by the Members unless otherwise required.

This Plan may be terminated by a two-thirds vote of each of the Board of Directors of Elberton and the Board of Directors of the Bank at any time prior to the Special Meeting of Members, and at any time following such Special Meeting with the concurrence of the OCC in each case consistent and in accordance with the terms of the Agreement. In their discretion, the Boards of Directors of Elberton and the Bank may modify or terminate this Plan upon the order or with the approval of the OCC, and without further approval by Members.

This Plan shall terminate if the Plan is not approved by Members or the sale of all shares of Oconee Conversion Stock is not completed within 24 months of the date of the Special Meeting of Members.

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**X.**  **<u>EXPENSES OF THE CONVERSION MERGER</u>** 

Elberton and the Bank shall use their best efforts to assure that expenses incurred by them in connection with the Conversion Merger shall be reasonable.

**XI.**  **<u>TAX OPINION</u>** 

Consummation of the Conversion Merger is expressly conditioned upon prior receipt of an opinion of tax counsel with respect to federal taxation, and an opinion of tax counsel or accountants with respect to Georgia taxation, to the effect that consummation of the transactions contemplated herein will not be taxable to Oconee, the Bank or Elberton.

**XII.**  **<u>EXTENSION OF CREDIT FOR PURCHASE OF STOCK</u>** 

Neither Elberton nor the Bank shall knowingly loan funds or otherwise extend credit to any Person to purchase any shares of Oconee Conversion Stock in the Conversion Merger.

**XIII.**  **<u>PAYMENT OF FEES TO BROKERS</u>** 

Oconee may elect to offer to pay fees on a per share basis to securities brokers who assist purchasers of Oconee Conversion Stock in the Conversion Merger.

**XIV.**  **<u>EFFECTIVE DATE</u>** 

The effective date of the Conversion Merger shall be the date upon which the last of the following actions occurs: (i) the filing of Articles of Merger with the Georgia Secretary of State with respect to the Bank Merger, and (ii) the closing of the issuance of the shares of Oconee Conversion Stock in the Conversion Merger. The filing of Articles of Merger relating to the Bank Merger and the closing of the issuance of shares of Oconee Conversion Stock in the Conversion Merger shall not occur until all requisite regulatory and Member approvals, non- objections and waivers have been obtained, all applicable waiting periods have expired and sufficient subscriptions and orders for the Oconee Conversion Stock have been received. It is intended that the closing of the Bank Merger and the sale of shares of Oconee Conversion Stock in the Conversion Merger shall occur consecutively and substantially simultaneously.

**XV.**  **<u>INTERPRETATION OF THE PLAN</u>** 

All interpretations of this Plan and application of its provisions to particular circumstances by a majority of each of the Board of Directors of Elberton and the Board of Directors of the Bank shall be final, subject to the authority of the OCC.

## Add

**<u>Exhibit 7.2</u>**

**(Plan of Merger Conversion)**

**AMENDED AND RESTATED PLAN OF MERGER CONVERSION OF** 

**ELBERTON FEDERAL SAVINGS AND LOAN ASSOCIATION** 

**WITH** 

**OCONEE STATE BANK** 

**I.**  **<u>GENERAL</u>** 

On July 15, 2021, the Boards of Directors of Elberton Federal Savings and Loan Association ("Elberton"), Oconee Financial Corporation ("Oconee") and Oconee State Bank (the "Bank"), respectively, adopted and approved this Amended and Restated Plan of Merger Conversion (the "Plan"), which amends and restates, and supersedes in its entirety, the Plan of Merger Conversion adopted by the Boards of Directors of Elberton, Oconee and the Bank on May 27, 2021, and the related Agreement and Plan of Merger Conversion, dated June 1, 2021 (the "Agreement"), subject to regulatory and Member approvals, whereby Elberton proposes to convert from a federally-chartered mutual savings association to a federally-chartered stock savings association, pursuant to the rules and regulations of the Office of the Comptroller of the Currency and any successor thereto (the "OCC"). This Plan and the Agreement provide that Elberton shall merge with and into the Bank concurrently with Elberton's conversion to stock form and the issuance of shares of common stock of Oconee to depositors and borrowers of Elberton, the community served by Elberton and Oconee shareholders, pursuant to the terms and conditions of this Plan and the Agreement (the "Merger Conversion").

The Board of Directors of Elberton has concluded, in consultation with its advisors, that the Merger Conversion is in the best interests of Elberton, the depositors and borrowers of Elberton, and the community served by Elberton. The Merger Conversion will further the interests of the depositors and borrowers of Elberton and the community served by Elberton by promoting a program of sound growth, increasing funds and capital available for lending, and providing additional resources for expansion of services, as well as by providing an enhanced opportunity for attracting and retaining qualified personnel. In making these determinations, the Board of Directors of Elberton concluded that Elberton does not have the management or financial resources to pursue a standard mutual-to-stock conversion and that the Merger Conversion is the best means to serve the interests of the Members of Elberton. The Board of Directors of the Bank as well as the Board of Directors of its parent holding company, Oconee, have determined that the Merger Conversion is in the best interests of the Bank and the shareholders of Oconee.

This Plan and the Agreement are subject to the receipt of the approval or non-objection of the OCC, the FDIC, the GDBF and, if not waived, the FRB and, with respect to the Plan, the approval of the Members of Elberton.

**II.**  **<u>DEFINITIONS</u>** 

<u>Acting In Concert</u>. The phrase "Acting in Concert" means (i) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement or understanding; or (ii) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. A Person which acts in concert with another Person ("other party") shall also be deemed to be acting in concert with any Person who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated and participants or beneficiaries of any such tax-qualified employee stock benefit plan will not be deemed to be acting in concert solely as a result of their common interests as participants or beneficiaries. When Persons act together for such purpose, their group is deemed to have acquired their stock. The determination of whether

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a group is Acting in Concert shall be made solely by the Boards of Directors of Oconee and Elberton or Officers delegated by such Boards and may be based on any evidence upon which the Boards or such delegatee chooses to rely, including, without limitation, joint account relationships or the fact that such Persons share a common address (whether or not related by blood or marriage) or have filed joint Schedules 13D or Schedules 13G with the SEC with respect to other companies. Directors of Elberton, Oconee and the Bank shall not be deemed to be Acting in Concert solely as a result of their membership on any such board or boards.

<u>Aggregate Subscription Amount</u>. As to each subscriber in the Subscription Offering and each purchaser in the Community Offering and/or Syndicated Community Offering, the total dollar amount submitted by such subscriber or purchaser in payment for the total number of shares of Oconee Conversion Stock covered by the subscription or purchase order submitted by such subscriber or purchaser.

<u>Affiliate</u>. A Person who, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the Person specified.

<u>Agreement</u>. The Agreement and Plan of Merger Conversion by and among Elberton, the Bank and Oconee to which this Plan is an exhibit.

<u>Articles of Merger</u>. The articles of merger to be filed with the Georgia Secretary of State to effect the Bank Merger.

<u>Associate</u>. The term "associate," when used to indicate a relationship with any Person, means (i) any corporation or organization (other than Elberton, the Bank, Oconee or a majority -owned subsidiary of Oconee) of which such Person is an officer, director or partner or is, directly or indirectly, the beneficial owner of ten percent or more of any class of equity securities, (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, provided, however, that such term will not include any tax-qualified employee stock benefit plan of Oconee or the Bank in which such person has a substantial beneficial interest or serves as a trustee in a similar fiduciary capacity, and (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same home as such Person or who is a Director or Officer of Elberton, the Bank, Oconee or any subsidiary of Oconee.

<u>Bank</u>. Oconee State Bank, a Georgia-chartered commercial bank headquartered in Watkinsville, Georgia.

<u>Bank Merger</u>. The merger of Elberton with and into the Bank, with the Bank surviving and the separate corporate existence of Elberton ceasing.

<u>Closing Date</u>. The date on which the Merger Conversion is consummated in accordance with the Agreement and this Plan, including, without limitation, <u>Section XIV</u>.

<u>Community Offering</u>. The offering of any shares unsubscribed in the Subscription Offering to Persons as may be selected by Oconee and Elberton in their sole discretion.

<u>Community Resident</u>. The term "Community Resident" has the meaning set forth in <u>Section</u> <u>V.C</u>.

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<u>Constructive Sale</u>. With respect to any Security, a short sale with respect to such Security, entering into or acquiring an offsetting derivative contract with respect to such Security, entering into or acquiring a futures or forward contract to deliver such Security or entering into any other hedging or other derivative transaction that has the effect of materially changing the economic benefits and risks of ownership.

<u>Merger Conversion</u>. The change of Elberton's Charter and Bylaws to those of a federally-chartered stock savings association, the Bank Merger, and the issuance and sale by Oconee of the Oconee Conversion Stock in the Offerings, all as provided for in this Plan and in the Agreement.

<u>Deposit Account</u>. Any withdrawable or repurchaseable account or deposit in Elberton, including Savings Accounts and demand accounts, as defined in 12 C.F.R. 161.16, provided that the term Deposit Account shall not include any escrow accounts maintained at Elberton.

<u>Director</u>. A director of Elberton, Oconee or the Bank, as the sense of the context provides.

<u>Elberton</u>. Elberton Federal Savings and Loan Association, a federally-chartered mutual savings association headquartered in Elberton, Georgia, which, pursuant to the terms hereof, will consummate the Merger Conversion.

<u>Eligibility Record Date</u>. The close of business on March 31, 2020.

<u>Eligible Account Holder</u>. Any Person holding a Qualifying Deposit in Elberton on the Eligibility Record Date.

<u>Eligible Oconee Shareholders</u>. This term has the meaning set forth in <u>Section</u> <u>V.C</u>.

<u>Estimated Valuation Range</u>. The range of the estimated proforma market value of Elberton as determined by the Independent Appraiser prior to the Subscription Offering and as it may be amended from time to time thereafter.

<u>FDIC</u>. The Federal Deposit Insurance Corporation.

<u>FRB</u>. The Board of Governors of the Federal Reserve System.

<u>GDBF</u>. The Georgia Department of Banking and Finance.

<u>Independent Appraiser</u>. An independent investment banking or financial consulting firm that is experienced and expert in the area of thrift institution appraisals and that is retained by Elberton to prepare an appraisal of the proforma market value of Elberton.

<u>Liquidation Account</u>. The account established by the Oconee representing the liquidation interests to be received by Eligible Account Holders and Supplemental Eligible Account Holders in exchange for their interest in Elberton in connection with the Merger Conversion.

<u>Market Maker</u>. A dealer (i.e., any Person who engages directly or indirectly as agent, broker or principal in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another Person) who, with respect to a particular security, (i) regularly publishes bona fide, competitive bid and offer quotations in a recognized inter-dealer quotation system; or (ii) furnishes bona fide competitive bid and offer quotations on request; and (iii) is ready, willing, and able to effect transactions in reasonable quantities at his quoted prices with other brokers or dealers.

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<u>Member</u>. Any Person or entity that qualifies as a member of Elberton pursuant to its mutual Charter and Bylaws.

<u>OCC</u>. The Office of the Comptroller of the Currency of the Department of Treasury and any successor thereto.

<u>Oconee</u>. Oconee Financial Corporation, a Georgia corporation that is the sole shareholder of the Bank and that, upon completion of the Merger Conversion, shall own all of the outstanding common stock of the Resulting Institution.

<u>Oconee Common Stock</u>. Shares of common stock, par value $2.00 per share, of Oconee.

<u>Oconee Conversion Stock</u>. Shares of Oconee Common Stock to be offered, issued and sold by Oconee in the Offerings as a part of the Merger Conversion.

<u>Oconee Market Price</u>. The average daily closing price rounded to the nearest cent (with any amount equal to or greater than $0.005 rounded to the next higher $0.01), of Oconee Common Stock on the OTCQX market for the consecutive period of thirty (30) full trading days ending on and including the trading day immediately preceding the date of the Offering Statement; provided, however, if such price is less than $33.50, then the Oconee Market Price shall be $33.50, and if such price is greater than $41.00, then the Oconee Market Price shall be $41.00.

<u>Offerings</u>. Collectively, the Subscription Offering, the Community Offering and the Syndicated Community Offering, if any.

<u>Offering Price</u>. The price equal to 85.0% of the Oconee Market Price, rounded to the nearest cent (with any amount equal to $0.005 rounded to the next higher $0.01).

<u>Offering Statement</u>. The Offering Statement on Form 1-A to be filed by Oconee with the SEC pursuant to which the Oconee Conversion Stock will be offered in the Offerings in accordance with this Plan.

<u>Officer</u>. The chairman of the board, president, chief executive officer, vice president, secretary and treasurer or principal financial officer, comptroller or principal accounting officer and any other person performing similar functions with respect to any organization, whether incorporated or unincorporated.

<u>Order Forms</u>. Forms to be used to exercise Subscription Rights in the Subscription Offering and to submit purchase orders in the Community Offering.

<u>Other Member</u>. Any person who is a Member of Elberton (other than Eligible Account Holders or Supplemental Eligible Account Holders) as of the Voting Record Date.

<u>Person</u>. An individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust (including Individual Retirement Accounts and KEOGH Accounts), any unincorporated organization, or a government or political subdivision thereof.

<u>Plan</u>. This Plan of Merger Conversion of Elberton, Oconee and the Bank, including any amendment approved as provided in this Plan.

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<u>Qualifying Deposit</u>. The aggregate balance of all Deposit Accounts of an (i) Eligible Account Holder of $50 or more in Elberton at the close of business on the Eligibility Record Date or (ii) a Supplemental Eligible Account Holder of $50 or more in Elberton on the Supplemental Eligibility Record Date.

<u>Resulting Institution</u>. The Bank, which shall be the Resulting Institution in the Bank Merger.

<u>Savings Account</u>. The term Savings Account includes savings accounts, as defined in 12 C.F.R. Section 161.42, in Elberton, and includes certificates of deposit.

<u>SEC</u>. The United States Securities and Exchange Commission.

<u>Security or Securities</u>. Any "security" as such term is defined under Section 2(a)(1) of the Securities Act or other instrument commonly referred to as a security, including without limitation, any preferred stock, senior or subordinated debt or any other form of indebtedness, debentures, loans (whether secured or unsecured), preferred securities, convertible securities, options, warrants, rights, voting or non-voting securities, hybrid securities, credit or debt facilities, trust preferred securities, or other instruments or forms of financing.

<u>Securities Act</u>. The Securities Act of 1933, as amended.

<u>Special Meeting</u>. The Special Meeting of Members of Elberton, including any adjournments thereof, to be called for the purpose of considering and voting upon this Plan.

<u>Subscription Offering</u>. The offering of shares of Oconee Conversion Stock for subscription and purchase pursuant to <u>Section V.B</u> of the Plan.

<u>Subscription Rights</u>. Non-transferable, non-negotiable, personal rights of Eligible Account Holders, Supplemental Eligible Account Holders and Other Members, to subscribe for shares of Oconee Conversion Stock in the Subscription Offering.

<u>Supplemental Eligibility Record Date</u>. The last day of the calendar quarter preceding approval of this Plan by the OCC.

<u>Supplemental Eligible Account Holder</u>. Any person holding a Qualifying Deposit in Elberton (other than an Officer or Director and their Associates) on the Supplemental Eligibility Record Date.

<u>Syndicated Community Offering</u>. The offering for sale by a syndicate of broker-dealers to the general public of shares of Oconee Conversion Stock not purchased in the Subscription Offering and the Community Offering.

<u>Transfer</u>. With respect to any Security, including, without limitation, the direct or indirect assignment, sale, transfer, tender, pledge, hypothecation, or the grant, creation of an encumbrance in or upon, or the gift, placement in trust, or the Constructive Sale or other disposition of such Security or any right, title or interest therein or the record or beneficial ownership thereof, the offer to make such a sale, transfer, Constructive Sale or other disposition, and each agreement or other arrangement to effect any of the foregoing; provided, however, a Transfer shall not be deemed to have occurred with respect to any Security solely by reason of the appointment of an executor, administrator or personal representative to administer the estate of the deceased holder of a Security.

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<u>Voting Record Date</u>. The date fixed by the Board of Directors of Elberton in accordance with Elberton's Bylaws and OCC regulations for determining the Members eligible to vote at the Special Meeting.

**III.**  **<u>STEPS PRIOR TO SUBMISSION OF PLAN OF CONVERSION MERGER TO THE MEMBERS FOR APPROVAL</u>** 

Prior to submission of this Plan to its Members for approval, Elberton must receive the approval of the OCC of its application to convert to the stock form of organization and to concurrently merge with and into the Bank. The following steps must be taken prior to receipt of such regulatory approval:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Board of Directors of Elberton shall adopt the Plan by not less than a two-thirds vote.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Elberton shall notify its Members of the adoption of the Plan by publishing a statement in a newspaper having a general circulation in the community in which Elberton maintains its office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Copies of the Plan adopted by the Board of Directors of Elberton shall be made available for inspection at the office of Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Elberton will promptly cause an Application for Approval of Conversion on Form AC to be prepared and filed with the OCC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. The Bank will promptly cause an Interagency Bank Merger Application to be prepared and filed with the GDBF and the FDIC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. Oconee will promptly request a waiver from the FRB of the application requirements of the Bank Holding Company Act of 1956, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. Oconee will promptly cause an Offering Statement on Form 1-A pursuant to the Securities Act to be prepared and filed with the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. At the time and in the manner prescribed by regulations of the OCC, Elberton, the Bank and Oconee, as applicable, shall post in their offices and publish in newspapers of general circulation notices of the filing of the applications made by each of them.

**IV.**  **<u>CONVERSION MERGER PROCEDURE</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Following approval or non-objection of the applications for approval of the Merger Conversion or notices by the OCC, the FDIC, the GDBF and, if not waived, the FRB, this Plan will be submitted by Elberton to a vote of its Members at the Special Meeting. The Members must approve the Plan by a majority of the total outstanding votes eligible to be cast at the Special Meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>B.</u> The Oconee Conversion Stock will be offered simultaneously in the Subscription Offering to the Eligible Account Holders, Supplemental Eligible Account Holders and Other Members in the respective priorities set forth in <u>Section V.B</u> of this Plan. The Subscription Offering may be commenced as early as the mailing of the Proxy Statement for the Special Meeting.

Any shares of Oconee Conversion Stock not subscribed for in the Subscription Offering may be offered for sale in the Community Offering and/or a Syndicated Community Offering, as provided in <u>Section V.C</u> of this Plan, if necessary and feasible. The Subscription Offering may be commenced prior to the Special Meeting and, in that event, the Community Offering may also be commenced prior to the Special Meeting. The offer and sale of Oconee Conversion Stock prior to the Special Meeting shall, however, be conditioned upon approval of the Plan by the Members.

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The period for the Subscription Offering and the Community Offering will be not less than 20 days nor more than 45 days, unless extended by Oconee and Elberton. Oconee and Elberton may jointly seek one or more extensions if necessary to complete the sale of all shares of Oconee Conversion Stock. In connection with any such extensions, subscribers and other purchasers will be permitted to increase, decrease or rescind their subscriptions or purchase orders to the extent required by the OCC in approving the extensions. Completion of the sale of all shares of Oconee Conversion Stock is required within 24 months after the date of the Special Meeting, unless a longer period is permitted by governing laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Upon consummation of the sale of at least the required minimum of Oconee Conversion Stock, Oconee will purchase from Elberton all of the capital stock to be issued by Elberton in its conversion in exchange for the consideration set forth in the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. After all of the foregoing actions, events and determinations have taken place, the Merger Conversion shall be effected by the filing of Articles of Merger with the Georgia Secretary of State, and any necessary filing with the OCC, with respect to the merger of Elberton with and into the Bank.

**V.**  **<u>STOCK OFFERING</u>** 

For purposes of this <u>Section V</u>, the Directors and Officers of Oconee, the Bank and Elberton shall not be deemed to be Associates or a group acting in concert solely as a result of their serving in such capacities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A. Total Dollar Amount of Shares and Purchase Price of Oconee Conversion Stock** 

The total dollar amount for which all shares will be sold in the Merger Conversion shall be no less than 15.0% below the midpoint of the Estimated Valuation Range and no more than 15.0% above the midpoint of the Estimated Valuation Range.

The per share purchase price for shares of Oconee Conversion Stock in the Offerings shall be the Offering Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B. Subscription Rights** 

Non-transferable Subscription Rights to purchase shares of Oconee Conversion Stock will be issued without payment therefor to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members of Elberton as set forth below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>1.</u> <u>Preference Category No. l: Eligible Account Holders</u>

Each Eligible Account Holder shall receive non-transferable Subscription Rights to subscribe for shares of Oconee Conversion Stock in the Subscription Offering in an amount equal to the greater of (a) 5.0% of the shares of Oconee Conversion Stock sold in the Offerings, (b) one-tenth of one percent (0.10%) of the aggregate number of shares to be sold in the Offerings or (c) 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of Oconee Conversion Stock to be issued in the Offerings by a fraction of which the numerator is the amount of the Qualifying Deposit of the Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders in Elberton in each case on the Eligibility Record Date.

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In the event of an oversubscription for shares under the provisions of this subparagraph, shares shall be allocated first to permit each subscribing Eligible Account Holder, to the extent possible, to purchase the lesser of the amount subscribed for or 100 shares, and thereafter be allocated among each subscribing Eligible Account Holder whose subscription remains unsatisfied on a pro rata basis in the same proportion that his Qualifying Deposit bears to the total Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unsatisfied, provided that no fractional shares shall be issued.

Non-transferable Subscription Rights to purchase Oconee Conversion Stock received by Directors and Officers of Elberton and their Associates, based on their increased deposits in Elberton in the one-year period preceding the Eligibility Record Date, shall be subordinated to all other subscriptions involving the exercise of non-transferable Subscription Rights of Eligible Account Holders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>2.</u> <u>Preference Category No.</u> <u>2: Supplemental Eligible Account Holders</u>

In the event that the Eligibility Record Date is more than 15 months prior to the date of the latest amendment to the Application filed prior to OCC approval as described in the "Supplemental Eligibility Record Date" definition in 12 C.F.R. § 192.25, then, and only in that event, each Supplemental Eligible Account Holder shall receive non-transferable Subscription Rights to subscribe for shares of Oconee Conversion Stock in the Subscription Offering in an amount equal to the greater of (a) 5.0% of the shares of Oconee Conversion Stock sold in the Offerings, (b) one-tenth of one percent (0.10%) of the aggregate number of shares to be sold in the Offerings or (c) 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of Oconee Conversion Stock to be issued in the Offerings by a fraction of which the numerator is the amount of the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders in Elberton in each case on the Supplemental Eligibility Record Date. Subscription Rights received pursuant to this category shall be subordinated to all Subscription Rights received by Eligible Account Holders pursuant to Category No. 1 above.

In the event of an oversubscription for shares under the provisions of this subparagraph, the shares available shall be allocated first to permit each subscribing Supplemental Eligible Account Holder to the extent possible, to purchase a number of shares sufficient to make his total allocation equal to the lesser of the amount subscribed for or 100 shares, and thereafter among each subscribing Supplemental Eligible Account Holder pro rata in the same proportion that his Qualifying Deposit bears to the total Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unsatisfied, provided that no fractional shares shall be issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>3.</u> <u>Preference Category No.</u> <u>3: Other Members</u>

Each Other Member shall receive non-transferable Subscription Rights to subscribe for shares of Oconee Conversion Stock in the Subscription Offering remaining after satisfying the subscriptions provided for under Category Nos. 1 and 2 above, subject to the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Each Other Member shall be entitled to subscribe for an amount of shares equal to the greater of (i) 5.0% of the shares of Oconee Conversion Stock sold in the Offerings and (ii) one-tenth of one percent (0.10%) of the aggregate number of shares to be sold in the Offerings to the extent that Oconee Conversion Stock is available.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. In the event of an oversubscription for shares under the provisions of this subparagraph, the shares available shall be allocated among the subscribing Other Members so as to permit each such Other Member, to the extent possible, to purchase a number of shares which will make his or her total allocation equal to the lesser of the number of shares subscribed for or 100 shares, and any remaining shares shall be allocated among subscribing Other Members whose orders remain unfilled on a pro rata basis in the same proportion as each such Other Member's subscription bears to the total subscriptions of all such subscribing Other Members, provided that no fractional shares shall be issued.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C. Community Offering and Syndicated Community Offering** 

The amount, if any, of Oconee Conversion Stock not subscribed for in the Subscription Offering may be offered for sale in a Community Offering and/or a Syndicated Community Offering. The Community Offering will involve an offering of the unsubscribed amount of shares of Oconee Conversion Stock directly to the general public. Shares will be available for purchase by members of the general public to whom a prospectus is delivered by Oconee or on its behalf, with preference given first to natural persons, including trusts of natural persons, residing in Elberton, Georgia or Elbert County, Georgia ("Community Residents"), and to shareholders of record of Oconee on the last day of the month immediately preceding the effectiveness of the Offering Statement filed by Oconee to register the shares of Oconee Conversion Stock ("Eligible Oconee Shareholders"). The Community Offering, if any, shall be for a period of not less than 20 days nor more than 45 days unless extended by Oconee and Elberton, and shall commence concurrently with, during or promptly after the Subscription Offering.

Oconee may use an investment banking firm or firms on a best-efforts basis to sell Oconee Conversion Stock in the Subscription Offering and the Community Offering. Oconee may pay a commission or other fee to such investment banking firm or firms as to the shares sold by such firm or firms in the Subscription Offering and the Community Offering and may also reimburse such firm or firms for expenses incurred in connection with the sale. The Oconee Conversion Stock will be offered and sold in the Community Offering and/or a Syndicated Community Offering, in accordance with OCC regulations, so as to achieve the widest distribution of the Oconee Conversion Stock.

Oconee, in its sole and absolute discretion, may reject, in whole or in part, purchase orders received from any Person under this section.

In the event of an oversubscription for shares of Oconee Conversion Stock in the Community Offering, the available shares shall be allocated first to each Community Resident and Eligible Oconee Shareholder whose order is accepted in an amount equal to the lesser of 100 shares or the number of shares subscribed for by each such Community Resident or Eligible Oconee Shareholder, if possible. Thereafter, unallocated shares shall be allocated among the Community Residents and Eligible Oconee Shareholders whose accepted orders remain unsatisfied on an equal number of shares per order basis until all available shares have been allocated, provided that no fractional shares shall be issued. If there are any shares remaining after all accepted orders by Community Residents and Eligible Oconee Shareholders have been satisfied, such remaining shares shall be allocated to other members of the general public who purchase in the Community Offering, applying the same allocation methodology as described above.

The amount of Oconee Conversion Stock that any Person, together with any Associate or group of Persons Acting In Concert, may purchase in the Community Offering shall be 5.0% of the shares of Oconee Conversion Stock, provided further that, to the extent applicable, and subject to the preferences set forth this <u>Section V.C</u> and the limitations on purchases of Oconee Conversion Stock set forth in this <u>Section V.C</u> and <u>Section V.D</u> of this Plan, orders for Oconee Conversion Stock in the Community Offering shall first be filled to a maximum of 2.0% of the total number of shares of Oconee Conversion Stock sold in the Offerings and thereafter any remaining shares shall be allocated on an equal number of shares per order basis until all available shares have been allocated, provided no fractional shares shall be issued.

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Subject to such terms, conditions and procedures as may be determined by Oconee, all shares of Oconee Conversion Stock not subscribed for in the Subscription Offering or ordered in the Community Offering may be sold by a syndicate of broker-dealers to the general public in a Syndicated Community Offering. Each order for Oconee Conversion Stock in the Syndicated Community Offering shall be subject to the sole and absolute discretion of Oconee to accept or reject any such order in whole or in part either at the time of receipt of an order or as soon as practicable after completion of the Syndicated Community Offering. The amount of Oconee Conversion Stock that any Person, together with any Associate or group of Persons Acting In Concert, may, directly or indirectly, subscribe for or purchase in the Syndicated Community Offering, shall not exceed be 5.0% of the shares of Oconee Conversion Stock; provided, however, that orders for Oconee Conversion Stock in the Syndicated Community Offering shall first be filled, unless otherwise permitted by the OCC, to a maximum of 2.0% of the total number of shares of Oconee Conversion Stock sold in the Offerings and thereafter any remaining shares shall be allocated on an equal number of shares basis per order until all available shares have been allocated, provided no fractional shares shall be issued. Oconee and Elberton may commence the Syndicated Community Offering concurrently with, at any time during, or as soon as practicable after the end of the Subscription Offering and/or Community Offering. The Syndicated Community Offering must be completed within 45 days after the completion of the Subscription Offering, unless extended by Oconee and Elberton with any required regulatory approval.

In the event that any insignificant residue of shares of Oconee Conversion Stock is not sold in the Subscription Offering, the Community Offering and/or the Syndicated Community Offering, Oconee and Elberton shall use their best efforts to obtain other purchasers for such shares in such manner and upon such conditions as may be satisfactory to the OCC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D. Additional Limitations Upon Purchases of Shares of Oconee Conversion Stock** 

The following additional limitations shall be imposed on all purchases of Oconee Conversion Stock in the Merger Conversion:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. In addition to the other restrictions and limitations set forth herein, the maximum amount of Oconee Conversion Stock which any Person, together with any Associate or group of Persons Acting In Concert, may, directly or indirectly, subscribe for or purchase in the Offerings, shall not exceed 5.0% of the shares of Oconee Conversion Stock sold in the Merger Conversion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Directors and Officers of Elberton and their Associates may not purchase in all categories in the Merger Conversion an aggregate of more than 35.0% of Oconee Conversion Stock, including any shares which may be issued in the event of an increase in the maximum of the Estimated Valuation Range to reflect changes in market, financial and economic conditions after commencement of the Subscription Offering and prior to completion of the Offerings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. No Person may purchase fewer than 25 shares of Oconee Conversion Stock in the Offerings, to the extent such shares are available; provided, however, that if the purchase price is greater than $20.00 per share, such minimum number of shares shall be adjusted so that the Aggregate Subscription Amount for such minimum shares will not exceed $500.00.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Subject to any required regulatory approval and the requirements of applicable laws and regulations, but without further approval of the Members, Elberton and Oconee may decrease the individual or the aggregate purchase limitations set forth herein or, as provided herein, increase such limitations to a percentage which does not exceed 9.99% of the total shares of Oconee Common Stock sold in the Offerings. In the event that an individual purchase limitation is increased after commencement of the Subscription Offering or any other offering, Elberton and Oconee shall permit any Person who subscribed for the maximum number of shares of Oconee Conversion Stock in the Subscription Offering or, in the discretion of Oconee and Elberton, the Community Offering, and who indicated a desire to be resolicited on the Order Form, to purchase an additional number of shares, so that such Person shall be permitted to subscribe for

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the then maximum number of shares permitted to be subscribed for by such Person, subject to the rights and preferences of any Person who has priority Subscription Rights. In the event of a resolicitation of such subscribers, Elberton and Oconee shall have the right, in their sole discretion, to require such Persons to supply immediately available funds for the purchase of additional shares of Oconee Conversion Stock. Such Persons will be prohibited from paying with cash or a personal check, but Elberton and Oconee may allow payment by wire transfer. In the event that any of the individual or aggregate purchase limitations are decreased after commencement of the Subscription Offering or any other offering, the orders of any Person who subscribed for more than the new purchase limitation shall be decreased by the minimum amount necessary so that such Person shall be in compliance with the then maximum number of shares permitted to be subscribed for by such Person. The maximum purchase limitations may be increased, provided that orders for Oconee Conversion Stock exceeding maximum subscription or purchase amounts set forth herein shall not exceed in the aggregate 9.99% of the total shares of Oconee Common Stock sold in the Offerings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>5.</u> Elberton and Oconee shall have the right to take all such action as they may, in their sole discretion, deem necessary, appropriate or advisable in order to monitor and enforce the terms, conditions, limitations and restrictions contained in this <u>Section V.D</u> and elsewhere in this Plan and the terms, conditions and representations contained in the Order Form, including, but not limited to, the absolute right (subject only to any necessary regulatory approvals or concurrences) to reject, limit or revoke acceptance of any subscription or order and to delay, terminate or refuse to consummate any sale of Oconee Conversion Stock which they believe might violate, or is designed to, or is any part of a plan to, evade or circumvent such terms, conditions, limitations, restrictions and representations. Any such action shall be final, conclusive and binding on all persons, and the Elberton and Oconee and their respective Boards shall be free from any liability to any Person on account of any such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E. Restrictions and Other Characteristics of Oconee Conversion Stock Being Sold** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. *Transferability*. Purchasers of Oconee Conversion Stock in the Offerings shall not Transfer any Oconee Common Stock or other Securities of Oconee (whether currently or hereafter authorized and issued or granted) for a period of 60 days following the Closing Date. In addition, shares of Oconee Conversion Stock that are purchased by Elberton's Directors, Officers and their Associates in the Offerings are subject to the restrictions set forth in 12 C.F.R. 192.505.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. *Voting Rights*. Upon completion of the Merger Conversion, neither holders of deposit accounts nor borrower Members of Elberton will have voting rights in the Resulting Institution or Oconee. Exclusive voting rights as to the Resulting Institution will be vested in Oconee, as the sole shareholder of the Resulting Institution. Voting rights as to Oconee will be held exclusively by the shareholders thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F. Exercise of Subscription Rights; Order Forms** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. If the Subscription Offering occurs concurrently with the solicitation of proxies for the Special Meeting, the prospectus and Order Form may be sent to each Eligible Account Holder, Supplemental Eligible Account Holder and Other Member, at his or her last known address as shown on the records of Elberton as of the Voting Record Date. However, Elberton may, and if the Subscription Offering commences after the Special Meeting, Elberton shall, furnish a prospectus and Order Form only to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members who have returned to Elberton by a specified date prior to the commencement of the Subscription Offering a post card or other written communication requesting a prospectus and Order Form. In such event, Elberton shall provide a postage-paid post card for this purpose and make appropriate disclosure in its proxy statement for the solicitation of proxies to be voted at the Special Meeting and/or letter sent in lieu of the proxy statement to those Eligible Account Holders and Supplemental Eligible Account Holders who are not Members on the Voting Record Date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Each Order Form will be preceded or accompanied by a prospectus describing Oconee and the Resulting Institution and the shares of Oconee Conversion Stock being offered for subscription and containing all other information required by the OCC or the SEC or otherwise necessary to enable Persons to make informed investment decisions regarding the purchase of Oconee Conversion Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The Order Forms (or accompanying instructions) used for the Subscription Offering will contain, among other things, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. A clear and intelligible explanation of the Subscription Rights granted under the Plan to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members of Elberton;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. A specified expiration date by which Order Forms must be returned to and actually received by Elberton, Oconee or their representative for purposes of exercising Subscription Rights, which date will be not less than 20 days and not more than 45 days after the Order Forms are initially mailed to potential subscribers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. A statement of the minimum and maximum number of shares of Oconee Conversion Stock that may be subscribed for under the Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. A specifically designated blank space for indicating the number of shares and the aggregate dollar amount of shares being subscribed for;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. A set of detailed instructions as to how to complete the Order Form, including a statement as to the available alternative methods of payment for the shares being subscribed for;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Specifically designated blank spaces for dating and signing the Order Form;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. An acknowledgment that the subscriber has received the prospectus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. A statement of the consequences of failing to properly complete and return the Order Form, including a statement that the Subscription Rights will expire on the expiration date specified on the Order Form unless such expiration date is extended by Oconee and Elberton, and that the Subscription Rights may be exercised only by delivering the Order Form, properly completed and executed, to Oconee, Elberton or their representative by the expiration date, together with required payment of the Aggregate Subscription Amount for all Oconee Conversion Stock subscribed for;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. A statement that the Subscription Rights are non-transferable and that all shares of Oconee Conversion Stock subscribed for upon exercise of Subscription Rights must be purchased on behalf of the Person exercising the Subscription Rights for his own account; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. A statement that, after receipt by Oconee, Elberton or their representative, a subscription may not be modified, withdrawn or cancelled without the consent of Oconee or Elberton.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**G. Method of Payment** 

In the Subscription Offering and the Community Offering, payment for all shares of Oconee Conversion Stock subscribed for must be received in full by Oconee, Elberton or their representatives, together with properly executed and completed Order Forms. Payment may be made in cash (if presented in Person), by personal check, bank check or money order, or, if the subscriber has a Deposit Account in Elberton (including a certificate of deposit), the subscriber may authorize Elberton to withdraw the amount of the Aggregate Subscription Amount from the subscriber's account.

If a subscriber authorizes Elberton to withdraw the amount of the Aggregate Subscription Amount from his account, the funds will continue to earn interest, but may not be used by the subscriber until all Oconee Conversion Stock has been sold or this Plan is terminated, whichever is earlier. Elberton will allow subscribers to purchase shares by withdrawing funds from certificate accounts without the assessment of early withdrawal penalties. In the case of early withdrawal of only a portion of such account, the certificate evidencing such account shall be cancelled if the remaining balance of the account is less than the applicable minimum balance requirement, in which event the remaining balance will earn interest at the Bank's passbook rate. This waiver of the early withdrawal penalty is applicable only to withdrawals made in connection with the purchase of Oconee Conversion Stock under this Plan. Interest will also be paid, at not less than the Bank's then current passbook rate, on all orders paid in cash, by check or money order, from the date payment is received until consummation or termination of the Merger Conversion. Payments made in cash, by check or money order will be placed by the Bank and Elberton in a segregated account established specifically for this purpose at the Bank.

In the event of an unfilled amount of any subscription order, Oconee or Elberton will make an appropriate refund or cancel an appropriate portion of the related withdrawal authorization. If for any reason the Merger Conversion is not consummated, subscribers will have refunded to them all payments made and all withdrawal authorizations will be cancelled in the case of subscription payments authorized from accounts at Elberton.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**H. Undelivered, Defective or Late Order Forms; Insufficient Payment** 

The Boards of Directors of Oconee and Elberton shall have the absolute right, in their sole discretion, to reject any Order Form submitted in either the Subscription Offering or the Community Offering, including but not limited to, any Order Forms that (i) are not delivered or are returned by the United States Postal Service (or the addressee cannot be located) or are not mailed pursuant to a "no mail" order placed in effect by the account holder; (ii) are not received back by Oconee, Elberton or their representative, or are received after the termination date specified thereon; (iii) are defectively completed or executed; (iv) are not accompanied by the total required payment for the shares of Oconee Conversion Stock subscribed for (including cases in which the subscribers' Deposit Accounts are insufficient to cover the authorized withdrawal for the required payment); or (v) are submitted by or on behalf of a Person whose representations the Boards of Directors of Oconee or Elberton believe to be false or who they otherwise believe, either alone or Acting In Concert with others, is violating, evading or circumventing, or intends to violate, evade or circumvent, the terms and conditions of this Plan. In such event, the Subscription Rights, if any, of the Person to whom such rights have been granted will not be honored and will be treated as though such Person failed to return the completed Order Form within the time period specified therein. Elberton and Oconee may, but will not be required to, waive any irregularity relating to any Order Form or require submission of corrected Order Forms or the remittance of full payment for subscribed shares by such date as Elberton and Oconee may specify. The interpretation by Oconee and Elberton of the terms and conditions of this Plan and of the proper completion of the Order Form will be final, subject to the authority of the OCC.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**I. Members in Non-Qualified States or in Foreign Countries** 

Oconee will make reasonable efforts to comply with the securities laws of all states in the United States in which Persons entitled to subscribe in the Subscription Offering for Oconee Conversion Stock pursuant to the Plan reside. However, no such Person will be issued subscription rights or be permitted to purchase shares of Oconee Conversion Stock in the Subscription Offering if such Person resides in a foreign country or in a state of the United States with respect to which any of the following apply: (1) a small number of Persons otherwise eligible to subscribe for shares under the Plan reside in such state; (2) the issuance of subscription rights or the offer or sale of shares of Oconee Conversion Stock to such Persons would require Oconee, under the securities laws of such state, to register as a broker, dealer, salesman or agent or to register or otherwise qualify its securities for sale in such state; or (3) such registration or qualification would be impracticable for reasons of cost or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**J. Stock Option Plan and Management Recognition Plan** 

The aggregate number of shares of Oconee Common Stock for which options may be awarded to directors and employees of Elberton under any stock option plan of Oconee in connection with the Merger Conversion shall not exceed 10% of the aggregate number of shares of Oconee Conversion Stock issued in the Merger Conversion. The aggregate number of restricted shares of Oconee Common Stock that may be granted to directors and employees of Elberton under any management recognition plan of Oconee in connection with the Merger Conversion shall not exceed 3% of the aggregate number of shares of Oconee Conversion Stock issued in the Merger Conversion.

**VI.**  **<u>CERTIFICATE OF INCORPORATION AND BYLAWS OF RESULTING INSTITUTION</u>** 

As part of the Merger Conversion, the Certificate of Incorporation and Bylaws of the Bank will become the Certificate of Incorporation and Bylaws of the Resulting Institution.

**VII.**  **<u>STATUS OF DEPOSIT ACCOUNTS AND LOANS SUBSEQUENT TO THE CONVERSION MERGER</u>** 

Each Deposit Account holder shall retain, without payment, a withdrawable Deposit Account or Accounts in the Resulting Institution, equal in amount to the withdrawable value of such account holder's Deposit Account or Accounts in Elberton prior to the Merger Conversion. All Deposit Accounts will continue to be insured by the FDIC up to the applicable limits of insurance coverage, and shall be subject to the same terms and conditions (except as to voting and liquidation rights) as such Deposit Account in Elberton at the time of the Merger Conversion. All loans shall retain the same status after the Merger Conversion as these loans had prior to the Merger Conversion (except as to voting rights, if any).

**VIII.**  **<u>LIQUIDATION ACCOUNT</u>** 

For purposes of granting to Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain Deposit Accounts at the Resulting Institution a priority in the event of a complete liquidation of the Resulting Institution, the Resulting Institution will, at the time of the Merger Conversion, establish a liquidation account in an amount equal to the net worth of Elberton as shown on its latest statement of financial condition contained in the final prospectus used in connection with the Merger Conversion or, if no such statement is included, the net worth of Elberton as reflected in its Call Report for the same quarter as the latest statement of financial condition of Oconee contained in such final prospectus. The creation and maintenance of the liquidation account will not operate to restrict the use or application of any of the regulatory capital accounts of the Resulting Institution; provided, however, that such regulatory capital accounts will not be voluntarily reduced below the required dollar amount of the liquidation account. Each Eligible Account Holder and Supplemental Eligible Account Holder shall, with respect to the Deposit Account held, have a related inchoate interest in a portion of the liquidation account balance ("subaccount balance"). All Deposit Accounts having the same social security number will be aggregated for purposes of determining the initial subaccount balance with respect to such Deposit Accounts, except as otherwise provided in this Section.

------

The initial subaccount balance of a Deposit Account held by an Eligible Account Holder or Supplemental Eligible Account Holder shall be determined by multiplying the opening balance in the liquidation account by a fraction of which the numerator is the amount of the Qualifying Deposit in the Deposit Account on the Eligibility Record Date or the Supplemental Eligibility Record Date and the denominator is the total amount of the Qualifying Deposits in Elberton of all Eligible Account Holders and Supplemental Eligible Account Holders on such record dates. Such initial subaccount balance shall not be increased, and it shall be subject to downward adjustment as provided below. For Deposit Accounts in existence at both the Eligibility Record Date and the Supplemental Eligibility Record Date, if any, separate initial subaccount balances shall be determined on the basis of the Qualifying Deposits in such Deposit Accounts on each such record date.

If the deposit balance in any Deposit Account of an Eligible Account Holder or Supplemental Eligible Account Holder at the close of business on any annual closing date subsequent to the record date is less than the lesser of (i) the deposit balance in such Deposit Account at the close of business on any other annual closing date subsequent to the Eligibility Record Date or the Supplemental Eligibility Record Date or (ii) the amount of the Qualifying Deposit in such Deposit Account on the Eligibility Record Date or Supplemental Eligibility Record Date, the subaccount balance shall be reduced in an amount proportionate to the reduction in such deposit balance. In the event of a downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any increase in the deposit balance of the related Deposit Account. If all funds in such Deposit Account are withdrawn, the related subaccount balance shall be reduced to zero.

In the event of a complete liquidation of the Resulting Institution (and only in such event), each Eligible Account Holder and Supplemental Eligible Account Holder shall be entitled to receive a liquidation distribution from the liquidation account in the amount of the then-current adjusted subaccount balances for Deposit Accounts then held before any liquidation distribution may be made to shareholders. No merger, consolidation, bulk purchase of assets with assumptions of Deposit Accounts and other liabilities, or similar transactions with another institution the accounts of which are insured by the FDIC, shall be considered to be a complete liquidation. In such transactions, the liquidation account shall be assumed by the surviving institution.

The creation and maintenance of the Liquidation Account shall not operate to restrict the use or application of the equity accounts of Oconee or the Bank, except that neither Oconee nor the Bank shall declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its equity to be reduced below (i) the amount required for the Liquidation Account or (ii) the regulatory capital requirements of Oconee (to the extent applicable) or the Bank.

**IX.**  **<u>AMENDMENT OR TERMINATION OF PLAN</u>** 

If necessary or desirable, this Plan may be amended at any time prior to submission of the Plan and proxy materials to the Members of Elberton by a two-thirds vote of each of the Board of Directors of Elberton and the Board of Directors of the Bank. After submission of the Plan and proxy materials to the Members, this Plan may be amended by a two-thirds vote of each of the Boards of Directors of Elberton and the Bank only with the concurrence of the OCC. Any amendments to this Plan made after approval by the Members with the concurrence of the OCC and shall not necessitate further approval by the Members unless otherwise required.

This Plan may be terminated by a two-thirds vote of each of the Board of Directors of Elberton and the Board of Directors of the Bank at any time prior to the Special Meeting of Members, and at any time following such Special Meeting with the concurrence of the OCC in each case consistent and in accordance with the terms of the Agreement. In their discretion, the Boards of Directors of Elberton and the Bank may modify or terminate this Plan upon the order or with the approval of the OCC, and without further approval by Members.

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This Plan shall terminate if the Plan is not approved by Members or the sale of all shares of Oconee Conversion Stock is not completed within 24 months of the date of the Special Meeting of Members.

**X.**  **<u>EXPENSES OF THE CONVERSION MERGER</u>** 

Elberton and the Bank shall use their best efforts to assure that expenses incurred by them in connection with the Merger Conversion shall be reasonable.

**XI.**  **<u>TAX OPINION</u>** 

Consummation of the Merger Conversion is expressly conditioned upon prior receipt of an opinion of tax counsel with respect to federal taxation, and an opinion of tax counsel or accountants with respect to Georgia taxation, to the effect that consummation of the transactions contemplated herein will not be taxable to Oconee, the Bank or Elberton.

**XII.**  **<u>EXTENSION OF CREDIT FOR PURCHASE OF STOCK</u>** 

Neither Elberton nor the Bank shall knowingly loan funds or otherwise extend credit to any Person to purchase any shares of Oconee Conversion Stock in the Merger Conversion.

**XIII.**  **<u>PAYMENT OF FEES TO BROKERS</u>** 

Oconee may elect to offer to pay fees on a per share basis to securities brokers who assist purchasers of Oconee Conversion Stock in the Merger Conversion.

**XIV.**  **<u>EFFECTIVE DATE</u>** 

The Merger Conversion shall become effective upon (i) the filing of Articles of Merger with the Georgia Secretary of State, and any necessary filing with the OCC, with respect to the Bank Merger, and (ii) the closing of the issuance of the shares of Oconee Conversion Stock in the Offerings. The filing of Articles of Merger relating to the Bank Merger and the closing of the issuance of shares of Oconee Conversion Stock in the Offerings shall not occur until all requisite regulatory and Member approvals, non -objections and waivers have been obtained, all applicable waiting periods have expired and sufficient subscriptions and orders for the Oconee Conversion Stock have been received. The closing of the Bank Merger and the sale of shares of Oconee Conversion Stock in the Offerings shall occur consecutively and substantially simultaneously on the Closing Date.

**XV.**  **<u>INTERPRETATION OF THE PLAN</u>** 

All interpretations of this Plan and application of its provisions to particular circumstances by a majority of each of the Board of Directors of Elberton and the Board of Directors of the Bank shall be final, subject to the authority of the OCC.

## Ex1A-11

**Exhibit 11.1** 

**Consent of RP Financial, LC** 

March 23, 2023

We hereby consent to the inclusion of our appraisal of the fair market value of Elberton Federal Savings and Loan Association dated October 28, 2022, which appears in the accompanying Offering Statement on Form 1-A of Oconee Financial Corporation. We also consent to the reference to our firm under the headings "Summary" and "Terms of the Offering" in the Offering Circular.

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| |
|:---|
| Sincerely, |
| **/s/ RP FINANCIAL, LC** |

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Atlanta, Georgia

## Ex1A-11

**Exhibit 11.2** 

**Consent of Alston & Bird LLP** 

March 23, 2023

We consent to the filing of our opinion letter as an exhibit to the accompanying Offering Statement on Form 1-A of Oconee Financial Corporation. We also consent to the reference to our firm under the headings "Terms of the Offering" and "Legal Matters" in the Offering Circular. In giving our consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

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| |
|:---|
| Sincerely, |
| **/s/ ALSTON & BIRD LLP** |

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Dallas, Texas

## Ex1A-11

**Exhibit 11.3** 

**Consent of Wipfli, LLP** 

March 23, 2023

We consent to the inclusion in the Offering Circular on Form 1-A of Oconee Financial Corporation ("<u>Oconee</u>") of our report dated May 26, 2022, relating to our audit of the financial statements of Elberton Federal Savings and Loan Association as of and for the years ended December 31, 2021 and 2020. We also consent to the reference to our firm under the heading "Experts" in the Offering Circular.

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| |
|:---|
| Sincerely, |
| **/s/ WIPFLI, LLP** |

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Atlanta, Georgia

## Ex1A-11

**Exhibit 11.4** 

**Consent of Mauldin & Jenkins, LLC** 

March 23, 2023

We consent to the inclusion in the Offering Circular on Form 1-A of Oconee Financial Corporation ("<u>Oconee</u>") of our reports relating to our audits of the financial statements of Oconee as of and for the years ended December 31, 2021, 2020 and 2019. We also consent to the reference to our firm under the heading "Experts" in the Offering Circular.

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| |
|:---|
| Sincerely, |
| **/s/ MAULDIN & JENKINS, LLC** |

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Atlanta, Georgia

## Ex1A-12

**Exhibit 12.1**![LOGO](g406793page05.jpg)

One Atlantic Center

1201 West Peachtree Street

Atlanta, GA 30309-3424

404-881-7000 \| Fax: 404-881-7777

<u> </u>, 2023

Oconee Financial Corporation

41 N. Main Street

Watkinsville, Georgia 30677

Re: Oconee Financial Corporation – Offering Statement on Form 1-A

Ladies and Gentlemen:

We have acted as counsel for Oconee Financial Corporation, a Georgia corporation (the "<u>Company</u>"), in connection with its filing on the date hereof of an Offering Statement on Form 1-A (the "<u>Offering Statement</u>") with the Securities and Exchange Commission (the "<u>Commission</u>") under the Securities Act of 1933, as amended (the "<u>Securities Act</u>").

This opinion letter is being furnished pursuant to Item 16 of Form 1-A and Item 601(b)(5) of Regulation S-K under the Securities Act.

The Offering Statement registers [•] shares of the Company's common stock, par value $2.00 per share (the "<u>Shares</u>"). We understand that the Shares will be purchased and sold pursuant to a Form of Elberton Subscription Agreement or Form of Community Subscription Agreement, each as set forth in the Offering Statement, and as entered into between the Company and each purchaser of the Shares ("<u>Purchasers</u>").

In rendering the opinion expressed herein, and except as hereinafter limited, we have examined the Articles of Incorporation of the Company; the Bylaws of the Company; the Offering Statement; and records of the proceedings of the Board of Directors of the Company as we deemed necessary for purposes of expressing the opinions set forth herein. In our examination, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as original documents, and the conformity to original documents submitted to us as certified, conformed, facsimile, electronic or photostatic copies.

As to certain factual matters relevant to this opinion letter, we have relied conclusively upon originals or copies, certified or otherwise identified to our satisfaction, of such records, agreements, documents, and instruments, including certificates or comparable documents of officers of the Company and of public officials, as we have deemed appropriate as a basis for the opinions hereinafter set forth.

This opinion letter is limited in all respects to the laws of the State of Georgia, and no opinion is expressed with respect to the laws of any other jurisdiction or any effect that such laws may have on the opinions expressed herein. Any reference herein to "laws," "statutes", or "regulations" shall be deemed to mean the laws, statutes, and regulations that are applicable to transactions like the sale of the Shares contemplated by the Offering Statement. This opinion letter is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein. No opinion is given herein as to the availability of specific performance or equitable relief of any kind.

<u> Alston & Bird LLP </u>   <u> www.alston.com </u>

------

<u> </u>, 2023

Based upon and subject to the foregoing and the additional qualifications set forth below, we are of the opinion that the Shares, when issued, sold and delivered to the Purchasers and paid for by the Purchasers as contemplated by the Offering Statement, will be legally issued, fully paid and non-assessable.

This opinion letter is delivered as of the date hereof, and we make no undertaking and expressly disclaim any duty to supplement or update this opinion letter, if, after the date hereof, facts or circumstances come to our attention or changes in the law occur which could affect the opinion and other statements expressed herein. This opinion letter is being rendered solely for the benefit of the Company in connection with the matters addressed herein and is not to be used, circulated, quoted or otherwise referred to or relied upon by any other person or for any other purpose without my prior express written consent.

We consent to the filing of this opinion letter as an exhibit to the Offering Statement. In giving our consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

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| | |
|:---|:---|
| Alston & Bird LLP | Alston & Bird LLP |
| By: |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Partner |

---

## Add

**Exhibit 99.1** 

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| |
|:---|
| <br> **PRO FORMA VALUATION REPORT**<br>**Elberton Federal Savings & Loan Association**<br>**For the simultaneous merger/conversion with and into:**<br> **Oconee State Bank**<br> **Watkinsville, Georgia**<br>|
| &nbsp;&nbsp;&nbsp; <br> **Elberton Federal Savings & Loan Association**<br> Elberton, Georgia<br>|

---

**Valuation Date: October 28, 2022**![LOGO](g406793dsp1.jpg)

1311-A Dolley Madison Boulevard, Suite 2A

McLean, Virginia 22101

703.528.1700 rpfinancial.com

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**Exhibit 99.1**![LOGO](g406793dsp2.jpg)

October 28, 2022

Board of Directors

Elberton Federal Savings & Loan Association

Six Church Street

Elberton, Georgia 30635

Members of the Board of Directors:

At your request, RP<sup>®</sup> Financial, LC. ("RP Financial") has completed and hereby provides an independent appraisal ("Appraisal") of the estimated pro forma market value of the common stock which is to be offered in connection with the Agreement and Plan of Merger Conversion described below. This Appraisal is furnished pursuant to the requirements stipulated in the Code of Federal Regulations and has been prepared in accordance with the "Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization" (the "Valuation Guidelines") as originally issued by the Office of Thrift Supervision ("OTS") and accepted by the Office of the Comptroller of the Currency ("OCC") and other federal banking regulators, and applicable regulatory interpretations thereof. This Appraisal incorporates by reference the May 7, 2021 Appraisal we prepared for the regulatory application for the transaction described herein, recognizing that this Appraisal reflects subsequent changes in financial, market and other aspects.

<u>Agreement and Plan of Merger Conversion</u> 

On June 1, 2021, Elberton Federal Savings & Loan Association ("Elberton" or the "Association") entered into an Agreement and Plan of Merger Conversion (the "Agreement") with Oconee Financial Corporation ("Oconee"), a Georgia corporation, Oconee State Bank ("Oconee State Bank"), a Georgia state chartered commercial bank and the wholly-owned subsidiary of Oconee, providing for a merger conversion transaction ("Merger Conversion") whereby Elberton will convert from mutual to stock form and simultaneously merge with and into Oconee State Bank.

Pursuant to the Agreement, Elberton shall convert from a federally-chartered mutual savings association to a federally-chartered stock savings association, and immediately thereafter merge with and into Oconee State Bank with Oconee State Bank as the resulting institution. Immediately following Elberton's mutual-to-stock conversion, Oconee State Bank will acquire the 1,000 shares of common stock of Elberton issued in the conversion for $1.00 in cash, without interest, per share.

In connection with the Merger Conversion, Oconee will conduct a Subscription Offering, and if needed, a Community and/or a Syndicated Community Offering, with stock issued by Oconee in an amount within the offering range of Elberton's appraised market value as set forth herein. As detailed in the offering documents, Oconee will sell stock in a Subscription Offering to the: (1) any person holding a Qualifying Deposit in Elberton on the Eligibility Record Date (referred to as the Eligible Account Holders); (2) any person holding a Qualifying Deposit in Elberton (other than an Officer or Director and their associates) on the Supplemental Eligibility Record Date (referred to as the Supplemental Eligible Account Holders); and, (3) any person who is a Member

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| 1311-A Dolley Madison Boulevard, Suite 2A | Main: (703) 528-1700 |
| McLean, VA 22101 | Fax: (703) 528-1788 |
| mail@rpfinancial.com | www.rpfinancial.com |

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*Board of Directors* 

*October 28, 2022* 

*Page 2* 

of Elberton (other than Eligible Account Holders or Supplemental Eligible Account Holders) as of the Voting Record Date (referred to as Other Members). To the extent Oconee shares are not sold in the Subscription Offering, such shares may be sold to the general public with preference given first to natural persons, including trusts of natural persons, residing in Elberton, Georgia or Elbert County, Georgia ("Community Residents"), and to shareholders of record of Oconee on the last day of the month immediately preceding the effectiveness of the Offering Statement filed by Oconee to register the shares of Oconee Conversion Stock ("Eligible Oconee Shareholders"). Any available shares remaining in the offering will then be offered to natural persons, including trusts of natural persons, residing in Oconee County, Georgia, and last to the general public. If shares remain available for sale following the Subscription Offering and Community Offering, Oconee also may offer for sale shares of its common stock through a "syndicated community offering". Shares to be sold in the Subscription, Community and Syndicated Community Offerings will be sold at a 15% discount to the prevailing Oconee stock price based on a specific calculation method within a range of value of the Oconee common stock price. The closing of the Merger Conversion and stock sale is targeted for the first half of 2023.

<u>RP<sup>®</sup> Financial, LC.</u> 

RP<sup>®</sup> Financial, LC. ("RP Financial") is a financial consulting firm serving the financial services industry nationwide that, among other things, specializes in financial valuations and analyses of business enterprises and securities, including the pro forma valuation for savings institutions converting from mutual-to-stock form. The background and experience of RP Financial is detailed in Exhibit V-1. For its appraisal services, RP Financial is being compensated on a fixed fee basis for the original appraisal and for any subsequent updates, and such fees are payable regardless of the valuation conclusion or the completion of the conversion offering transaction. We believe that, except for the fee we will receive for the Appraisal, we are independent of Elberton, Oconee State Bank, Oconee Financial and the other parties engaged by Elberton, Oconee State Bank or Oconee Financial to assist in the transaction process.

<u>Materials Reviewed and Considered</u> 

In preparing our Appraisal, we have reviewed the Form AC Application for Conversion from Mutual to Stock Form as filed with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Georgia Department of Banking and Finance or the Board of Governors of the Federal Reserve System. We have conducted a financial analysis of the Association that has included a review of audited financial information for the fiscal years ended December 31, 2017 through December 31, 2021 and various unaudited and internal financial reports and information through September 30, 2022. We have also conducted due diligence related discussions with the Association's management, Wipfli, LLP, the Association's independent auditor; Fenimore, Kay, Harrison & Ford, LLP, the Association's conversion counsel, and Performance Trust Capital Partners, LLC, the Association's financial and marketing advisor in connection with the stock offering. All assumptions and conclusions set forth in the Appraisal were reached independently from such discussions. In addition, where appropriate, we have considered information based on other available published sources that we believe are reliable. While we believe the information and data gathered from all these sources are reliable, we cannot guarantee the accuracy and completeness of such information.

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*Board of Directors*

*October 28, 2022*

*Page 3*

We have investigated the competitive environment within which the Association operates and have assessed the Association's relative strengths and weaknesses. We have kept abreast of the changing regulatory and legislative environment for financial institutions and analyzed the potential impact on the Association and the industry as a whole. We have reviewed the economic and demographic characteristics of the Association's primary market area. We have compared the Association's financial performance and condition with selected publicly-traded thrifts in accordance with the Valuation Guidelines, as well as all publicly-traded thrifts and thrift holding companies. We have reviewed the current conditions in the securities markets in general and the market for thrift stocks in particular, including the market for existing thrift issues and initial public offerings by thrifts and thrift holding companies. We have excluded from such analysis thrifts subject to announced or rumored acquisition and/or those that exhibit other unusual characteristics.

The Appraisal is based on the Association's representation that the information contained in the regulatory applications and additional information furnished to us by the Association and its independent auditor, legal counsel and other authorized agents are truthful, accurate and complete. We did not independently verify the financial statements and other information provided by the Association, or its independent auditor, legal counsel and other authorized agents nor did we independently value the assets or liabilities of the Association. The valuation considers the Association only as a going concern and should not be considered as an indication of the Association's liquidation value.

Our appraised value is predicated on a continuation of the current operating environment for the Association and for all thrifts and their holding companies. Changes in the local, state and national economy, the legislative and regulatory environment for financial institutions and mutual holding companies, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or the value of the Association's stock alone. To the extent that such factors can be foreseen, they have been factored into our analysis.

The estimated pro forma market value is defined as the price at which the Association's common stock, immediately upon completion of a stand-alone conversion offering, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

<u>Valuation Conclusion</u> 

It is our opinion that, as of October 28, 2022, the estimated aggregate pro forma market value of the shares to be issued in the Merger Conversion transaction with Oconee equaled $3,750,000 at the midpoint. Pursuant to the regulatory conversion guidelines, the 15% valuation range indicates a minimum value of $3,187,500 and a maximum value of $4,312,500. The price per share of Oconee shares to be issued pursuant to the Merger Conversion will be determined at the closing of the Offering and will incorporate a 15% discount to the price of the Oconee shares for shares sold in the Subscription Offering, the Community and/or Syndicated Community Offerings, subject to the Oconee common stock having a per share value within a certain range.

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*Board of Directors*

*October 28, 2022*

*Page 4*

<u>Limiting Factors and Considerations</u> 

The Appraisal is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of the common stock. Moreover, because such Appraisal is determined in accordance with applicable regulatory guidelines and is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of common stock in the Subscription or Community Offerings will thereafter be able to buy or sell such shares at prices related to the foregoing valuation of the estimated pro forma market value thereof. The Appraisal reflects only a valuation range as of this date for the pro forma market value of Elberton immediately upon issuance of the stock and does not take into account any trading activity with respect to the purchase and sale of common stock in the secondary market on the date of issuance of such securities or at anytime thereafter following the completion of the Subscription and Community Offerings.

RP Financial is not a seller of securities within the meaning of any federal and state securities laws and any report prepared by RP Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities. RP Financial maintains a policy which prohibits RP Financial, its principals or employees from purchasing stock of its client institutions.

This valuation will be updated as provided for in the conversion regulations and guidelines. These updates will consider, among other things, any developments or changes in the financial performance and condition of the Association, management policies, and current conditions in the equity markets for thrift shares, both existing issues and new issues. These updates may also consider changes in other external factors which impact value including, but not limited to: various changes in the legislative and regulatory environment for financial institutions, the stock market and the market for thrift stocks, and interest rates. Should any such new developments or changes be material, in our opinion, to the valuation of the shares, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in the update at the date of the release of the update. The valuation will also be updated at the completion of the Merger Conversion transaction.

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| Respectfully submitted, |
| RP<sup>®</sup> Financial, LC. |
| ![LOGO](g406793dsp5.jpg) |
| Ronald S. Riggins |
| Managing Director |
| ![LOGO](g406793dsp5a.jpg) |
| James J. Oren |
| Director |

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| ***RP<sup>®</sup> Financial, LC.*** |
| ***i*** |

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*****TABLE OF CONTENTS*****

***Elberton Federal Savings & Loan Association***

***Elberton, Georgia***

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| DESCRIPTION |  | PAGE<br>NUMBER |
|  <u>CHAPTER ONE</u> | OVERVIEW AND FINANCIAL ANALYSIS |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Introduction |  | I.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Strategic Overview | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Strategic Overview | I.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Agreement and Plan of Merger Conversion | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Agreement and Plan of Merger Conversion | I.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Balance Sheet Trends | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Balance Sheet Trends | I.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income and Expense Trends | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income and Expense Trends | I.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Risk Management | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Risk Management | I.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lending Activities and Strategy | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lending Activities and Strategy | I.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset Quality |  | I.10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Funding Composition and Strategy | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Funding Composition and Strategy | I.12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subsidiary Operations | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subsidiary Operations | I.12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Legal Proceedings |  | I.12 |
|  <u>CHAPTER TWO</u> | MARKET AREA |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Introduction |  | II.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; National Economic Factors | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; National Economic Factors | II.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Environment | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Environment | II.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Primary Market Area | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Primary Market Area | II.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Primary Market Area Employment Sectors | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Primary Market Area Employment Sectors | II.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unemployment Trends | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unemployment Trends | II.10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposit Market Share | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposit Market Share | II.10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Competition |  | II.11 |
|  <u>CHAPTER THREE</u> | PEER GROUP ANALYSIS |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Peer Group Selection | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Peer Group Selection | III.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Condition | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Condition | III.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income and Expense Components | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income and Expense Components | III.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan Composition |  | III.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit Risk |  | III.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Risk |  | III.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Summary |  | III.13 |

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| ***RP<sup>®</sup> Financial, LC.*** |
| ***ii*** |

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*****TABLE OF CONTENTS*****

***Elberton Federal Savings & Loan Association***

***Elberton, Georgia***

***(continued)***

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| DESCRIPTION |  | PAGE<br>NUMBER |
|  <u>CHAPTER FOUR</u> | VALUATION ANALYSIS |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Introduction |  | IV.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appraisal Guidelines | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appraisal Guidelines | IV.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RP Financial Approach to the Valuation | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RP Financial Approach to the Valuation | IV.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation Analysis | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation Analysis | IV.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Financial Condition | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Financial Condition | IV.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Profitability, Growth and Viability of Earnings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Profitability, Growth and Viability of Earnings | IV.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Asset Growth | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Asset Growth | IV.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Primary Market Area | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Primary Market Area | IV.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Dividends | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Dividends | IV.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Liquidity of the Shares | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Liquidity of the Shares | IV.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Marketing of the Issue | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Marketing of the Issue | IV.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Public Market | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Public Market | IV.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The New Issue Market | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The New Issue Market | IV.14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The Acquisition Market | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The Acquisition Market | IV.16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. Management | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. Management | IV.16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. Effect of Government Regulation and Regulatory Reform | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. Effect of Government Regulation and Regulatory Reform | IV.17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Summary of Adjustments | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Summary of Adjustments | IV.17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation Approaches | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation Approaches | IV.18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Price-to-Earnings ("P/E") | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Price-to-Earnings ("P/E") | IV.19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Price-to-Book ("P/B") | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Price-to-Book ("P/B") | IV.20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Price-to-Assets ("P/A") | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Price-to-Assets ("P/A") | IV.20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comparison to Recent Offerings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comparison to Recent Offerings | IV.20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation Conclusion | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation Conclusion | IV.22 |

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| ***RP<sup>®</sup> Financial, LC.*** |
| ***iii*** |

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***LIST OF TABLES***

***Elberton Federal Savings & Loan Association***

***Elberton, Georgia***

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|:---|:---|:---|
| TABLE<br> NUMBER | DESCRIPTION | PAGE |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 | Historical Balance Sheets | I.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 | Historical Income Statements | I.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 | Asset Quality | I.11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 | Summary Demographic/Economic Data | II.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 | Primary Market Area Employment Sectors | II.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 | Market Area Largest Employers | II.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 | Unemployment Trends | II.10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 | Deposit Summary | II.11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 | Market Area Deposit Competitors – As of June 30, 2022 | II.12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 | Peer Group of Publicly-Traded Thrifts | III.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 | Balance Sheet Composition and Growth Rates | III.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 | Income as a Pct. of Avg. Assets and Yields, Costs, Spreads | III.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 | Loan Portfolio Composition and Related Information | III.10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5 | Credit Risk Measures and Related Information | III.11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6 | Interest Rate Risk Measures and Net Interest Income Volatility | III.12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 | Peer Group Market Area Unemployment Rates | IV.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 | Pricing Characteristics and After-Market Trends | IV.15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 | Valuation Adjustments | IV.17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 | Public Market Pricing Versus Peer Group | IV.21 |

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| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.1*** |

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**I. OVERVIEW AND FINANCIAL ANALYSIS** 

<u>Introduction</u> 

Elberton Federal Savings & Loan Association ("Elberton" or the "Association") is a federally-chartered mutual savings and loan association located in Elberton, Elbert County, Georgia. The City of Elberton is in northeastern Georgia along the South Carolina border approximately 35 miles east of Athens, Georgia, the closest metropolitan area. A map showing the Association's office location is set forth in Exhibit I-1.

Operating since its founding in 1922 as a savings institution, the Association has traditionally served the local community's retail savers and borrowers and provided a high level of personal service to individuals in the community served with residential home loans and retail savings products. The Association seeks to focus on customers and employees, operating in a safe and sound manner and being a contributor to local community. The Association provides traditional deposit services such as savings, money market and certificates of deposit ("CDs") accounts at a single retail banking facility on Church Street in Elberton. In terms of lending activities, the Association offers first position fixed rate residential mortgage loans and consumer loans secured by time deposit accounts. Given the small size and limited staff, the Association does not offer checking accounts and commercial loans and does not provide online banking.

The Association's primary regulator is the Office of the Comptroller of the Currency ("OCC"). Elberton is a member of the Federal Home Loan Bank ("FHLB") system, and its deposits are insured up to the regulatory maximums by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC").

<u>Strategic Overview</u> 

At September 30, 2022, Elberton reported $26.5 million in assets, $20.6 million in deposits and equity of $4.8 million, equal to 18.1% of total assets (see Exhibit 1-2 for excerpts from audited financial statements for calendar years 2020 and 2021 and internal and call report financial statements through September 30, 2022 and Exhibit I-3 for summary financial highlights 2017 to present).

Elberton recorded a net loss of $145,000 for the year ended December 31, 2021, and a net loss of $188,000 for the most recent 12-month period ended September 30, 2022, representing negative 0.67% of average assets. The operating results include Merger Conversion related expenses.

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| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.2*** |

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Since its founding, Elberton has primarily served the residents of Elbert County and the surrounding area, with its primary strategy consisting of meeting the 1-4 family residential mortgage loan and personal savings needs of its local retail customer base. Given the small asset size and limited market area served by its single location, the Association has not significantly diversified its lending and deposit offerings or delivery channels. While this strategy has been effective historically, the competitive banking environment has undergone dramatic change, and so the financial, staffing and technology investment to transform the Association's strategy presents significant challenges today.

The Association operates in a highly competitive market with a county population base of less than 20,000 people. There are four financial institutions and several other consumer financial service providers (credit unions, investment firms, and others) that operate locally, most of which have greater size, resources, product offerings and delivery channels than the Association. The Association is at a distinct disadvantage given its small size, limited products and services, small staff and no online banking.

Elberton's small-scale operations have become increasingly handicapped. First, the Association has not invested in the technology to offer digital banking options such as ATMs, telephone, or online banking – this has limited the ability to attract a younger customer base and those seeking such options. Second, the Association has not established a checking product line and continues to rely on savings accounts and time deposits as the primary funding source – this has limited the ability to build lower cost transaction accounts and attract business customers. Third, the Association has not diversified the lending products beyond long term fixed rate 1-4 family residential loans – this has limited the ability to meet customer credit needs as well as the ability to enhance asset yields and increase the rate sensitivity of the loan portfolio. Fourth, the small asset size limited the ability to offer fee income generating financial services. These factors have contributed to the limited ability to expand, increase its competitive profile, and enhance profitability. Finally, the small size has limited to the capacity to hire additional staff to facilitate expansion and diversification and address management succession. Thus, the Association's long-term viability is a source of concern by the Board and management.

As noted, the limited product line primarily consists of fixed rate 1-4 family residential mortgage loans (comprising approximately 95% of the loan portfolio), time deposit account-secured personal loans, and higher risk-weight land and church loans. Elberton does not offer checking accounts and thus has found it difficult to compete with other banking and financial services companies through its single office, limited product offerings and no digital banking capability. When coupled with its limited market presence and aging customer base, there are challenges to grow and attract a younger customer base for long-term viability.

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.3*** |

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In reviewing its current situation, Elberton evaluated strategic alternatives, including completion of a mutual-to-stock conversion on stand-alone basis or a merger with another financial institution. Although a stock conversion can theoretically strengthen equity to support investment in personnel, technology and market area expansion, the challenges are the small offering size, high proportional offering costs, and the ability to successfully attract investors to complete a stand-alone conversion. Further, the amount of equity that could be raised in a conversion offering is considered insufficient to make the necessary technology, diversification and staffing investments to foster improved profitability and long-term viability. Thus, the Association has determined that seeking a merger partner to be the best strategy. Given that there are no mutual thrift or mutual holding company acquirers in the region, the only viable merger alternative is to pursue a Conversion Merger with a stock financial institution.

<u>Agreement and Plan of Merger Conversion</u> 

On June 1, 2021, Elberton entered into the Agreement with Oconee and Oconee State Bank for a Merger Conversion. Specifically, Elberton shall convert to a federally-chartered stock savings association, and immediately subsequent thereto, merge with and into Oconee State Bank with Oconee State Bank as the Resulting Institution. Immediately following Elberton's mutual-to-stock conversion, Oconee State Bank will acquire the shares of common stock of Elberton issued in the conversion for $1.00 in cash, without interest, per share.

In connection with the Merger Conversion, Oconee will conduct a Subscription Offering, and if needed, a Community and/or a Syndicated Community Offering, with stock issued by Oconee in an amount within the offering range of Elberton's appraised market value as set forth herein. As detailed in the offering documents, Oconee will sell stock in a Subscription Offering to the: (1) any person holding a Qualifying Deposit in Elberton on the Eligibility Record Date (referred to as the Eligible Account Holders); (2) any person holding a Qualifying Deposit in Elberton (other than an Officer or Director and their associates) on the Supplemental Eligibility Record Date (referred to as the Supplemental Eligible Account Holders); and, (3) any person who is a Member of Elberton (other than Eligible Account Holders or Supplemental Eligible Account Holders) as of the Voting Record Date (referred to as Other Members). To the extent Oconee shares are not sold in the Subscription Offering, such shares may be sold to the general public with preference given first to natural persons, including trusts of natural persons, residing in Elberton, Georgia or

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.4*** |

---

Elbert County, Georgia ("Community Residents"), and to shareholders of record of Oconee on the last day of the month immediately preceding the effectiveness of the Offering Statement filed by Oconee to register the shares of Oconee Conversion Stock ("Eligible Oconee Shareholders"). Any available shares remaining in the offering will then be offered to natural persons, including trusts of natural persons, residing in Oconee County, Georgia, and last to the general public. If shares remain available for sale following the Subscription Offering and Community Offering, Oconee also may offer for sale shares of its common stock through a "syndicated community offering". Shares to be sold in the Subscription, Community and Syndicated Community Offerings will be sold at a 15% discount to the prevailing Oconee stock price based on a specific calculation method within a range of value of the Oconee common stock price. The closing of the Merger Conversion and stock sale is targeted for the first half of 2023.

<u>Balance Sheet Trends</u> 

Table 1.1 shows the historical balance sheet data since year end 2017 (also see Exhibit I-4). Over this period, assets increased at a 2.8% annual rate, with the highest increase in assets occurring in 2020 due to reduced consumer spending and federal government pandemic stimulus payments, both of which increased the deposit portfolio. Assets declined in 2022 as borrowings were repaid using available liquidity, as business activity subsided and in view of the pending merger. The loan portfolio balance has trended upward since fiscal 2017, increasing at a higher annual rate than assets, reaching 86.3% of assets at September 30, 2022. Such loans increased year-to-date 2022 as the rising interest rate environment since early 2022 led to a decline in loan repayments and refinancing. Cash balances increased notably in 2020 and 2021 due to the rise in deposits, and since then the balance has declined. Investment securities totaled $2.3 million at September 30, 2022, or 8.6% of assets (see Exhibit I-5 for portfolio composition).

Fixed assets totaled $220,000 or 0.83% of assets at September 30, 2022, consisting of investment in land, building, and furniture, fixtures, and equipment at the single office location.

Over the period, funding needs have been met through retail deposits, borrowings, internal cash flows and retained earnings, and increased at an annual rate of 6.35%. Certificates of deposit ("CDs") have continuously made up the largest portion of deposits, totaling $8.9 million as of September 30, 2022, 43.2% of total deposits. FHLB advances have periodically provided supplemental funding and totaled $1.0 million at September 30, 2022, with maturities extending to 2024.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.5*** |

---

Table 1.1

Elberton Federal Savings & Loan Association

Historical Balance Sheets

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | | | | | | | | | | | 2017-2022Q3<br>Annualized<br>Growth |
|  | As of December 31, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | | | 2017-2022Q3<br>Annualized<br>Growth |
|  | 2017 | 2017 | 2018 | 2018 | 2019 | 2019 | 2020 | 2020 | 2021 | 2021 | As of Sept. 30, 2022 | As of Sept. 30, 2022 | 2017-2022Q3<br>Annualized<br>Growth |
|  | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Pct |
|  | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | (%) |
|  <u>Total Amount of:</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  Assets | $23262 | 100.00% | $23715 | 100.00% | $24308 | 100.00% | $27011 | 100.00% | $28325 | 100.00% | $26482 | 100.00% | 2.77% |
|  Loans Receivable (net) | 18622 | 80.05% | 18412 | 77.64% | 19435 | 79.96% | 20718 | 76.70% | 22454 | 79.27% | 22851 | 86.29% | 4.40% |
|  Cash and Equivalents | 721 | 3.10% | 492 | 2.07% | 420 | 1.73% | 2432 | 9.00% | 2596 | 9.17% | 774 | 2.92% | 1.51% |
|  FHLB Stock | 178 | 0.77% | 178 | 0.75% | 206 | 0.85% | 207 | 0.77% | 89 | 0.31% | 89 | 0.34% | -13.59% |
|  Investment Securities | 3337 | 14.35% | 4244 | 17.89% | 3864 | 15.90% | 3299 | 12.21% | 2733 | 9.65% | 2276 | 8.59% | -7.74% |
|  Fixed Assets | 285 | 1.23% | 263 | 1.11% | 257 | 1.06% | 244 | 0.90% | 236 | 0.83% | 220 | 0.83% | -5.32% |
|  Other Assets | 118 | 0.51% | 127 | 0.54% | 125 | 0.52% | 112 | 0.41% | 217 | 0.77% | 272 | 1.03% | 19.18% |
|  Deposits | $15400 | 66.20% | $15517 | 65.43% | $15326 | 63.05% | $17932 | 66.39% | $21308 | 75.23% | $20631 | 77.91% | 6.35% |
|  Borrowings | 2850 | 12.25% | 3250 | 13.70% | 3850 | 15.84% | 3850 | 14.25% | 2000 | 7.06% | 1000 | 3.78% | -19.79% |
|  Other Liabilities | 27 | 0.12% | 29 | 0.12% | 35 | 0.15% | 51 | 0.19% | 34 | 0.12% | 57 | 0.22% | 17.06% |
|  Equity | 4985 | 21.43% | 4919 | 20.74% | 5096 | 20.97% | 5177 | 19.17% | 4983 | 17.59% | 4794 | 18.10% | -0.82% |
|  Net Unrealized Gain/(Loss) on Investment/MBS Available for Sale | 24) | -0.10% | 73) | -0.31% | $44 | 0.18% | $102 | 0.38% | $53 | 0.19% | 71) | -0.27% |  |
|  Loans/Deposits | 120.92% |  | 118.66% |  | 126.81% |  | 115.53% |  | 105.38% |  | 110.76% |  |  |
|  Offices Open | 1 |  | 1 |  | 1 |  | 1 |  | 1 |  | 1 |  |  |

---

(1) Ratios are as a percent of ending assets.

Source: Elberton's audited financial statements (2017-2021), September 30, 2022 call report.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.6*** |

---

Although equity has been strong, there has been a recent decline due to operating losses (largely due to merger related expenses) and the decline in value of available for sale investment securities. The equity/assets ratio decreased from 21.43% at year-end 2017 to 18.10% as of September 30, 2022. The Association maintained surpluses relative to all its regulatory capital requirements at September 30, 2022, and there were no intangible assets.

<u>Income and Expense Trends</u> 

Table 1.2 summarizes income and expense trends since 2017 (see Exhibit I-6 for additional data). The Association has generally recorded low profitability or small operating losses, and there was a loss reported for the most recent 12-month period. Principal factors leading for these operating results include: limited non-interest income as there are no checking account fees and nominal other fee income; modest net interest income level owing to a high proportion of lower-yielding residential loans and no non-interest bearing checking accounts, and the small operating size and certain required operating expenses. Also, merger related expenses impacted earnings in 2021 and 2022. For the 12 months ended September 30, 2022, the net loss was $188,000, equal to 0.67% of average assets. For the same period, the adjusted (core) net loss was estimated at $21,000 excluding merger related expenses.

Elberton's net interest income ratio to average assets has generally declined in recent years due to the prevailing interest rate environment. The reduction in market interest rates in early 2020 notably reduced interest income from 4.05% of average assets in 2019 to 3.38% for 2021 as existing fixed rate residential loans were refinanced into lower rates and new originations were made at lower rates. The net interest income ratio thus declined from 3.42% in 2019 to 2.77% in 2021. For the most recent 12-month period, net interest income increased slightly as deposit costs continued to decline as the Association did not increase deposit rates through September 30, 2022, notwithstanding the increase in general market interest rates in 2022. Since the rising interest rate environment in 2022 reduced fixed rate loan prepayments and repayments and few loans were originated, interest income for the most recent 12-month period was essentially unchanged.

Non-interest income has been a nominal contributor to earnings as there are no checking accounts to earn fee income and limited other financial services.

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.7*** |

---

Table 1.2

Elberton Federal Savings & Loan Association

Historical Income Statements

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| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, | 12 Months<br>Ended, | 12 Months<br>Ended, |
|  | 2017 | 2017 | 2018 | 2018 | 2019 | 2019 | 2020 | 2020 | 2021 | 2021 | Sept. 30, 2022 | Sept. 30, 2022 |
|  | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) |
|  | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) |
|  Interest Income | $953 | 4.03% | $925 | 3.91% | $975 | 4.05% | $941 | 3.66% | $956 | 3.38% | $940 | 3.37% |
|  Interest Expense | (108) | -0.46% | (118) | -0.50% | (150) | -0.62% | (179) | -0.69% | (174) | -0.62% | (148) | -0.53% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Interest Income | $845 | 3.58% | $807 | 3.41% | $825 | 3.42% | $763 | 2.97% | $782 | 2.77% | $792 | 2.84% |
|  Provision for Loan Losses | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Interest Income after Provisions | $845 | 3.58% | $807 | 3.41% | $825 | 3.42% | $763 | 2.97% | $782 | 2.77% | $792 | 2.84% |
|  Other Non-Interest Income | $1 | 0.01% | $3 | 0.01% | $1 | 0.00% | $0 | 0.00% | $3 | 0.01% | $0 | 0.00% |
|  Change in Fair Value of Equity Securities (2) | 0 | 0.00% | 0 | 0.00% | 31 | 0.13% | 19 | 0.07% | (23) | -0.08% | (5) | -0.02% |
|  Operating Expense | (769) | -3.25% | (826) | -3.50% | (818) | -3.39% | (759) | -2.95% | (772) | -2.73% | (808) | -2.90% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Operating Income | $78 | 0.33% | 17) | -0.07% | $39 | 0.16% | $22 | 0.09% | 11) | -0.04% | 21) | -0.07% |
|  Gain on Sale of Investment Securities | $3 | 0.01% | $0 | 0.00% | $21 | 0.09% | $0 | 0.00% | $0 | 0.00% | $0 | 0.00% |
|  Merger Related Expenses (3) | $0 | 0.00% | $0 | 0.00% | $0 | 0.00% | $0 | 0.00% | 134) | -0.47% | 167) | -0.60% |
|  Net Income Before Tax | $80 | 0.34% | 17) | -0.07% | $60 | 0.25% | $22 | 0.09% | 145) | -0.51% | 188) | -0.67% |
|  Income Taxes | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Income (Loss) | $80 | 0.34% | 17) | -0.07% | $60 | 0.25% | $22 | 0.09% | 145) | -0.51% | 188) | -0.67% |
|  <u>Adjusted Earnings:</u> |  |  |  |  |  |  |  |  |  |  |  |  |
|  Net Income (Loss) | $80 | 0.34% | 17) | -0.07% | $60 | 0.25% | $22 | 0.09% | 145) | -0.51% | 188) | -0.67% |
|  Add(Deduct): Gain on Sale of Inv. Securities | 3 | 0.01% | 0 | 0.00% | 21 | 0.09% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
|  Addback: Merger Related Expenses | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 134 | 0.47% | 167 | 0.60% |
|  Tax Effect | (1) | 0.00% | 0 | 0.00% | (5) | -0.02% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjusted Earnings | $82 | 0.35% | 17) | -0.07% | $76 | 0.32% | $22 | 0.09% | 11) | -0.04% | 21) | -0.07% |
|  Memo: |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Efficiency Ratio (%) | 90.83% |  | 102.04% |  | 98.98% |  | 99.56% |  | 98.44% |  | 101.98% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expense Coverage Ratio (%) | 109.91% |  | 97.65% |  | 100.91% |  | 100.44% |  | 101.24% |  | 98.06% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Return on Equity (%) | 1.62% |  | -0.33% |  | 1.20% |  | 0.43% |  | -2.82% |  | -3.82% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effective Tax Rate (%) | 0.00% |  | 0.00% |  | 0.00% |  | 0.00% |  | 0.00% |  | 0.00% |  |

---

(1) Ratios are as a percent of average assets.

(2) Reflects the change in fair value of a Freddie Mac stock investment, an equity security with a readily
determinable market value, which must be shown in the income statement.

(3) Reflects legal, accounting, valuation and other merger-related expenses.

Source: Elberton's audited financial statements (2017-2021), Call reports for period ending September 30, 2022.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.8*** |

---

Operating expenses showed an upward trend through 2019, declined in 2020 and increased somewhat in 2021 and for the 12 months ended September 30, 2022. Excluding merger related expense, core operating expenses approximated $808,000 for the 12 months ended September 30, 2022, or 2.90% of average assets. Management indicated there are other additional upward pressures on operating costs including elevated inflation. In a stock conversion scenario, there would be additional public company and stock benefit plan expenses.

The low core earnings rate is also reflected in the 98.06% expense coverage ratio (net interest income divided by operating expenses) and 102.0% efficiency ratio for the last 12 months.

The Association's credit quality has been favorable given the focus on 1-4 family residential loans. No loan loss provisions were established 2017 to date, and there have been no net loan charge offs or recoveries over this same period. As of September 30, 2022, valuation allowances totaled $41,000, or 0.18% of loans receivable.

Non-recurring items have not typically had a material impact on earnings other than the gain on the sale of Freddie Mac stock in 2019. Also, the merger related expenses are considered to be non-recurring.

There was no tax expense recorded for the time shown in Table 1.2 as the Association has accumulated net operating losses ("NOLs") from prior years' losses that are available to offset future taxable income. As of December 31, 2021, the NOLs equaled of $691,000 (federal) and $2,686,000 (state) and begin to expire in 2026 (federal) and 2020 (state). However, given the uncertainty as the ability to use such NOLs to offset future income, a 100% valuation allowance continues to be maintained against the NOLs. The marginal effective statutory tax rate, including state income taxes, approximates 25.75%. For valuation purposes, we applied this effective tax rate to the reinvestment rate from the assumed reinvestment of net conversion proceeds.

<u>Interest Rate Risk Management</u> 

The Association's balance sheet is liability sensitive based on the assumptions incorporated into its interest rate risk analysis. The residential loan portfolio is comprised primarily of fixed rate loans with maturities ranging from 5-30 years at the time of origination, however in recent years the Association has strived to reduce the terms of the loans in portfolio to 10-15 years. In addition, Elberton seeks to limit interest rate risk exposure inherent in such lending by maintaining balances of cash and short-term liquidity and investment securities classified as available for sale ("AFS"). On the liability side of the balance sheet, management of interest rate risk has been pursued primarily through funding with term CDs and utilization of term borrowings and seeking to maintain a large balance of core deposits which are less sensitive to changing interest rates. Elberton also maintains a strong equity position, currently 18.10% of assets, which provides interest-free funding, thereby reducing the interest rate risk.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.9*** |

---

The Association uses a third-party firm to perform interest rate risk calculations, including Economic Value of Equity ("EVE"). There are numerous limitations inherent in interest rate risk analyses such as the credit risk of Association's loans pursuant to changing interest rates. Additionally, such analyses do not measure the impact of changing spread relationships, as interest rates among various asset and liability accounts rarely move in tandem, as the shape of the yield curve for various types of assets and liabilities is constantly changing in response to investor perceptions and economic events and circumstances.

<u>Lending Activities and Strategy</u> 

Exhibit I-7 provides summary information of the Association's loan portfolio since December 31, 2017. The loan portfolio data reflects the nature of the Association's lending operations which are primarily focused on the origination of fixed rate first mortgage loans secured by 1-4 family residential property to local retail customers. As of September 30, 2022, 1-4 residential mortgage loans comprised 97.05% of total loans. Other loans in portfolio consisted of small balances of land loans, church loans and loans secured by deposit accounts. Most of the Association's loans are secured by real estate in Elbert County.

<u>First Lien Residential Real Estate Lending</u> 

As a traditional thrift institution, Elberton's historical lending focus is the origination of first lien 1-4 family residential real estate loans secured by local properties for portfolio. The Association does not sell loans to other parties or purchase loans from other parties and does not originate second position residential loans such as home equity loans or lines of credit. The first position loans totaled $22.216 million as of September 30, 2022. All the Association's residential first position loans are fixed rate loans, with terms to maturity of between five and 30 years. The loans are originated on internal loan documents, and thus are not conforming to secondary market standards. The portfolio includes a modest amount of 1-4 family residential loans secured by rental property. These loans are originated with terms and conditions that account for the increased risk of such loans.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.10*** |

---

Loans are originated with maximum 80% loan-to-value ratios ("LTV"), although a portion of the loans in portfolio (about 15%) are first-time homebuyer loans that have LTV ratios of up to 90%. In terms of the underwriting process, the Association does not obtain credit scores for borrowers, instead depending upon the personal knowledge of the borrower and the property to underwrite the loan. Debt-to-income ratios are limited to 39%, going up to 45% for first-time homebuyers.

<u>Commercial Real Estate/Multi-Family Lending</u> 

Elberton does not engage in commercial real estate or multifamily property lending. The Association holds a small number of loans on local churches, and such loans totaled $389,000 as of September 30, 2022. These loans are community-based loans, and the Association has not had any delinquencies related to these loans.

<u>Land/Agriculture Loans</u> 

Elberton does not engage in construction lending. There is a small balance of land loans in portfolio ($28,000) as of September 30, 2022, which consisted of a few loans on local land. These properties were not intended to be developed for residential housing, but instead represent land owned by individuals. The Association reported $73,000 of agriculture loans, which similarly were secured by land with no buildings and used for agriculture purposes.

<u>Commercial Business Lending</u> 

Elberton does not engage in commercial business lending.

<u>Consumer Lending</u> 

To a minor extent, Elberton originates consumer loans to individuals who reside or work in the Association's market area, consisting solely of loans secured by deposit accounts. As of September 30, 2022, loans secured by deposit accounts totaled $186,000, or 0.8% of total loans. These loans are originated for up to 90% of the underlying balance in the deposit account, at a rate of 2.5% above the yield on the deposit account. The Association offers such loans as a courtesy to existing customers and does not emphasize such loans.

<u>Asset Quality</u> 

Elberton's lending operations. which are focused on residential mortgage lending in the local market coupled with relatively conservative loan underwriting, have limited asset quality issues for the Association. Continued emphasis on proper underwriting has resulted in non-performing assets and loans greater than 90 days delinquent and still accruing ("NPAs") remaining below 0.50% of assets over the past five and three quarter years. Further, based on the internal allowance for loan and lease losses ("ALLL") calculations, the Association has not recorded a loan charge off or recovery over the same time period and has not established a provision for loan loss during this period (historical details of NPAs are included in Table 1.3 and Exhibit I-8).

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.11*** |

---

To track the Association's asset quality and the adequacy of valuation allowances, Elberton has established detailed asset classification policies and procedures which are consistent with regulatory guidelines. Detailed asset classifications are reviewed quarterly by senior management and the Board. The required level of valuation allowances is based on historical loss experience, the types and amounts of loans in portfolio, adverse situations that may affect borrower's ability to repay, estimated values of underlying collateral, peer group information and prevailing economic conditions. Pursuant to these procedures, when needed, the Association establishes additional valuation allowances to cover anticipated losses in classified or non-classified assets. As of September 30, 2022, the Association maintained an allowance for loan losses of $41,000, equal to 0.18% of net loans receivable.

Table 1.3

Elberton Federal Savings & Loan Association

Non-Performing Assets

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | 9/30/2022 |
|  | ($000) | ($000) | ($000) | ($000) | ($000) |
|  Non-Accruing Loans | $75 | $0 | $136 | $93 | $132 |
|  Accruing Troubled Debt Restructurings | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Non-Performing Loans | $75 | $0 | $136 | $93 | $132 |
|  Loans >90 Days Del. and Accruing | $0 | $0 | $0 | $0 | $0 |
|  Real Estate Owned (Net) | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total NPAs+90 Days Del. | $75 | $0 | $136 | $93 | $132 |
|  NPAs+90+ as a % of Assets | 0.32% | 0.00% | 0.50% | 0.33% | 0.50% |
|  NPLs as a % of Loans | 0.41% | 0.00% | 0.66% | 0.41% | 0.58% |
|  <u>MEMO:</u> |  |  |  |  |  |
|  Allowance for Loan Losses | $41 | $41 | $41 | $41 | $41 |
|  ALLs/Non-Performing Loans | 54.67% | NM | 30.15% | 44.09% | 31.06% |
|  ALLs/Loans HFI | 0.22% | 0.21% | 0.20% | 0.18% | 0.18% |
|  Net Chargeoffs (Recoveries) | $0 | $0 | $0 | $0 | $0 |

---

Source: Elberton's call reports.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.12*** |

---

<u>Funding Composition and Strategy</u> 

Deposits have traditionally accounted for most of the Association's interest-bearing liabilities, and at September 30, 2022 deposits equaled $20.6 million, or 77.9% of assets. Exhibit I-9 sets forth information regarding the Association's deposit base since December 31, 2017, including the maturity composition of the CD portfolio. Of the CDs with balances less than $250,000, $3.5 million or 38.9% of the CDs were scheduled to mature in one year or less. There were no brokered or other wholesale-type deposits in portfolio as of September 30, 2022.

The Association does not offer checking accounts, which reduces office customer traffic and data processing expenses, while also reducing fee income benefits. Money market and savings accounts totaled $10.1 million (48.7% of deposits) and $1.7 million (8.0% of deposits), respectively.

Elberton maintained borrowed funds totaling $1.0 million as of September 30, 2022, bearing an interest cost of 1.69% and a maturity in August 2024. This FHLB advance was taken down in part to extend the liability term and assist in interest rate risk.

<u>Subsidiary Operations</u> 

As of September 30, 2022, Elberton did not have any subsidiary operations.

<u>Legal Proceedings</u> 

Elberton is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business which, in the aggregate, are believed by management to be immaterial to the financial condition of the Association.

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**II. OPERATING ENVIRONMENT AND MARKET AREA** 

<u>Introduction</u>

Elberton conducts operations from its single office location in Elberton, Elbert County, Georgia, located in northeastern Georgia along the South Carolina border. Elberton is located about 30 miles east of Athens, Georgia and 110 miles east of Atlanta, Georgia. The Association considers Elbert County to be the primary market area for depository activities, with a majority of the loans held in portfolio secured by property in this county. We have examined the Association's market area in terms of demographic and economic characteristics and conditions in relation to the impact of the market area on the pro forma market value of Elberton.

<u>National Economic Factors</u>

After expanding for over 10 years, the longest on record, the national economic expansion came to an end in the second quarter of 2020 as a result of the COVID-19 pandemic and related shutdown of businesses and economic activity on both a personal and business basis. Through September 2022, the worldwide impact of COVID-19 has caused a substantial change in current and go-forward expectations in many economic performance factors, including the United States GDP growth. Following annual GDP growth in the range of 1.0% to 3.0% during the most recent economic expansion, the United States GDP increased by 0.3% for calendar year 2020, with a sharp decline in the second quarter (31.2%) and strong growth in the third quarter (33.8%) as a result of the implementation of federal assistance payments. More recent GDP growth was 5.6% for calendar year 2021, indicating a return to growth, but still supported by notable government programs, and a decline for the first half of 2022 of 1.1%, as the economy remains impacted by fallout of the pandemic and related issues such as inflation, rising interest rates and supply-chain interruptions, among other impacts. Based on the most recent Wall Street Journal ("WSJ") economists' forecast, GDP is projected to increase by 1.3% for the second half of 2022.

The economy has recorded job growth in recent years, with an average of 2.4 million jobs added annually over the 2015-2019 time period, indicating a steady and notable growth period. As was the case with GDP performance noted above, United States job growth turned negative in March 2020, with the labor force contracting by 1.7 million in March and 20.7 million in April 2020, reflecting an unprecedented deterioration in the employment sector of the economy. During the May-December 2020 time period, a total of 12.3 million jobs were added to the workforce, reflecting a recovery of a portion of the prior losses. A further 6.23 million jobs were added in 2021 and 3.4 million jobs through September 2022. Near-term expectations for employment gains are for continued improvement, with quarterly average job growth of 390,000 jobs as estimated by the WSJ economists forecast.

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Economists have been focused in recent periods on the national unemployment rate, which prior to 2020 had been at levels considered to be "full employment" for the last year and a half. The unemployment rate equaled 3.5% as of December 2019, the lowest rate in 2019. The economic disruption caused by the COVID-19 crisis caused the rate to reach 14.8% for April 2020, a level not seen since the Great Depression. The national unemployment rate trended downward to reach 6.7% as of December 2020 and a further 3.9% at December 2021 and reflecting the job increases and a return to pre-COVID economic activity noted earlier. Such unemployment rate has further declined to 3.5% as of September 2022. There remains excess demand for employees in many industries, with such demand resulting in some companies unable to return to their pre-COVID level of operations and the need to offer higher compensation to attract employees becoming part of the inflationary trend. There remain other longer-term impacts on job growth such as the aging of the employment base, further loss of the working age population base as baby boomers retire, increased use of technology to reduce or replace workers in the workplace, and the overall slower rate of population growth compared to prior generations.

For 2020, the annualized national inflation rate was 1.20%, indicating inflation had been kept under control, which is a long term focus of the Federal Reserve policy. More recent inflation data indicated an annualized inflation rate of 4.7% for 2021 and 8.3% for the nine months ended September 2022. The 2020 inflation rate was impacted substantially by the COVID-19 crisis, reflecting the reduced demand for products and services nationwide and therefore lower inflation. Since the start of the second quarter of 2021, the inflation rate has dramatically increased to a decades old high, reflecting increased consumer demand, a lack of available individuals to full open positions, limitations on production due to COVID-19 labor interruptions and substantial global supply chain issues. This has become a substantial issue for future economic performance in the United States. The Federal Reserve has addressed the inflation rate by raising interest rates to reduce demand, however this action will continue through at least the rest of 2022 and current expectations are that a recession will occur within a year or so as a result of the reduced economic activity related to higher interest rates. The most recent WSJ economists forecast indicated an expected 2022 inflation rate of 6.9%, declining to 2.9% for calendar year 2023 and further to 2.3% in 2024.

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|  | ***Page II.3*** |

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After recording a strong performance in calendar year 2019, the major stock market indices reached all-time highs in early 2020, and then fell quickly and dramatically through March 2020 as a result of worldwide fears of economic slowdowns or recession, based on the emergence of the COVID-19 pandemic. Subsequent to March 2020, these indices have recovered substantially all of the losses incurred or reached new highs due to government spending actions and as the national economy has mostly returned to pre-pandemic levels. From an all-time high of 29,551.42 on February 12, 2020, the DJIA fell by 37.1% to 18,591.93 as of March 23, 2020. Since that date, the DJIA has recorded a recovery to 28,755.21 as of September 30, 2022, however this level reflects a sharp drop from early 2022 levels approaching 37,000 as various concerns such as inflation, rising interest rates, labor shortages, supply chain restrictions, the Ukraine War, and recession fears have caused investor pessimism. Similarly, these trends have also occurred in the other major market indexes such as the S&P 500, which settled at 3,585.62 on September 30, 2022, well above the February 2020 all-time high of 3,386.15, but a decline from a recent 2022 high of 4,796.56, while the NASDAQ has exceeded the February 2020 high of 9,817.18 to reach 10,575.62 as of September 30, 2022, which also represents a recent decline from a January 2022 high of 15,832.80.

Similar to the major market indices noted above, the major banking market indexes also increased substantially in calendar year 2019 and then fell quickly and dramatically as a result of worldwide fears of economic slowdowns or recession in early 2020. From an all-time high of 165.73 on January 2, 2020, the S&P BMI Bank Index fell by 49.4% through March 23, 2020 to 83.73 based primarily in expected lower income and eventual loan losses due to the economic decline. Since that low, the SNL BMI index has recovered to 136.69, representing an increase of 63.3%. However, similar to the broader market indexes, the BMI Index has fallen from an early 2022 high of 202.27, as the impact of various factors listed above have impacted the outlook for banking industry performance. There has been a general positive market conclusion of the eventual impact of COVID-19 and the potential economic fallout to financial institutions.

Regarding factors that most directly impact the banking and financial services industries, through early 2020, the residential real estate industry was relatively healthy, as new and previously owned home sales increased, and residential housing prices have continued to trend upward in most metropolitan areas of the country. Homebuilders were expecting a more stable trend in new home construction with residential housing starts projected to increase somewhat from 2020 to 2021. As a result of the pandemic and the corresponding lower interest rates, residential loan volumes dramatically increased for 2020 and 2021, with many mortgage banking

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operations recording substantial increases in volumes and profits. Further, the recent implementation of rate increases by the Federal Reserve initially caused additional demand for housing as individuals have decided to make housing purchases now versus later when prices are expected to be higher. However, the Federal Reserve interest rate hikes which began in March 2022, and have totaled 3.00% through September 30, 2022, have caused a sharp reduction in home sales and the related mortgage banking activity as the fixed rate residential loan secondary market rates have approached or exceeded 5%. As a result of the above, national home price indices have recorded notable increases in 2020, 2021 and year-to-date 2022, however there are expectations that housing prices will begin to record declines due to the higher rate environment. After reaching a high of $413,800 in June 2022, such figure declined to $389,500 in August 2022. These figures compare favorably to the generational low of $169,000 recorded in March 2009 during the national recession.

Based on the consensus outlook of economists surveyed by The Wall Street Journal in July 2022, the economists forecasted a rising federal funds rate from 3.294% in December 2022 to 3.47% in June 2023 and a subsequent decline to 2.93% in December 2024. On average, the economists forecasted that the 10-year Treasury yield would equal 3.32% in December 2022 and decline to 3.22% in December 2023 and 3.17% in December 2024.

The September 2022 mortgage finance forecast from the Mortgage Bankers Association (the "MBA") reflected notable trends in units and dollars of residential housing. The forecast indicated that 2024 existing home sales are expected to reach 5.454 million, up slightly from 5.409 million in 2022 and new home sales were forecasted to equal 784,000 in 2024 compared to 2022 sales of 668,000. The 2024 median sale price for existing homes was forecasted to increase to $410,600, up from $381,800 in 2022, while the new homes price was forecasted to reach $443,700 in 2024 versus $435,700 in 2022. Total mortgage production was forecasted to decrease through 2024 to $2.501 trillion, compared to $2.324 trillion in 2022. The forecasted level in 2024 originations was based on a 2% decrease in refinancing volume, offset by a 12% increase in purchase volume. Purchase mortgage originations were forecasted to total $1.806 trillion in 2024, versus refinancing volume totaling $0.695 billion. Housing starts for 2024 were projected to total 1.660 million, versus 1.580 million in 2022.

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|  | ***Page II.5*** |

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<u>Interest Rate Environment</u> 

The pandemic outbreak and implied impact to the national economy, which became more and more evident throughout early 2020, led the Federal Reserve to reduce interest rates to essentially zero, with a prime rate of 3.25%, and a targeted fed funds rate of 0.00% to 0.25%, indicating that the Federal Reserve's direct interest rate levers had been implemented to support the national economy. After reaching a low of 0.52% on August 4, 2020, the 10-year Treasury Bond traded in the range of 1.00% to 1.50% through early 2022, at which time the rate began to increase as inflation trends increased and as the Federal Reserve began increasing interest rates. Through September 30, 2022, the Federal Reserve has increased the base federal funds target rate a total of 3.00% from 0.25% to 3.25%. The 10-year Treasury rate was 3.83% as of September 30, 2022. Similarly, after reaching a low of 1.19% on August 4; 2020, the 30-year Treasury Bond rate has trended upward to 3.79% as of September 30, 2022. The latest Wall Street Journal survey of leading economists indicates a modestly declining rate scenario starting in mid-2023 through 2024 with short-term rates declining more than long term rates.

The current rising interest rate environment is expected to benefit financial institutions as adjustable-rate loans will reprice upward, either immediately for prime based loans, or over a period of time, while the level of industry liquidity will likely limit the need to increase deposit rate offerings at the same pace. Residential loan demand, particularly for refinance transactions, has been substantially impacted by rising interest rates, and the remaining lending sectors may be impacted by a potential recession, thus indicating some limitations on bank lending and activity in the near-term future. Historical interest rate trends are presented in Exhibit II-1.

<u>Primary Market Area</u>

Elbert County is located along the Savannah River in northeastern Georgia, within the foothills of the Appalachian Mountains. Historically, Elbert County maintained a significant agriculture economic base. Currently, agriculture maintains a traditional role in Elbert County, with a concentration in poultry production, while land use is focused on hay/pasture. As is typical in rural areas, manufacturing comprises a notable portion of the economy. Further, Elbert County produces approximately one-third of the granite mined in the United States, and the county is widely known for its granite production. There are approximately 40 quarries in operation in the county. The county's post-Civil War history has largely revolved around the granite mining industry, following the opening of the first commercial quarry and manufacturing plant in 1889. As the industry grew in the early 1900s, it created development in railroad lines for passenger and freight, enhancing the development of the county.

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Outdoor recreation and an attractive lifestyle are also characteristics of the area. Elbert County is bordered to the east by the Savannah River and two U.S. Army Corps of Engineers lakes, making the county a prime destination for water-based recreational activities. Clarks Hill Lake is on the southern tip of the county, while just north of it is Lake Russell. Two major parks are in Elbert County, the Bobby Brown Park Outdoor Recreation Area and the Richard B. Russell State Park on Lake Russell. The economy of Elbert County has become increasingly diversified over the past several decades, which has provided more of a cushion against any major downturn in the area's economy, which has historically been oriented toward the cyclical manufacturing sector. At the same time, population and household growth rates in the Association's market have been limited, which have impacted Elberton's ability to realize significant loan, deposit, and earnings growth. The market area also experiences competition from other banking services providers, including credit unions.

Elberton's future growth opportunities and financial strength largely depend on the growth in the local market area served. As presented in Table 2.1, the market area's demographic trends have been examined to help analyze how the various market conditions could affect the Association's ability to realize franchise, balance sheet and earnings growth, with additional data presented in Exhibit II-2. The population in the primary market area served by the Association (19,400 residents) has increased slightly over the last five years at a 0.2% annual rate and is projected to continue a slow increase over the next five years. This slightly expanding population base represents a favorable statistic for financial institutions such as Elberton, as the demand for personal financial services is related to the changes in the population base of a market area. In contrast, the state of Georgia is projected to record relatively strong annual population growth rate over the next five years, 50% higher than the growth rate for the nation.

Similar to the population trends noted above, the number of households recorded slight increases in Elbert County from 2017 to 2022, and this trend is projected to continue over the next five years. Elbert County's changes in population and households were less favorable in comparison to the levels reported by the state of Georgia and the United States, however many small or rural markets, like Elbert County, have experienced slow or minimal growth as younger residents have tended to leave these regions for larger metropolitan areas that have greater employment opportunities. The population base in Elbert County is also somewhat older than Georgia and the nation, as Elbert County reported a lower proportion of residents between the ages of 15 and 34, and a higher proportion of residents over 55 years of age, as compared to state and nationwide aggregates.

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|  | ***Page II.7*** |

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Table 2.1

Elberton Federal Savings & Loan Association

Summary Demographic/Economic Data

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Year | Year | Year | Growth Rate | Growth Rate |
|  | 2017 | 2022 | 2027 | 2017-2022 | 2022-2027 |
|  | | | | (%) | (%) |
|  **<u>Population (000)</u>** |  |  |  |  |  |
|  USA | 325139 | 334280 | 344999 | 0.6% | 0.6% |
|  Georgia | 10375 | 10869 | 11349 | 0.9% | 0.9% |
|  Elbert, GA | 19.2 | 19.4 | 19.6 | 0.2% | 0.2% |
|  **<u>Households (000)</u>** |  |  |  |  |  |
|  USA | 123357 | 127074 | 131388 | 0.6% | 0.7% |
|  Georgia | 3854 | 4039 | 4225 | 0.9% | 0.9% |
|  Elbert, GA | 7.7 | 7.9 | 8.0 | 0.4% | 0.3% |
|  **<u>Median Household Income ($)</u>** |  |  |  |  |  |
|  USA | 57462 | 72465 | 81230 | 4.7% | 2.3% |
|  Georgia | 52421 | 68363 | 75593 | 5.5% | 2.0% |
|  Elbert, GA | 38381 | 42810 | 46414 | 2.2% | 1.6% |
|  **<u>Per Capita Income ($)</u>** |  |  |  |  |  |
|  USA | 31459 | 40370 | 45347 | 5.1% | 2.4% |
|  Georgia | 28400 | 36969 | 41460 | 5.4% | 2.3% |
|  Elbert, GA | 22057 | 24382 | 26736 | 2.0% | 1.9% |

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|:---|:---|:---|:---|:---|:---|
| **2022 Age Distribution (%)** | 0-14 Yrs. | 15-34 Yrs. | 35-54 Yrs. | 55-69 Yrs. | 70+ Yrs. |
|  USA | 18.2 | 26.6 | 25.0 | 18.5 | 11.7 |
|  Georgia | 18.9 | 27.5 | 25.8 | 17.5 | 10.2 |
|  Elbert, GA | 18.0 | 23.1 | 22.5 | 20.8 | 15.5 |

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|:---|:---|:---|:---|:---|
| **2022 HH Income Dist. (%)** | Less Than<br>25,000 | $25,000 to<br>50,000 | $50,000 to<br>100,000 | $100,000+ |
|  USA | 16.4 | 19.1 | 28.8 | 35.8 |
|  Georgia | 17.4 | 20.3 | 29.5 | 32.8 |
|  Elbert, GA | 29.7 | 28.4 | 24.4 | 17.5 |

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Source: S&P Global Market Intelligence.

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The Association's office location is not located in any metropolitan statistical area or other such defined area and is in a rural area that generally requires less income for housing and other purchases. This thus provides for per capita and median household income figures that are less than statewide averages. Elbert County's reported median household income and per capita income figures as of 2022 were $42,810 and $24,382, compared to the statewide aggregates of $68,363 and $36,969. These income levels for Elbert County are 37% and 34% below the respective statewide averages. Household income distribution rates for 2022 also reveal the lower income figures of the market area as a higher proportion of Elbert County residents reported income in the lower ranges (less than $50,000) than the state of Georgia and the United States. Only 17.5% of the residents of Elbert County reported incomes in excess of $100,000, versus 32.8% for the state of Georgia. Annual growth in per capita income through 2027 in Elbert County is projected to be lower than the state and nation while median household income growth for the same period in Elbert County is projected to also lower than the comparatives. These lower income figures for the Association's primary market area indicate a less attractive market area for Elberton in terms of deposit gathering and overall levels of banking activities.

<u>Primary Market Area Employment Sectors</u> 

Table 2.2 provides an overview of employment by sector for the state of Georgia and for Elbert County. The table shows that manufacturing is by far the largest employment sector in Elbert County, while services employment is much lower compared to statewide averages. Agriculture sector employment is also much larger in Elbert County, consistent with the higher prevalence of farming enterprises. The concentration in manufacturing employment is seen as somewhat as a risk factor given the long-term decline in manufacturing in the nation and the volatility in employment in that sector.

Table 2.3 below presents the major employers in the Association's market area of Elbert County. As shown, the specific companies include various economic sectors such as mining (granite), agriculture (poultry production), health care and manufacturing. As noted above, a historical concentration in mining employment, specifically granite production has remained a part of the employment base for over 100 years. Certain manufacturing companies have located in the county because of the availability of labor for such jobs.

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Table 2.2

Elberton Federal Savings & Loan Association

Primary Market Area Employment Sectors

(Percent of Labor Force)

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| | | |
|:---|:---|:---|
| Employment Sector | Georgia | Elbert<br>County |
|  | (%) | (%) |
|  Services | 26.9% | 15.8% |
|  Education,Healthcare, Soc. Serv. | 20.8% | 22.6% |
|  Government | 4.6% | 5.0% |
|  Wholesale/Retail Trade | 13.9% | 15.7% |
|  Finance/Insurance/Real Estate | 6.3% | 2.3% |
|  Manufacturing | 10.8% | 27.3% |
|  Construction | 6.7% | 4.0% |
|  Information | 2.3% | 0.8% |
|  Transportation/Utility | 6.9% | 3.8% |
|  Agriculture | 0.9% | 2.8% |
|  | 100.0% | 100.0% |

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Source: U.S. Census Bureau.

Table 2.3

Elberton Federal Savings & Loan Association

Market Area Largest Employers

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| | |
|:---|:---|
| **Employer** | **Industry** |
|  **<u>Elbert County</u>** |  |
| Eagle Granite Company, Inc. | Granite Products |
| Heritage Healthcare at Spring Valley | Health Care |
| Ingles Markets, Inc. | Supermarket |
| Keystone Memorials, Inc. | Granite Products |
| Mollertech South, LLC | Plastic Fabrication |
| Pilgrim's Pride Corporation | Poultry Production |
| Pinnacle Bank | Financial Services |
| The York Group | International Technology |
| Walmart | Retail |
| Whitlow Electic Company, Inc. | Utility |

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Source: Georgia Department of Labor.

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|  | ***Page II.10*** |

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<u>Unemployment Trends</u>

Recent unemployment data has also been examined as another indication of the economic environment within which the Association operates. As shown in Table 2.4, Elbert County reported an unemployment rate of 3.2% as of September 2022, higher than the state rate but similar to the national rate. The unemployment rate for Elbert County and the comparative areas increased after March 2020 primarily due to the COVID-19 impact, while the current unemployment rate indicates that the Bank's local market area has recovered to pre-pandemic employment. It should be noted that the unemployment rate in Elbert County is moderated by the limited growth rate in population, which limits the number of residents available to search for employment. The small population base also indicates that a change in a single employer may have a notable impact on the overall county-wide unemployment rate.

<u>Deposit Market Share</u>

Table 2.5 displays deposit market trends and deposit market share, respectively, for commercial banks and savings institutions for the state of Georgia and the Association's market area of Elbert County from June 30, 2018 to June 30, 2022. Deposit growth trends are important indicators of a market area's current and future prospects for growth. Georgia deposits increased at an annualized rate of 8.9% over the four-year time period shown in Table 2.5, with commercial banks increasing deposits at an annual rate of 8.9%, while savings and loan associations recorded an annual increase of 1.1%. Commercial banks dominate the deposit market in Georgia, and as of June 30, 2022, commercial banks held a market share of 99.2% of total bank and thrift deposits. Part of the decline in savings institution deposits is due to charter conversions of thrifts to commercial banks and continued merger and acquisition activity in recent years.

Table 2.4

Elberton Federal Savings & Loan Association

Unemployment Trends

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| | | | |
|:---|:---|:---|:---|
|  | Unemployment Rate | Unemployment Rate | Net |
| Region | Sept. 2021 | Sept. 2022 | Change |
|  USA | 4.6% | 3.3% | -1.3% |
|  Georgia | 3.3% | 2.6% | -0.7% |
|  Elbert, GA | 4.2% | 3.2% | -1.0% |

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Source: S&P Global Market Intelligence.

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|  | ***Page II.11*** |

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Table 2.5

Elberton Federal Savings & Loan Association

Deposit Summary

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | As of June 30, | As of June 30, | As of June 30, | As of June 30, | As of June 30, | As of June 30, | |
|  | 2018 | 2018 | 2018 | 2022 | 2022 | 2022 | |
|  | Deposits | Market<br>Share | No. of<br>Branches | Deposits | Market<br>Share | No. of<br>Branches |<br>Deposit<br>Growth Rate<br>2018-2022 |
|  | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (%) |
|  **Georgia** | $250360000 | 100.0% | 2313 | $351575000 | 100.0% | 2066 | 8.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Banks | 247529000 | 98.9% | 2264 | 348615000 | 99.2% | 2037 | 8.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings Institutions | 2831000 | 1.1% | 49 | 2960000 | 0.8% | 29 | 1.1% |
|  **Elbert County** | $324005 | 100.0% | 6 | $488586 | 100.0% | 6 | 10.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Banks | 307815 | 95.0% | 5 | 467094 | 95.6% | 5 | 11.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings Institutions | 16190 | 5.0% | 1 | 21492 | 4.4% | 1 | 7.3% |
|  Elberton FS&LA | 16190 | 5.0% | 1 | 21492 | 4.4% | 1 | 7.3% |

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Source: FDIC.

Within Elbert County, the table indicates that total deposits from 2018 to 2022 increased at an annual rate slightly higher than the state average. Elberton is the only savings institution operating in Elbert County and recorded an increase in deposits at an annual rate of 7.3%. As of June 30, 2022, the Association's deposit market share of total Elbert County deposits was 4.4%. The number of financial institution branches remained the same over the past four years, while the state of Georgia lost about 250 branches over the time period.

Elberton' deposit market share figure is representative of the overall size of the deposit base in Elbert County and the Association's small size, indicating a less competitive position for the Association. While future deposit gains and market share gains may be likely given the low current market share, the competitive environment has proven to be significant, and the lack of notable demographic and economic growth also limits deposit growth.

<u>Competition</u> 

The competitive environment for financial institution products and services on a national, regional and local level can be expected to become even more competitive in the future. Consolidation in the bank, thrift and credit union industries provides economies of scale to the larger institutions, while the increased presence of investment options provides consumers with attractive investment alternatives to financial institutions. Changing consumer practices in terms of use of internet banking, mobile banking or other technology also impacts the ability of smaller financial institutions, such as Elberton, to remain competitive.

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|  | ***Page II.12*** |

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Competition among financial institutions in the market area is significant. Among the Association's competitors are much larger and more diversified institutions, which have greater resources and offer more products and services than offered by the Association. Financial institution competitors in the Association's market area consist of commercial banks, including banks with a regional presence. There are also smaller community-based banks that pursue similar operating strategies as the Association. In addition, credit unions are present in the market area. From a competitive standpoint, Elberton benefits from its status of a locally-based financial institution, longstanding customer relationships, and continued efforts to offer competitive products and services. However, competitive pressures will also likely continue to build as the financial services industry continues to consolidate and as additional non-bank investment options for consumers become available. There were four financial institutions operating in Elberton's Elbert County primary market area as of June 30, 2022.

Table 2.6 lists the Association's bank competitors in Elbert County, based on deposit market share. Elberton maintains the lowest deposit market share in Elbert County, indicating a relatively less competitive position in the marketplace.

Table 2.6

Elberton Federal Savings & Loan Association

Market Area Deposit Competitors - As of June 30, 2022

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| | | | |
|:---|:---|:---|:---|
| **Location Name** | **Location Name** | **Market**<br>**Share** | **Rank** |
|  |  | **(%)** | |
|  Elbert County | Pinnacle Bank (GA) | 65.92 |  |
|  | Northeast Georgia Bank (GA) | 15.36 |  |
|  | Regions Bank (AL) | 14.32 |  |
|  | **Elberton FS&LA (GA)** | **4.40** | **4 out of 4** |

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Source: S&P Global Market Intelligence.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.1*** |

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**III. PEER GROUP ANALYSIS** 

This chapter presents an analysis of Elberton's operations versus a group of comparable savings institutions (the "Peer Group") selected from the universe of all publicly-traded savings institutions in a manner consistent with the regulatory valuation guidelines and other regulatory guidance. The basis of the pro forma market valuation of Elberton is derived from the pricing ratios of the Peer Group institutions, incorporating valuation adjustments for key differences regarding Elberton in relation to the Peer Group. Since no public thrift or overall Peer Group of public thrifts can be exactly comparable to Elberton, key areas examined for differences are: financial condition; profitability, growth, and viability of earnings; asset growth; primary market area; dividends; liquidity of the shares; marketing of the issue; management; and effect of government regulations and regulatory reform.

<u>Peer Group Selection</u> 

The Peer Group selection process follows the general parameters set forth in the regulatory valuation guidelines and other regulatory guidance. Specifically, we have limited the Peer Group composition to publicly-traded thrifts whose common stock is either listed on the NYSE or NASDAQ, since their stock trading activity is regularly reported and generally more frequent than non-publicly traded and closely-held savings institutions. Institutions that are not listed on the NYSE or NASDAQ are inappropriate, since the trading activity for thinly-traded or closely-held stocks are typically highly irregular in terms of frequency and price and thus may not be a reliable indicator of market value. We have also excluded from the Peer Group those companies under acquisition or subject to rumored acquisition and recent conversions, since their pricing ratios are subject to unusual distortion and/or have limited trading history. Further, we have excluded from the Peer Group publicly-traded thrifts in partial stock mutual holding company form and thus have considered only fully-converted savings institutions. A recent listing of the universe of all publicly-traded savings institutions is included as Exhibit III-1.

From the universe of publicly-traded savings institutions, we selected the minimum of 10 Peer Group members with characteristics reasonably similar to those of Elberton recognizing its small size and that on a standalone basis it is considered unlikely that a regular active trading market would develop for the stock. In the selection process, we applied the following "screen" to the universe of all public companies that were eligible for consideration:

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.2*** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>The 10 smallest profitable public savings institutions in full stock form for at least one year and not subject to acquisition.</u> The resulting Peer Group included: 1895 Bancorp of Wisconsin, Inc.; Catalyst Bancorp, Inc. of Louisiana; Cincinnati Bancorp, Inc. of Ohio; Cullman Bancorp, Inc. of AL; FFBW, Inc. of Wisconsin; Generations Bancorp NY, Inc.
of New York; Mid-Southern Bancorp, Inc. of Indiana; PB Bankshares, Inc. of Pennsylvania; TC Bancshares, Inc. of Georgia and Texas Community Bancshares, Inc. of Texas.

Table 3.1 shows general characteristics of the 10 Peer Group companies and Exhibit III-2 provides summary demographic and deposit market share data for the primary market areas they serve. While there are expectedly some differences relative to the Peer Group companies, we believe that the Peer Group companies, on average, provide a good basis for valuation subject to valuation adjustments. The following sections present a comparison of Elberton's financial condition and growth, income and expense trends, loan composition, credit risk and interest rate risk versus the Peer Group as of the most recent publicly available date. Comparative data for all public savings institutions have been included in the Chapter III tables as well.

A summary description of the key comparable characteristics of each of the Peer Group companies relative to Elberton's characteristics is detailed below.

• 1895 Bancorp of Wisconsin, Inc. of Wisconsin. Selected due to small size, low interest-bearing funding base
composition, low net interest income, and good credit profile.

• Catalyst Bancorp, Inc. of Louisiana. Selected due to small size, good credit profile, similar funding composition
and limited loan diversification.

• Cincinnati Bancorp of Ohio. Selected due small size, similar funding composition, loans/assets ratio, net
interest income ratio, and limited loan diversification.

• Cullman Bancorp, Inc. of Alabama. Selected due to small size, similar balance sheet mix, and limited loan
diversification.

• FFBW, Inc. of Wisconsin. Selected due to small size, similar funding composition and growth rate, and net
interest income ratio.

• Generations Bancorp NY of New York. Selected due to small size, similar funding composition, limited growth,
profitability composition, good credit profile and limited loan diversification.

• Mid-Southern Bancorp, Inc. of Indiana. Selected due to similar funding
composition, net interest income ratio, good credit profile and limited loan diversification.

• PB Bankshares, Inc. of Pennsylvania. Selected due to small size and similar funding, net interest income ratio, non-interest income ratio, good credit profile and limited loan diversification.

• TC Bancshares, Inc. of Georgia. Selected due to small size and similar funding composition, equity ratio,
interest-earning asset yields, and good credt profile.

• Texas Community Banchares, Inc. of Texas. Selected due to similar funding composition, equity ratio, net interest
income ratio, and good credit profile.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.3*** |

---

Table 3.1

Peer Group of Publicly-Traded Savings Institutions

As of September 30, 2022 or the Most Recent Date Available.

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  | |  | |  | As of | As of |
|  |  |  |  |  |  | |  | |  | October 28, 2022 | October 28, 2022 |
|  |  |  |  |  |  | Total |  | | Fiscal | Stock | Market |
| Ticker | Financial Institution | Exchange | Region | City | State | Assets |  | Offices | Mth End | Price | Value |
|  |  |  |  |  |  | ($Mil) |  |  |  | ($) | ($Mil) |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | NASDAQCM | MW | Greenfield | WI | 536 | (1) | 6 | Dec | 10.05 | 64 |
|  CLST | Catalyst Bancorp, Inc. | NASDAQCM | SW | Opelousas | LA | 283 |  | 6 | Dec | 13.05 | 64 |
|  CNNB | Cincinnati Bancorp, Inc. | NASDAQCM | MW | Cincinnati | OH | 282 | (1) | 5 | Dec | 14.76 | 44 |
|  CULL | Cullman Bancorp, Inc. | NASDAQCM | SE | Cullman | AL | 384 | (1) | 4 | Dec | 10.97 | 81 |
|  FFBW | FFBW, Inc. | NASDAQCM | MW | Brookfield | WI | 314 |  | 7 | Dec | 11.87 | 69 |
|  GBNY | Generations Bancorp NY, Inc. | NASDAQCM | MA | Seneca Falls | NY | 370 | (1) | 10 | Dec | 10.87 | 26 |
|  MSVB | Mid-Southern Bancorp, Inc. | NASDAQCM | MW | Salem | IN | 265 |  | 3 | Dec | 12.76 | 37 |
|  PBBK | PB Bankshares, Inc. | NASDAQCM | MA | Coatesville | PA | 377 |  | 4 | Dec | 12.52 | 32 |
|  TCBC | TC Bancshares, Inc. | NASDAQCM | SE | Thomasville | GA | 431 | (1) | 2 | Dec | 14.97 | 68 |
|  TCBS | Texas Community Bancshares, Inc. | NASDAQCM | SW | Mineola | TX | 374 | (1) | 6 | Dec | 15.36 | 46 |

---

Source: S&P Global Market Intelligence

(1) As of July 01, 2022 or the most recent date available.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.4*** |

---

In comparison to all public thrifts, the Peer Group thrifts were much smaller, maintained a higher level of tangible equity ratio and were less profitable. The Peer Group's average Price/Tangible Book ("P/TB") ratio was considerably discounted to all public thrifts, while the average core Price/Earnings ("P/E") multiple was higher. Such pricing ratio comparisons are typical for smaller public thrifts not only due to lower profitability but also smaller size and less diversification as well as a trading activity in the stock.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | All Public<br>Thrifts |  | Peer Group |  |
|  <u>Financial Characteristics (Averages)</u> |  |  |  |  |
|  Assets ($Mil) | $4377 |  | $363 |  |
|  Market capitalization ($Mil) | $471 |  | $53 |  |
|  Tangible equity/tangible assets (%) | 13.37 | % | 17.36 | % |
|  Return on average assets (%) | 0.76 |  | 0.43 |  |
|  Return on average equity (%) | 6.22 |  | 2.35 |  |
|  <u>Pricing Ratios (Averages) (1)</u> |  |  |  |  |
|  Price/earnings (x) | 14.15 | x | 25.76 | x |
|  Price/tangible book (%) | 106.45 | % | 87.31 | % |
|  Price/assets (%) | 12.49 |  | 14.97 |  |

---

(1) Based on market prices as of October 28, 2022.

Since the Association has some key differences relative to the Peer Group, as evaluated in the following pages, it is necessary to account for such differences in determining valuation adjustments in the next chapter. Those selected for the Peer Group have several distinct differences than the much smaller, less diversified, and less profitable Elberton. Recognizing the needs for such valuation adjustments, we believe this Peer Group is the "best fit" group and provides a good basis for the valuation analysis herein. Comparative data for all public savings institutions is included in the Chapter III tables as well.

<u>Financial Condition</u> 

Table 3.2 shows comparative balance sheet measures, reflecting expected similarities and differences (the Association's ratios are through September 30, 2022, while the Peer Group reflects the latest quarterly data). Elberton's pre-conversion equity/assets ratio of 18.10% was similar to the Peer Group's average equity/assets ratio of 18.01%. Tangible equity/assets ratios for the Association and the Peer Group average equaled 18.10% and 17.20%, respectively. With the infusion of the net proceeds on a stand-alone conversion basis, the Association's pro forma

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.5*** |

---

Table 3.2

Balance Sheet Composition and Growth Rates

Comparable Institution Analysis

As of September 30, 2022 or the Most Recent Date Available.

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| | | | | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Regulatory Capital | Regulatory Capital | Regulatory Capital |
|  |  |  | Cash &<br>Equivalents | MBS &<br>Invest | BOLI | Net<br>Loans (1) | Deposits | Borrowed<br>Funds | Sub.<br>Debt | Total<br>Equity | Goodwill<br>& Intang | Tangible<br>Equity | Assets | MBS, Cash &<br>Investments | Loans | Deposits | Borrows.<br>& Sub debt | Total<br>Equity | Tangible<br>Equity | Tier 1<br>Leverage | Tier 1<br>Risk-Based | Risk-Based<br>Capital |
|  <u>Elberton FS&LA</u> | <u>Elberton FS&LA</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  September 30, 2022 | September 30, 2022 |  | 2.92% | 8.93% | 0.00% | 86.29% | 77.91% | 3.78% | 0.00% | 18.10% | 0.00% | 18.10% | -6.27% | -40.40% | 1.93% | -2.03% | -50.00% | -6.70% | -6.70% | 18.06% | NA | NA |
|  <u>All Fully-Converted Public Thrifts</u> | <u>All Fully-Converted Public Thrifts</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages |  | 5.70% | 16.04% | 1.86% | 72.03% | 77.33% | 6.77% | 0.39% | 13.85% | 0.67% | 12.99% | 6.94% | 8.53% | 13.24% | 5.45% | 19.57% | 25.14% | 26.49% | 13.14% | 14.84% | 19.48% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians |  | 5.11% | 15.26% | 1.86% | 74.78% | 78.55% | 5.52% | 0.00% | 11.75% | 0.05% | 11.03% | 3.81% | -1.54% | 12.53% | 3.37% | -4.33% | 2.19% | 1.85% | 11.12% | 13.51% | 14.48% |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages |  | 6.62% | 19.15% | 2.61% | 69.07% | 75.67% | 4.70% | 0.00% | 18.01% | 0.07% | 17.20% | 1.84% | 2.41% | 12.68% | 2.09% | -23.22% | 45.71% | 52.53% | 15.94% | 25.75% | 26.72% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians |  | 5.94% | 15.60% | 2.46% | 71.37% | 76.58% | 3.85% | 0.00% | 15.08% | 0.00% | 14.93% | 3.47% | -3.84% | 11.94% | 0.54% | -35.56% | 58.04% | 74.06% | 14.33% | 19.74% | 20.78% |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | (2) WI | 3.78% | 24.75% | 2.63% | 65.32% | 71.52% | 10.72% | 0.00% | 15.12% | 0.00% | 15.12% | -11.55% | 20.37% | 5.31% | -17.83% | -9.44% | 42.01% | 42.01% | 11.94% | 16.87% | 17.69% |
|  CLST | Catalyst Bancorp, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LA | 12.77% | 33.11% | 4.77% | 45.83% | 65.00% | 3.23% | 0.00% | 31.52% | 0.00% | 31.52% | -9.03% | 43.57% | -3.12% | -26.15% | 2.01% | 82.16% | 82.16% | 28.29% | 57.84% | 59.09% |
|  CNNB | Cincinnati Bancorp, Inc. | (2) OH | 5.84% | 3.99% | 1.52% | 85.16% | 79.04% | 5.67% | 0.00% | 14.14% | 0.05% | 14.09% | 12.92% | -26.68% | 17.07% | 41.73% | -65.45% | 1.08% | 1.14% | 13.27% | 16.34% | 17.13% |
|  CULL | Cullman Bancorp, Inc. | (2) AL | 6.45% | 7.49% | 2.30% | 80.15% | 72.98% | 0.00% | 0.00% | 25.70% | 0.00% | 25.70% | 2.07% | -15.96% | 26.51% | -0.06% | -100.00% | 74.06% | 74.06% | 18.78% | NA | NA |
|  FFBW | FFBW, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WI | 5.11% | 15.60% | 3.26% | 72.76% | 74.56% | 0.00% | 0.00% | 24.69% | NA | NA | -11.68% | -31.44% | 10.66% | -6.61% | -100.00% | -13.34% | NA | 21.77% | 26.56% | 27.51% |
|  GBNY | Generations Bancorp NY, Inc. | (2) NY | 3.68% | 9.59% | 2.15% | 76.00% | 84.28% | 3.85% | 0.00% | 10.56% | 0.42% | 10.14% | -2.74% | 2.97% | -2.24% | 0.35% | -35.56% | 0.40% | 0.58% | 11.21% | 14.25% | 15.06% |
|  MSVB | Mid-Southern Bancorp, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN | 1.52% | 39.87% | NA | 53.86% | 76.29% | 11.72% | 0.00% | 11.65% | 0.00% | 11.65% | 4.87% | -10.65% | 20.57% | 3.37% | 210.00% | -30.00% | -30.00% | 15.38% | NA | NA |
|  PBBK | PB Bankshares, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PA | 6.04% | NA | NA | 80.00% | 76.88% | NA | 0.00% | 11.84% | 0.00% | 11.84% | 20.56% | -20.64% | 33.39% | 16.53% | NA | 105.05% | 105.05% | 9.73% | NA | NA |
|  TCBC | TC Bancshares, Inc. | (2) GA | 14.13% | 10.94% | 2.62% | 69.98% | 78.90% | 0.00% | 0.00% | 19.83% | 0.00% | 19.83% | 6.19% | 19.01% | 13.23% | 8.85% | -100.00% | 112.78% | 112.78% | 16.06% | 22.61% | 23.86% |
|  TCBS | Texas Community Bancshares, Inc. | (2) TX | 6.92% | 27.02% | 1.62% | 61.64% | 77.21% | 7.10% | 0.00% | 15.05% | 0.12% | 14.93% | 6.79% | 43.53% | 5.45% | 0.73% | -10.49% | 82.88% | 84.97% | 13.00% | NA | NA |

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(1) Includes loans held for sale.

(2) As of September 30, 2022 or the latest date available.

Source: S&P Global Market Intelligence, LC. and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2021 by RP<sup>®</sup> Financial, LC.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.6*** |

---

equity and tangible equity ratios far exceed the Peer Group's averages. Although an increase in the Association's pro forma capital is favorable from a risk perspective and can support expansion and diversification, the pro forma earnings benefit is moderated by the public company and stock benefit plan expenses and the limited reinvestment earnings.

The Association's loans/assets ratio of 86.29% was higher than the comparable Peer Group average of 69.07%. Comparatively, the Association's cash and investments ratio (including mortgage-backed securities) of 11.85% of assets was lower than the Peer Group average of 25.77%. Overall, Elberton's interest-earning assets ("IEA") ratio of 98.14% of assets exceeds the Peer Group average of 94.84%. Partially accounting for the Association's higher ratio was that the Peer Group held bank-owned life insurance ("BOLI") of 2.61% of assets. On a pro forma basis, the net conversion proceeds would be expected to initially increase the Association's cash and investments until the proceeds could be used to increase loan funding.

Elberton's funding strategy reflected similar reliance on deposits and lower borrowings utilization. Specifically, the Association's deposits equaled 77.91% of assets, higher than the Peer Group average of 75.67%. Comparatively, the Association's lower borrowings represented 3.78% of assets, as compared to a 4.70% average for the Peer Group. Total interest-bearing liabilities ("IBL") for the Association and the Peer Group equaled 81.69% and 80.37 % of assets, respectively. The Association's IBL ratio could be expected to decline on a pro forma basis with the benefit of the net offering proceeds. A key measure of balance sheet strength is the IEA/IBL ratio. The Association's current ratio exceeds Peer Group average, at 120.14% and 118.00%, respectively, and the net offering proceeds would increase the Association's advantage.

For the last 12 months, Elberton's assets declined 6.27% versus growth of 1.84% on average for the Peer Group (recognizing that Peer Group had exhibited a wide range of growth rates as well as growth in loans and cash and investments). Elberton's asset shrinkage reflected a sharp reduction in cash and investments while there was a modest increase in loan balances, while deposit and borrowing funding declined. The Peer Group's overall asset growth was funded with deposit growth while borrowings declined.

The Association's tangible equity declined 6.70% the last 12 months, while the Peer Group's tangible equity increased by a much higher rate despite the payment of dividends by some of the Peer Group members. The Association's post-conversion tangible equity growth rate would continue to be constrained for the foreseeable future by a substantially higher pro forma capital position and continuing low profitability.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.7*** |

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<u>Income and Expense Components</u> 

Table 3.3 compares key income statement components over the last 12 months earnings. Elberton and the Peer Group reported net income/(loss) to average assets ratios of (0.67%) and 0.38%, respectively. Adjusted for merger related expenses, Elberton's core operating loss was 0.07% of average assets. In comparison, the Peer Group had higher net interest income and noninterest income ratios and a similar operating expense ratio. Elberton's merger related expenses were a key factor in the reported earnings disadvantage. The Peer Group had nominal provisions for losses while the Association had none. Unlike the tax-paying Peer Group, the Association did not pay taxes due the operating loss.

The Association's slight interest income advantage was offset by its higher interest expense ratio, leading to a slightly lower net interest income ratio. Elberton's interest income advantage reflects a higher IEA ratio while its interest expense disadvantage reflects no noninterest bearing deposits.

The Association's operating expense ratio was similar to the Peer Group. The Association maintains a comparatively lower amount of assets per full-time equivalent employee at $6.621 million versus $9.219 million for the Peer Group. It would be difficult for the Association to reduce the size of its four person staff.

When viewed together net interest income and operating expenses provide considerable insight into earnings strength, given their prominence and greater predictability relative to other income statement components. As measured by their expense coverage ratios (net interest income divided by operating expenses), the Association's ratio was similar to the Peer Group, at 0.98x for both.

The Association generally does not have non-interest operating income whereas the Peer Group on average reported 0.31% of gains on sale of loans (including mortgage banking gains) and 0.39% of other noninterest income. Taking non-interest operating income into account, Elberton's efficiency ratio (operating expenses as a percent of the sum of non-interest operating income and net interest income) of 102.67% was far less favorable than the Peer Group's efficiency ratio of 82.17%.

Loan loss provisions had minimal impact on both the Association's and the Peer Group's earnings reflecting favorable asset quality positions and Elberton's limited high risk lending activities.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.8*** |

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Table 3.3

Income as Percent of Average Assets and Yields, Costs, Spreads

Comparable Institution Analysis

For the 12 Months Ended March 31, 2021 or the Most Recent 12 Months Available

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| | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | | Net Interest Income | Net Interest Income | Net Interest Income | Net Interest Income | | Non-Interest Income | Non-Interest Income | | Non-Op. Items | Non-Op. Items | | Yields, Costs, and Spreads | Yields, Costs, and Spreads | Yields, Costs, and Spreads | | |
|  |  |  |<br>Net<br>Income (2) | Income | Expense | NII | Loss<br>Provis.<br>on IEA |<br>NII<br>After<br>Provis. | Gain<br>on Sale of<br>Loans | Other<br>Non-Int<br>Income |<br>Total<br>Non-Int<br>Expense | Net<br>Losses (1) | Extrao.<br>Items |<br>Provision<br>for<br>Taxes | Yield<br>On IEA | Cost<br>Of IBL | Yld-Cost<br>Spread |<br>MEMO:<br>Assets/<br>FTE Emp. |<br>MEMO:<br>Effective<br>Tax Rate (2) |
|  |  |  | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | ($000) | (%) |
|  <u>Elberton FS&LA</u> | <u>Elberton FS&LA</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  September 30, 2022 | September 30, 2022 |  | -0.67% | 3.37% | 0.53% | 2.84% | 0.00% | 2.84% | 0.00% | -0.02% | 2.90% | -0.60% | 0.00% | 0.00% | 3.70% | 0.84% | 2.86% | $6621 | 0.00% |
|  <u>All Fully-Converted Public Thrifts</u> | <u>All Fully-Converted Public Thrifts</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  Averages | Averages |  | 0.74% | 3.47% | 0.35% | 3.12% | 0.05% | 3.02% | 0.29% | 0.43% | 2.66% | -0.05% | 0.00% | 0.26% | 3.68% | 0.46% | 3.27% | $9219 | 21.73% |
|  Medians | Medians |  | 0.76% | 3.23% | 0.31% | 2.98% | 0.04% | 2.98% | 0.01% | 0.36% | 2.51% | 0.00% | 0.00% | 0.28% | 3.48% | 0.45% | 3.08% | $7828 | 23.87% |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages |  | 0.38% | 3.29% | 0.36% | 2.94% | 0.03% | 2.90% | 0.31% | 0.39% | 2.99% | -0.13% | 0.00% | 0.08% | 3.46% | 0.52% | 2.98% | $6119 | 13.93% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians |  | 0.37% | 3.40% | 0.32% | 2.94% | 0.04% | 2.91% | 0.01% | 0.40% | 2.84% | -0.08% | 0.00% | 0.08% | 3.56% | 0.49% | 3.03% | $6029 | 18.82% |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | WI | -0.13% | 2.71% | 0.26% | 2.45% | 0.04% | 2.40% | 0.14% | 0.40% | 2.97% | -0.16% | 0.00% | -0.07% | 2.81% | 0.45% | 2.36% | $4855 | NM |
|  CLST | Catalyst Bancorp, Inc. | LA | 0.04% | 2.71% | 0.23% | 2.48% | -0.26% | 2.74% | 0.00% | 0.40% | 3.02% | NA | 0.00% | -0.01% | 2.85% | 0.44% | 2.41% | $5064 | -26.74% |
|  CNNB | Cincinnati Bancorp, Inc. | OH | 0.26% | 3.39% | 0.40% | 2.99% | 0.05% | 2.94% | 2.17% | 0.47% | 4.94% | -0.30% | 0.00% | 0.08% | 3.56% | 0.53% | 3.03% | $3864 | 24.14% |
|  CULL | Cullman Bancorp, Inc. | AL | 0.67% | 3.93% | 0.35% | 3.59% | 0.05% | 3.54% | 0.05% | 0.36% | 2.70% | -0.43% | 0.00% | 0.14% | 4.12% | 0.57% | 3.55% | $6365 | 17.62% |
|  FFBW | FFBW, Inc. | WI | 0.62% | 3.42% | 0.25% | 3.17% | 0.03% | 3.14% | 0.01% | 0.30% | 2.59% | 0.00% | 0.00% | 0.24% | 3.72% | 0.42% | 3.30% | $6003 | 27.76% |
|  GBNY | Generations Bancorp NY, Inc. | NY | 0.38% | 3.54% | 0.39% | 3.15% | 0.15% | 3.00% | 0.00% | 0.69% | 3.15% | -0.08% | 0.00% | 0.07% | 3.94% | 0.54% | 3.40% | $4490 | 15.72% |
|  MSVB | Mid-Southern Bancorp, Inc. | IN | 0.72% | 3.18% | 0.29% | 2.88% | 0.01% | 2.88% | 0.00% | 0.49% | 2.60% | 0.00% | 0.00% | 0.04% | 3.31% | 0.35% | 2.96% | $6055 | 5.05% |
|  PBBK | PB Bankshares, Inc. | PA | 0.35% | 3.45% | 0.69% | 2.76% | 0.20% | 2.56% | 0.00% | 0.22% | 2.32% | -0.03% | 0.00% | 0.08% | NA | 0.88% | NA | $11097 | 18.82% |
|  TCBC | TC Bancshares, Inc. | GA | 0.67% | 3.58% | 0.19% | 3.39% | 0.04% | 3.34% | 0.43% | 0.23% | 3.12% | 0.00% | 0.00% | 0.21% | 3.69% | 0.28% | 3.41% | $6956 | 23.83% |
|  TCBS | Texas Community Bancshares, Inc. | TX | 0.25% | 3.02% | 0.52% | 2.50% | 0.03% | 2.48% | NA | NA | 2.51% | -0.17% | 0.00% | 0.06% | 3.14% | 0.72% | 2.42% | $6441 | 19.15% |

---

(1) Net gains/losses includes gain/loss on sale of securities and nonrecurring income and expense, including merger
related expense for Elberton.

Source: S&P Global Market Intelligence and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2021 by RP<sup>®</sup> Financial, LC.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.9*** |

---

The Assocation's non-recurring merger expenses materially impacted operating results – although the Peer Group incurred non-recurring net losses on sale of assets, the adverse impact was substantially different. Given the non-recurring nature, earnings will be adjusted to estimate core earnings for both the Association and the Peer Group in evaluating the P/E multiple. Extraordinary items were not a factor for either the Association or the Peer Group.

As noted, unlike the Peer Group average, the Association did not pay income taxes given its operating loss. For calculating the pro forma reinvestment and stock benefit plan expending impact for the Association, we have made the standard assumption of applying the marginal federal and state income tax rate of 25.75%.

<u>Loan Composition</u> 

Table 3.4 compares the loan and mortgage-backed securities composition. The Association has a substantially higher concentration of 1-4 family mortgages, indicative of its traditional long-term residential lending strategy and less diversification. While some of the Peer Group members were active in selling and servicing loans, while the Association is a portfolio lender. The Association's lending strategy has led to its strong credit profile, but it has reduced the overall loan yield and increased its interest rate risk exposure.

<u>Credit Risk</u> 

The Association's similarity in credit risk profile is highlighted Table 3.5, with both having relatively low nonperforming loans and other real estate owned. Elberton's loss coverage ratio is substantially lower than the Peer Average, largely due to the Association's principal focus on 1-4 family lending and low loan loss experience.

<u>Interest Rate Risk</u> 

Table 3.6 highlights certain comparative interest rate risk measures. The Association's higher tangible equity ratio provided a more favorable IEA/IBL ratio, which lessens the impact of interest expense. The Association maintained a lower non-interest assets ratio, resulting in a comparatively higher proportion of earning assets. With the net offering, the earnings power of the Association would be expected to improve, and its interest rate risk profile would be expected to diminish. Furthermore, the initial reinvestment of the net proceeds into short- and intermediate term securities would improve the Association's interest rate risk profile.

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.10*** |

---

Table 3.4

Loan Portfolio Composition and Related Information

Comparable Institution Analysis

As of June 30, 2022 or the Most Recent Date Available.

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | | |
|  |  |<br>MBS | 1-4<br>Family | Constr.<br>& Land | Multi-<br>Family |<br>Comm RE | Commerc.<br>Business |<br>Consumer |<br>RWA/<br>Assets |<br>Servicing<br>Assets |
|  |  | **(%)** | **(%)** | **(%)** | **(%)** | **(%)** | **(%)** | **(%)** | **(%)** | **($000)** |
|  **<u>Elberton FS&LA</u>** |  |  |  |  |  |  |  |  |  |  |
|  September 30, 2022 |  | 2.04% | 83.89% | 0.11% | 0.00% | 1.74% | 0.00% | 0.70% | NA | $0 |
|  <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages |  | 8.39% | 32.69% | 4.45% | 6.55% | 18.40% | 3.77% | 3.81% | 72.78% | $504 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians |  | 6.68% | 33.54% | 4.57% | 4.54% | 18.11% | 4.11% | 0.52% | 75.24% | $0 |
|  <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |
|  PyraMax Bank, F.S.B. | WI | 11.83% | 20.35% | 4.09% | 14.07% | 20.76% | 0.00% | 0.02% | 73.00% | $1890 |
|  Catalyst Bank | LA | 21.82% | 32.49% | 1.63% | 1.20% | 7.75% | 4.08% | 1.29% | 49.60% | $0 |
|  Cincinnati Federal | OH | 2.33% | 46.79% | 2.06% | 20.38% | 16.18% | 0.11% | 0.09% | 79.86% | $3130 |
|  Cullman Savings Bank | AL | 2.54% | 41.07% | 8.53% | 0.92% | 20.03% | 7.91% | 0.82% | NA | $0 |
|  First Federal Bank of Wisconsin | WI | 7.31% | 15.69% | 5.05% | 13.26% | 31.68% | 7.90% | 0.12% | 84.60% | $0 |
|  Generations Bank | NY | 0.27% | 38.10% | 0.05% | 0.12% | 4.61% | 1.73% | 33.48% | 77.48% | $14 |
|  Mid-Southern Savings Bank, F.S.B. | IN | 11.79% | 24.62% | 2.25% | 4.20% | 14.77% | 4.65% | 0.86% | NA | $0 |
|  Presence Bank | PA | 0.90% | 30.18% | 6.75% | 6.33% | 32.41% | 5.23% | 0.01% | NA | $0 |
|  TC Federal Bank | GA | 6.06% | 34.59% | 7.11% | 4.89% | 26.82% | 4.14% | 0.21% | 72.11% | $0 |
|  Mineola Community Bank, SSB | TX | 19.10% | 43.03% | 6.96% | 0.09% | 8.99% | 1.96% | 1.15% | NA | $7 |

---

Note: Bank level data.

Source: S&P Global Market Intelligence and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2022 by RP<sup>®</sup> Financial, LC.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.11*** |

---

Table 3.5

Credit Risk Measures and Related Information

Comparable Institution Analysis

As of September 30, 2022 or the Most Recent Date Available.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |<br>REO/<br>Assets | NPAs &<br>90+Del/<br>Assets (1) | Adj NPAs &<br>90+Del/<br>Assets (2) |<br>NPLs/<br>Loans (3) |<br>Rsrves/<br>Loans HFI |<br>Rsrves/<br>NPLs (3) | Rsrves/<br>NPAs &<br>90+Del (1) |<br>Net Loan<br>Chargeoffs (4) |<br>NLCs/<br>Loans |
|  |  | (%) | (%) | (%) | (%) | (%) | (%) | (%) | ($000) | (%) |
|  **<u>Elberton FS&LA</u>** |  |  |  |  |  |  |  |  |  |  |
|  September 30, 2022 |  | 0.00% | 0.50% | 0.50% | 0.58% | 0.18% | 31.06% | 31.06% | $0 | 0.00% |
|  <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages |  | 0.04% | 0.60% | 0.32% | 0.77% | 1.02% | 249.54% | 217.87% | $35 | 0.02% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians |  | 0.01% | 0.50% | 0.35% | 0.57% | 0.99% | 166.99% | 166.83% | $0 | 0.00% |
|  <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |
|  PyraMax Bank, F.S.B. | WI | 0.00% | 0.22% | 0.14% | 0.33% | 0.89% | 272.96% | 272.96% | 169 | -0.05% |
|  Catalyst Bank | LA | 0.12% | 0.95% | 0.57% | 1.42% | 1.37% | 96.42% | 70.19% | $93 | 0.07% |
|  Cincinnati Federal | OH | 0.00% | 0.28% | 0.02% | 0.32% | 0.75% | 226.42% | 226.42% | $0 | 0.00% |
|  Cullman Savings Bank | AL | 0.02% | 0.82% | 0.04% | 0.90% | 0.82% | 91.66% | 80.69% | $0 | 0.00% |
|  First Federal Bank of Wisconsin | WI | 0.00% | 0.10% | 0.05% | 0.13% | 1.10% | 834.98% | 834.98% | $0 | 0.00% |
|  Generations Bank | NY | 0.02% | 1.66% | 0.98% | 2.07% | 0.79% | 38.16% | 37.74% | $367 | 0.13% |
|  Mid-Southern Savings Bank, F.S.B. | IN | 0.04% | 0.64% | 0.36% | 1.11% | 1.15% | 103.51% | 97.46% | $13 | 0.01% |
|  Presence Bank | PA | 0.00% | 0.51% | 0.36% | 0.62% | 1.24% | 199.95% | 199.95% | $0 | 0.00% |
|  TC Federal Bank | GA | 0.23% | 0.48% | 0.36% | 0.27% | 1.37% | 497.36% | 224.60% | $0 | 0.00% |
|  Mineola Community Bank, SSB | TX | 0.00% | 0.34% | 0.34% | 0.52% | 0.70% | 134.02% | 133.70% | $46 | 0.02% |

---

(1) NPAs are defined as nonaccrual loans, performing TDRs, and OREO.

(2) Adjusted NPAs are defined as nonaccrual loans and OREO (performing TDRs are excluded).

(3) NPLs are defined as nonaccrual loans and performing TDRs.

(4) Net loan chargeoffs are shown on a last twelve month basis.

Source: S&P Global Market Intelligence and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obrained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2022 by RP<sup>®</sup> Financial, LC.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.12*** |

---

Table 3.6

Interest Rate Risk Measures and Net Interest Income Volatility

Comparable Institution Analysis

As of September 30, 2022 or the Most Recent Date Available.

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | |  | Balance Sheet Measures | Balance Sheet Measures | Balance Sheet Measures | | | | | | |
|  |  | |  | | | | Quarterly Change in Net Interest Income | Quarterly Change in Net Interest Income | Quarterly Change in Net Interest Income | Quarterly Change in Net Interest Income | Quarterly Change in Net Interest Income | Quarterly Change in Net Interest Income |
|  |  | |  | Tangible<br>Equity/<br>Assets | Avg<br>IEA/<br>Avg IBL | Non-Earn.<br>Assets/<br>Assets |<br>9/30/2022 |<br>6/30/2022 |<br>3/31/2022 |<br>12/31/2021 |<br>9/30/2021 |<br>6/30/2021 |
|  |  | |  | (%) | (%) | (%) | (change in net interest income is annualized in basis points) | (change in net interest income is annualized in basis points) | (change in net interest income is annualized in basis points) | (change in net interest income is annualized in basis points) | (change in net interest income is annualized in basis points) | (change in net interest income is annualized in basis points) |
|  **<u>Elberton FS&LA</u>** | **<u>Elberton FS&LA</u>** |  |  |  |  |  |  |  |  |  |  |  |
|  September 30, 2022 | September 30, 2022 |  |  | 18.1% | 117.9% | 3.7% | 41 | 0 | -23 | 15 | 23 | -36 |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |
|  Average | Average |  |  | 17.2% | 139.4% | 5.7% | 10 | 11 | 2 | 3 | 3 | -18 |
|  Median | Median |  |  | 14.9% | 138.1% | 5.7% | 0 | 9 | 4 | 6 | -5 | -18 |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | (1) | WI | 15.1% | 144.1% | 5.9% | 0 | -19 | 12 | 30 | -15 | -33 |
|  CLST | Catalyst Bancorp, Inc. |  | LA | 31.5% | 169.5% | 3.9% | 7 | 9 | 8 | -27 | -42 | -7 |
|  CNNB | Cincinnati Bancorp, Inc. | (1) | OH | 14.1% | 119.2% | 11.2% | 0 | 9 | 1 | -17 | 75 | -5 |
|  CULL | Cullman Bancorp, Inc. | (1) | AL | 25.7% | 138.1% | 6.7% | 0 | 20 | 62 | 13 | -30 | -29 |
|  FFBW | FFBW, Inc. |  | WI | NA | 158.7% | 4.8% | 23 | 40 | 20 | 3 | -23 | -5 |
|  GBNY | Generations Bancorp NY, Inc. | (1) | NY | 10.2% | 117.2% | 10.4% | 0 | -5 | -11 | -12 | 24 | 22 |
|  MSVB | Mid-Southern Bancorp, Inc. |  | IN | 11.6% | 131.2% | -1.3% | 18 | 31 | -30 | 5 | 18 | -44 |
|  PBBK | PB Bankshares, Inc. |  | PA | 11.8% | NA | 0.6% | 49 | 4 | -20 | 11 | 5 | -47 |
|  TCBC | TC Bancshares, Inc. | (1) | GA | 19.8% | 144.8% | 9.6% | 0 | 3 | -31 | 17 | 32 | 3 |
|  TCBS | Texas Community Bancshares, Inc. | (1) | TX | 14.9% | 131.9% | 5.6% | 0 | 15 | 7 | 8 | -15 | -38 |

---

NA=Change is greater than 100 basis points during the quarter.

(1) As of June 30, 2022 or the latest date available.

Source: S&P Global Market Intelligence and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2022 by RP<sup>®</sup> Financial, LC.

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III. 13*** |

---

To analyze interest rate risk on earnings, we compared quarterly changes in the net interest income ratio to average assets before considering the pro forma impact of the net offering proceeds for the Association. Over the period examined, the Association experienced greater quarterly fluctuation in the net interest income ratio, indicating greater volatility. Although such volatility may decline with higher capitalization and initial proceeds reinvestment, until the proceeds are actually reinvested the reduction in volatility cannot be measured.

<u>Summary</u> 

Based on the foregoing, RP Financial concluded that the Peer Group forms a reasonable basis for determining the pro forma market value of the Association. Where there are material differences, valuation adjustments will be applied to the Peer Group's pricing ratios.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 1*** |

---

**IV. VALUATION ANALYSIS** 

<u>Introduction</u> 

This chapter presents the valuation analysis and methodology prepared pursuant to the regulatory valuation guidelines, and the valuation adjustments and assumptions incorporated in the determination of the estimated pro forma market value of Elberton pursuant to a standard (stand-alone) conversion transaction.

<u>Appraisal Guidelines</u> 

The federal regulatory appraisal guidelines required by the OCC, the FDIC, the FRB, and state banking agencies specify the pro forma market value methodology for determining the pro forma market value of a converting mutual institution. Pursuant to this methodology: (1) a peer group of comparable publicly-traded savings institutions is selected; (2) a financial and operational comparison of the subject converting thrift to the peer group is conducted to determine key differences; and (3) a valuation analysis in which the pro forma market value of the subject converting thrift is determined based on the market pricing of the peer group as of the date of valuation, incorporating valuation adjustments for key differences relative to the selected peer group. In addition, the pricing characteristics of recent conversions (the new issue market), both at conversion and in the aftermarket, must be considered.

<u>RP Financial Approach to the Valuation</u> 

The valuation analysis herein complies with such regulatory approval guidelines. Accordingly, the valuation incorporates a detailed analysis based on the Peer Group, discussed in Chapter III, which constitutes "fundamental analysis" techniques. Additionally, the valuation incorporates a "technical analysis" of recently completed conversions. It should be noted that these valuation analyses cannot possibly fully account for all the market forces which impact trading activity and pricing characteristics of a stock on a given day.

The pro forma market value determined herein is a preliminary value for the Association's to-be-issued stock. Throughout the transaction process, RP Financial will: (1) review changes in the Association's operations and financial condition; (2) monitor the Association's operations and financial condition relative to the Peer Group to identify key fundamental changes; (3) monitor external factors that may impact value including, but not limited to, local and national economic

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 2*** |

---

conditions, interest rates, and the stock market environment, including the market for bank and thrift stocks and the selected Peer Group; and (4) monitor pending conversion offerings. If material changes should occur prior to the close of the offering, RP Financial will evaluate if updated valuation reports should be prepared reflecting such changes and their related impact on value, if any. RP Financial will also prepare a final valuation update at the closing of the offering regarding the range of value and the proposed closing value.

The appraised value determined herein is based on the current market and operating environment for the Association and for all savings institutions. Subsequent changes in the local and national economy, the legislative and regulatory environment, accounting and income taxes, the stock market, interest rates, and other external forces (such as natural disasters or major world events), which may occur from time to time (often with great unpredictability) may materially impact the market value of all bank and thrift stocks, the selected Peer Group and pending conversion offerings including the pro forma market value of Elberton. To the extent a change in factors impacting the Association's value can be reasonably anticipated and/or quantified, RP Financial has incorporated the estimated impact into its analysis.

<u>Valuation Analysis</u> 

A fundamental analysis identifying similarities and differences relative to the Peer Group was presented in Chapter III. The following sections summarize the key differences between the Association and the Peer Group and how those differences affect the pro forma valuation. Consistent with the regulatory valuation guidelines, key differences have been evaluated in the following areas: financial condition; profitability, growth, and viability of earnings; asset growth; primary market area; dividends; liquidity of the shares; marketing of the issue; management; and the effect of government regulations and/or regulatory reform. We have also considered the market for thrift stocks, including new issues, to assess the impact on value of Elberton in relation to the pending stock offering.

1. <u>Financial Condition</u> 

The financial condition of an institution is an important determinant in pro forma market value because investors typically look to such factors as overall asset/liability ("A/L") composition, credit quality, balance sheet liquidity, funding liabilities, and capital, in assessing investment attractiveness. The similarities and differences in the Association's and the Peer Group's financial strengths are noted as follows:

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 3*** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Overall A/L Composition</u>. Loans funded by retail deposits were the primary components of both
Elberton's and the Peer Group's balance sheets. The Association's IEA composition exhibited a higher concentration of loans and a lower concentration of cash and investments. The Peer Group has much greater diversification into higher
risk loans than the Elberton, which also provide yield and interest rate risk benefits. Because of the Association's concentration in fixed rate residential loans, which had not repriced downward in the recent lower interest rate environment
through early 2022, the Association's asset composition provided for a higher yield earned on IEA. Elberton's funding composition reflected a higher level of deposits and a lower level of borrowings in comparison to the Peer Group
averages. Further, the Association does not maintain any non-interest bearing checking accounts in portfolio, resulting in a higher cost of funds than the Peer Group and a slightly lower overall yield/cost
spread.

As a percent of assets, the Association maintained a higher level of IEA and a slightly higher level of IBL relative to the Peer Group averages, which translated into a higher IEA/IBL ratio for the Association. After factoring in the impact of the net stock proceeds, the Association's IEA/IBL ratio would further exceed the Peer Group's ratio. The Association's IEA yield can be expected to decline as the offering proceeds will initially be invested into short- to intermediate-term investment securities pending longer term reinvestment at higher yields. On balance, RP Financial concluded that A/L composition was a slightly negative factor in our adjustment for financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Credit Quality.</u> There are similarities in the nonperforming assets ratios to the Peer Group average. At
the same time, the Association maintained lower loss reserves ratios, indicating greater earnings risk in the event of unanticipated loan losses. The Association's residential mortgage portfolio focus supports a lower reserve ratio relative to
the Peer Group with more diversified loan portfolios with typically higher credit risk. On balance, RP Financial concluded that credit quality was a neutral factor in our adjustment for financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Balance Sheet Liquidity</u>. The Association maintained a lower level of cash and investment securities, in
part reflecting the Peer Group's higher level of transaction deposits. The initial reinvestment of the net offering proceeds would be expected to increase cash and short- and intermediate investment securities, which would mitigate the current
disadvantage relative to the Peer Group. Further, the net offering proceeds should initially reduce the Association's borrowings utilization for balance sheet liquidity. Overall, RP Financial concluded that balance sheet liquidity was a neutral
factor in our adjustment for financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Funding Liabilities</u>. Given the funding focus without offering checking accounts, the Association has a
higher cost of deposits and no related fee income. Although the net offering proceeds would reduce the Association's IBL ratio and support expanding deposits and offering transaction accounts, the cost of implementation transaction accounts and
the time to grow to a profitable size is considerable. Even though the net offering proceeds would diminish the IBL ratio, RP Financial concluded that funding liabilities mix was a moderately negative factor in our adjustment for financial
condition.

------

---

| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 4*** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Capital</u>. The Association currently maintains a higher tangible equity ratio, and the net offering proceeds
would further increase the advantage. At the same time, the Association's post-conversion growth in equity is expected to be lower given the lower profitability and higher equity, and thus the pro forma return on equity ("ROE") is
expected to be substantially lower than the Peer Group's average ROE for a sustained period. On balance, RP Financial concluded that capital strength was a slightly positive factor in our adjustment for financial condition.

On balance, Elberton's financial condition is considered less favorable, and thus, a slight downward adjustment was applied for the financial condition.

2. <u>Profitability, Growth and Viability of Earnings</u> 

Earnings are a key factor in determining pro forma market value, as the level and risk characteristics of an institution's earnings stream and prospects to generate future earnings heavily influence the multiple that the investment community will pay for earnings. The comparative summary for profitability, growth, and viability of earnings of the Association and the Peer Group appears below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Reported Earnings</u>. The Association reported a net operating loss in comparison to modest profitability for
the Peer Group. Although the merger expenses were a key factor, Elberton compared less favorably in other components of earnings, especially a lower noninterest income ratio. Despite the simplicity of the business model, the cost of operations is
high given the small asset size – and this is before including the cost of operating as a public company with stock benefit plans. The Association's disadvantage is heightened in that unlike the Peer Group it is not paying income taxes.
Overall, RP Financial concluded that this is a significantly negative factor in our adjustment for profitability, growth, and viability of earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Core Earnings</u>. When adjusted for merger related expenses for the Association and net gains/losses for the
Peer Group, it is apparent that the Association continues to compare unfavorably to the Peer Group. The unfavorable comparison is further underscored with an examination of the Association's less favorable expense coverage and efficiency
ratios, even before considering public company and stock benefit plans expense. Although the proceeds are assumed to be reinvested a recently higher interest rates, the net after-tax benefit is limited. The
pro forma profitability is assumed from a ROAA and ROAE perspective remains well below Peer Group levels. In fact, given the much higher equity position, the Association's ROE potential is diminished on a long-term basis. Therefore, RP
Financial concluded that this was a significantly negative factor in our adjustment for profitability, growth, and viability of earnings.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 5*** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Interest Rate Risk</u>. Although on a pro forma basis the Association will have a stronger IEA/IBL ratio, a
low non-earning asset level and the opportunity to reinvest the net offering proceeds in short- intermediate-term securities, the quarterly net interest income ratio is expected to remain more volatile than
the Peer Group given the concentration in fixed rate loans and no checking accounts. On balance, interest rate risk was a slightly negative factor in our adjustment for profitability, growth, and viability of earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Credit Risk</u>. The Association had a similarly low level of nonperforming assets, provisions and chargeoffs,
indicating a strong credit profile like the Peer Group. Although the loss reserves are low relative to the Peer Group, this reflects the low credit loss history and concentration in 1-4 family residential
mortgages. Overall, RP Financial concluded that credit risk was a neutral factor in the adjustment for profitability, growth, and viability of earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Earnings Growth Potential</u>. The Association's earnings growth potential, even with the additional
reinvestment of the net offering proceeds, is handicapped by the need to invest in facilities, additional staffing, development of products and services, and technology to increase its competitive profile and expand into other market areas. Given
that such investments may place a further drag on profitability in order to increase assets and generate additional interest and noninterest revenue, there is a significant challenge to realize earnings growth in the short- to intermediate term.
Overall, earnings growth potential was a moderate negative factor in our adjustment for profitability, growth, and viability of earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Return on Equity</u>. Currently, the Association is not profitable, and even the anticipated net earnings
benefit from the offering will not result in a market level ROE. It may take a few years to begin to generate a ROE comparable to Peer Group levels. Accordingly, this was a moderately negative factor in the adjustment for profitability, growth, and
viability of earnings.

On balance, a moderate downward adjustment has been applied for profitability, growth, and viability of earnings.

3. <u>Asset Growth</u> 

Unlike the slow average growth of the Peer Group, the Association has been shrinking over the last 12 months. While the strong capital can position the Association for substantially higher growth than the Peer Group, the practicality of generating profitable sustainable growth is believed to be low at present given the necessary investment in products and services, delivery channels and human resources. On balance, a moderate downward adjustment was applied for asset growth.

4. <u>Primary Market Area</u> 

The economic and demographic health, population base and type of the primary market area served can impact an institution's market value, as well as the competitive environment and market share in the local market served. Operating from a single office location in a small market in rural northeastern Georgia in Elbert County limits the Association's growth opportunities without a significant investment to pursue growth in other markets. Summary demographic and deposit market share data for the Association and the Peer Group companies is provided in Exhibit III-2.

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 6*** |

---

There are three other banking financial institutions operating within Elbert County, along with one small credit union. The three other banking institutions are all larger in size than Elberton and the Association maintains the smallest market share. Elberton's limited loan and deposit product line also limits the competitive position. The average and median deposit market shares maintained by the Peer Group companies in their respective headquarters counties are higher than Elberton's share of deposits.

The Peer Group companies operate in markets with larger populations than Elbert County. Population growth trends for the primary market area counties served by the Peer Group companies are somewhat more favorable than Elbert County's recent and projected population growth. Elbert County has a lower per capita income relative to the markets served by the Peer Group. As shown in Table 4.1, the average unemployment rate for the primary market area counties served by the Peer Group companies was below Elbert County's unemployment rate.

On balance we concluded that a moderate downward adjustment was appropriate for primary market area.

Table 4.1

Market Area Unemployment Rates

Elberton FS&LA and the Peer Group Companies (1)

---

| | | |
|:---|:---|:---|
|  | <br>County | August 2022<br>Unemployment |
|  Elberton FS&LA, Inc. - GA | Elbert | 3.8% |
|  Peer Group Average |  | 3.6 |
|  <u>The Peer Group</u> |  |  |
|  1895 Bancorp of Wisconsin, Inc. - WI | Milwaukee | 4.7 |
|  Catalyst Bancorp, Inc. - LA | Saint Landry | 4.8 |
|  Cincinnati Bancorp - OH | Hamilton | 4.2 |
|  Cullman Bancorp, Inc. - AL | Cullman | 2.2 |
|  FFBW, Inc. - WI | Waukesha | 2.9 |
|  Generations Bancorp NY, Inc. - NY | Seneca | 3.1 |
|  Mid-Southern Bancorp, Inc. - IN | Washington | 2.6 |
|  PB Bankshares, Inc. - PA | Chester | 3.5 |
|  TC Bancshares, Inc. - GA | Thomas | 3.5 |
|  Texas Community Bancshares, Inc. - TX | Wood | 4.6 |

---

(1) Unemployment rates are not seasonally adjusted.

Source: S&P Global Market Intelligence.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 7*** |

---

5. <u>Dividends</u> 

Assuming Elberton would undertake a stand-alone conversion, the Association would have the equity to support a dividend payment, but the low level of post-conversion earnings would not support a market rate dividend for an extended period. Actual declarations of dividends by the Board of Directors will depend upon several factors, including investment opportunities, growth objectives, financial condition, profitability, tax considerations, minimum capital requirements, regulatory limitations, stock market characteristics and general economic conditions. Until profitability increases it would be expected that the Association on a stand-alone conversion basis would not commence paying a dividend.

Three of the ten Peer Group companies pay regular cash dividends, with implied dividend yields ranging from 0.67% to 1.09%. The average dividend yield on the stocks of the three Peer Group institutions that pay a dividend equaled 1.21% as of October 28, 2022. Comparatively, as of October 28, 2022, the average dividend yield on the stocks of all fully-converted publicly-traded thrifts equaled 2.44%.

On balance, we concluded that a slight downward adjustment was warranted for this factor.

6. <u>Liquidity of the Shares</u> 

The Peer Group is, by definition, composed of larger thrift institutions whose stocks are publicly-traded and are NASDAQ listed. Given the small size of the offering, it would be anticipated that the Association's stock would be quoted on the OTC bulletin board following the stock offering and it is considered unlikely that there would be active trading in the stock.

The number of shares outstanding and market capitalization provides an indication of the degree of liquidity there will be in a particular stock recognizing that share liquidity may also be impacted by the amount of ownership by institutional shareholders, stock benefit plans, insiders, and other shareholders. The market capitalization of the Peer Group companies ranged from $26.4 million to $81.2 million as of October 28, 2022, with average and median market values of $53.1 million and $55.0 million, respectively. The shares issued and outstanding of the Peer Group companies ranged from 2.4 million to 7.4 million, with average and median shares outstanding of 4.4 million and 4.1 million, respectively. We anticipate that, under a stand-alone conversion scenario, the Association's stock offering would result in a pro forma market value substantially lower than the Peer Group's numbers, with the number of shares outstanding also well below the Peer Group companies.

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 8*** |

---

Based on the above, we concluded that the liquidity of the Association's stock would be much less than the Peer Group on average, and therefore a moderate downward adjustment was warranted for this factor.

7. <u>Marketing of the Issue</u> 

Three separate markets exist for thrift stocks: (1) the after-market for public companies, in which trading activity is regular and investment decisions are made based upon financial condition, earnings, capital, ROE, dividends and future prospects; (2) the new issue market in which converting thrifts are evaluated on the basis of the same factors but on a pro forma basis without the benefit of prior operations as a publicly-held company and stock trading history; and (3) the thrift acquisition market. All three of these markets were considered in the valuation of the Association's to-be-issued stock under a stand-alone conversion scenario.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. <u>The Public Market</u> 

The value of publicly-traded bank and thrift stocks is easily measurable and is tracked by most investment houses and related organizations. Exhibit IV-1 provides pricing and financial data on all publicly-traded thrifts. In general, thrift stock values react to market stimuli such as interest rates, inflation, perceived industry health, projected rates of economic growth, regulatory issues, and stock market conditions in general. Exhibit IV-2 displays historical stock market trends for various indices and includes historical stock price index values for thrifts. Exhibit IV-3 displays various stock price indices as of October 28, 2022.

In terms of assessing general stock market conditions, the broader stock market has generally trended lower in recent quarters. The broader stock market traded unevenly through the first half of October 2021, with lawmakers reaching a deal on a short-term debt limit and strong earnings posted by bank and healthcare companies contributing to stock market gains that were somewhat negated by stocks trading lower on worries about slowing growth and mounting inflation. Propelled by strong third quarter earnings reports, all three major U.S. stocks closed at multiple record highs during the second half of October. For the month of October, the Dow Jones Industrial Average ("DJIA") was up 5.8%, the S&P 500 was up 6.9% and the NASDAQ was up 7.3%. The broader stock market rally continued through the first week of November, with all three major U.S. stock indexes rising to fresh highs after the Federal Reserve approved plans

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 9*** |

---

to start scaling back its bond-buying stimulus program and the October employment report showed job growth rebounded. Data showing that inflation hit a three-decade high contributed to snapping the five-week winning streak in the broader stock market, as all three of the major U.S. stock indexes finished the second week of November with slim losses. Fresh Covid-19 restrictions in Europe contributed to stocks trading lower going into the second half of November, as a rise in Covid-19 cases dimmed prospects for a global economic recovery. Concerns that the fast-spreading Omicron Covid-19 variant would derail the global economy's recovery triggered a selloff in the broader stock market, with the DJIA suffering its worst day of 2021 on the Friday following Thanksgiving. Fueled by the uncertain impact of the Omicron variant and rising inflation, the retreat in the broader stock market continued through the end of November and the start of December. Notwithstanding weaker-than-expected job growth reported for November, stocks rallied to close out the first week of December and into the second week of December on hopes that the Omicron variant would be less damaging to the economy than initially feared. Stocks retreated ahead of the Federal Reserve's mid-December meeting and then traded higher at the conclusion of the Federal Reserve meeting, as the Federal Reserve mapped out plans to more quickly wind down pandemic stimulus efforts and to raise its target interest rate at least three time in 2022. Fears that the fast-spreading Omicron variant of Covid-19 could derail the sputtering global economic recovery spurred a stock market selloff heading into the second half of December, which was led by a decline in technology shares. Favorable economic data regarding consumer confidence and existing home sales contributed to stocks rallying in last week of December, with the DJIA and S&P 500 closing at record highs in late-December.

The DJIA and S&P 500 started 2022 closing at record highs, which was followed by stocks declining to finish the first week of trading of 2022 with their worst weekly performance for the start of a new year since 2016. Worries about higher interest rates and slowing economic growth sustained the downward trend in the broader stock market going into the second half of January, with the NASDAQ moving into correction territory. A strong fourth quarter earnings report posted by Apple Inc. helped to snap a three-week slump in the broader stock market at the end of January; although, all three major U.S. stock indexes recorded losses for the month of January, with the S&P 500 recording its worst month since March 2020. A mix of favorable and disappointing fourth quarter earnings reports provided for an up and down market through the first week of February, which was followed by a selloff in the broader stock market through late-February as investors grappled with the growing threat of Russia invading Ukraine and the possibility that the Federal Reserve would step-up the pace of interest rate increases. Despite a

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 10*** |

---

late-February rally, all three of the major U.S. stock indexes finished February with a second straight monthly loss. Volatility prevailed in the stock market during the first half of March, as investors reacted to rising and falling oil prices, inflation hitting a 40-year high and Russia's intensifying military campaign in Ukraine. Lower oil prices and the first rate increase by Federal Reserve since 2018 helped stocks to rally going into the second half of March, with all three of the major U.S. stock indexes notching their best week since November 2020. The positive trend in the broader stock market was generally sustained through late-March, which was followed by stocks closing sharply lower on the last day of March. Overall, the major U.S. stock indexes suffered their worst quarter in two years, with the DJIA, NASDAQ and S&P 500 recording first quarter declines of 4.6%, 9.1% and 4.9%, respectively.

After a favorable employment report for March supported stock market gains at the beginning of April 2022, stocks turned lower going into mid-April as rate fears mounted in light of data showing that inflation hit another 40-year high in March and the Federal Reserve signaling a more hawkish tone for future interest rate hikes in order to tame inflation. Stock indexes traded unevenly with the onset of first quarter earnings season in mid-April, amid uncertainty the impact that higher inflation and higher interest rates would have on corporate earnings. April concluded with a deepening rout in technology shares, which translated into the worst monthly performance for NASDAQ since 2008. The NASDAQ was down 13.3% for the month of April, versus an 8.8% decline in the S&P 500 and a 4.9% decline in the DJIA. Stocks initially rallied after the Federal Reserve concluded its early-May meeting by raising its target rate by 0.5%, which was followed by the DJIA posting its largest one-day decline in 2022 and the NASDAQ closing down 5.0%. Major U.S. stock indexes fell to new lows for 2022 heading into mid-May, as a higher-than-expected increase in the April CPI heighted concerns that the Federal Reserve would move to raise rates more aggressively and, in turn, slow economic growth. Following a mid-May rebound, stocks fell sharply heading into the second half of May as disappointing earnings from some larger retailers raised fears of a recession. Comparatively, some favorable earnings reports and economic data supported a broad-based rally during the last full week of trading in May, with all three major U.S. stock indexes recording their best week since November 2020. Stocks reversed course and traded sharply lower during the first half of June, in which the S&P 500 entered bear territory and the DJIA closed below 30000. High inflation, rising interest rates and growing concerns about the outlook for corporate profits and economic growth were noted factors that curtailed investors' appetite for investing in stocks. Stocks rallied in the second half of June on signs that economic activity was cooling off, which tempered expectations that the Federal Reserve would implement a series of steep rate hikes. The second quarter ended with stocks closing lower and, overall, posting their worst first half of a year in decades.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 11*** |

---

Stocks opened the third quarter of 2022 trading unevenly ahead of the release of the June employment report. Fears about a recession on the horizon and the June CPI showing inflation recached a four-decade high weighed on stocks going into mid-July, which was followed by a one-day rally to closeout the second full week of trading in July. The one-day rally was fueled by a larger than expected in June retail sales. Second quarter earnings reports drove day-to-day fluctuations in the broader stock market going into the second half of July, which was followed by stocks rallying at the end of July after the Federal Reserve increased its target rate by 0.75% and signaled more tightening was likely this year. Geopolitical tensions in China weighed on stocks at the start of August, which was followed a broader stock market rally through mid-August. Factors contributing to the upswing in stocks included some strong earnings reports and a slowdown in inflation as indicated by the CPI. Stocks snapped a four week winning to close out the third week of August, as fears of additional sharp interest rate increases by the Federal Reserve prompted a multi-day selloff heading into last two weeks of August. After rallying in advance of the Federal Reserve Chairman's late-August speech on the economy, stocks plummeted to close out August as investors reacted to the Federal Reserve Chairman's pledge to keep raising interest rates until it was confident that inflation was under control. Expectations that the Federal Reserve remained on track to raise interest rates following the release of the August jobs report provided for an up-and-down market for stocks during the first few days of trading in September. Stocks suffered their worst day in more than two years on September 13<sup>th</sup>, as a stronger than expected increase in the August CPI raised expectations that the Federal Reserve would move aggressively to combat inflation and, in turn, increase the possibility of a recession. Stocks continued to exhibit notable levels of volatility throughout the remainder of September and into October based on market reactions to perceptions on future interest rates and rate hikes by the Federal Reserve, expectations of future levels of oil and other energy prices, future probabilities for a recession in the United States, the impact of geopolitical actions such as the Ukraine war, and the pending mid-term elections in the United States. In particular, the elections could change control of Congress and thus begin a new series of federal actions that would impact the economy, governmental actions, and other areas of the operating environment for financial institutions.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 12*** |

---

On October 28, 2022, the DJIA closed at 32861.80, a decrease of 8.0% from one year ago and a decrease of 9.6% year-to-date, and the NASDAQ closed at 11102.45, a decrease of 28.1% from one year ago and a decrease of 29.0% year-to-date. The S&P 500 Index closed at 3901.06 on October 28, 2022, a decrease of 15.1% from one year ago and a decrease of 18.1% year-to-date.

The market for financial shares has also generally traded lower in recent quarters. Congress agreeing to avert a government default standoff for a couple of months and favorable third quarter earnings posted by the large banks supported a positive trend in financial stocks through the first half of October 2021. Financial shares edge up slightly during the second half of October, as investors reacted to weekly initial jobless claims hitting a new pandemic-era low and an increase in consumer confidence. News that Federal Reserve officials agreed to wind down their asset-purchase program by $15 billion each in November and December boosted financial shares at the start of November, which was followed by a slight pullback in the second week of November as inflation data added to investors' concerns about price pressures in the economy. Financial shares retreated further heading into the second half of November and then rebounded after Federal Reserve Chairman Jerome Powell was renominated for a second term. News of a fresh coronavirus threat following identification of the Omicron variant, along with concerns about rising inflation, pressured financial shares lower through the end of November and the beginning of December. Indications that the Omicron variant was causing milder illness than previously feared contributed to bank stocks edging higher in the second week of December. Bank shares edged lower in mid-December, as investors reacted to the Federal Reserve's decision to accelerate ending its asset purchase program and to begin raising rates in 2022. For the second half of December, bank shares closed out 2021 trading in a narrow range.

Comments by the Federal Reserve Chairman that the Federal Reserve was prepared to raise interest rates to combat inflation spurred a rally in bank stocks at the start of 2022, as investors wagered that looming interest rate increases would fuel higher earnings for the banking sector. Concerns that higher interest rates would lead to a slowdown in the economy weighed on bank shares in the second half of January, which was followed by an uptick in bank shares during the first half of February. As investors grappled with high inflation and the onset of Russia's military campaign in Ukraine, bank shares retreated in the second half of February. Financial shares led the broader stock market lower in early-March, amid surging oil prices and the mounting intensity of Russia's invasion of Ukraine. Growing confidence in the Federal Reserve's plans to lift rates would serve to control inflation and that the U.S. economy could withstand the escalating war in Ukraine translated into a stable market for banks shares in the closing weeks of the first quarter.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 13*** |

---

Signs that soaring inflation and a slowing economy were starting to impact businesses pressured bank stocks lower at the start of the second quarter of 2022. Lackluster first quarter earnings reports posted by the nation's largest banks and warnings of future headwinds that could negatively impact bank earnings extended the downturn in bank stocks through the end of April. The selloff in bank stocks continued through the first half of May, which was driven by investor fears that the economy could slide into a recession as the Federal Reserve pursued a more aggressive path of rate increases to combat inflation. Bank stocks participated in a broadly-based stock market rally in the second half of May, with positive earnings reports posted by some large retailers and favorable economic data lifting sentiment across the market. After bank shares stabilized through early-June, inflation fears triggered a selloff in bank stocks going into mid-June as the May CPI increased to its highest level in more than four decades. For the balance of the second quarter, bank shares settled into a narrow trading range.

At the start of the third quarter of 2022, bank stocks showed little movement ahead of the June employment report. Bank stocks traded lower at the start of the second quarter earnings season, as J.P. Morgan's second quarter earnings report spotlighted concerns about the outlook for the U.S. economy. The one-day rally in the broader stock market in mid-July lifted bank stocks as well, which was in part supported by favorable second quarter earnings reports posted by some large banks. A favorable earnings outlook reported by some banks in their second quarter earnings reports and the rally in the broader stock market following the Federal Reserve's rate hike helped to sustain a positive trend for financial shares through the second half of July. After edging lower at the start of August, a stronger-than-expected jobs report for July and a slightly slower pace of inflation indicated by the July CPI contributed to financial shares trending higher through mid-August. Bank stocks reversed course and followed the broader stock market lower during the second half of August, as investors assessed the likelihood that the Federal Reserve would continue to move aggressively to tame inflation and the potential that higher interest rates could push the U.S. economy into a protracted economic downturn. After edging lower at the start of September, financial shares traded higher along with the broader stock market heading into mid-September. Financial shares participated in the broader market selloff with the release of the August CPI in mid-September, which indicated that inflation remained elevated and raised

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 14*** |

---

expectations that the Federal Reserve would continue to raise rates aggressively in an effort to combat inflation. Financial shares continued a downward trend through the rest of September and through October based on further expectations on interest rates and the future performance of the economy and potential for a resulting recession, which would likely impact banking industry activity. On October 28, 2022, the S&P U.S. BMI Banks Index closed at 154.10, a decrease of 20.6% from one year ago and a decrease of 16.3% year-to-date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. <u>The New Issue Market</u> 

In addition to thrift stock market conditions in general, the new issue market for converting thrifts is also an important consideration in determining the Association's pro forma market value. The new issue market is separate and distinct from the market for seasoned thrift stocks in that the pricing ratios for converting issues are computed on a pro forma basis, specifically: (1) the numerator and denominator are both impacted by the conversion offering amount, unlike existing stock issues in which price change affects only the numerator; and (2) the pro forma pricing ratio incorporates assumptions regarding source and use of proceeds, effective tax rates, stock plan purchases, etc. which impact pro forma financials, whereas pricing for existing issues are based on reported financials. The distinction between pricing of converting and existing issues is perhaps no clearer than in the case of the price/book ("P/B") ratio in that the P/B ratio of a converting thrift will typically result in a discount to book value whereas in the current market for existing thrift stocks the P/B ratio may reflect a premium to book value. Therefore, it is appropriate to also consider the market for new issues, both at the time of the conversion and in the aftermarket.

As shown in Table 4.2, three standard conversion offerings have been completed during 2022, two of which were completed during the past three months. The average closing pro forma price/tangible book ratio of the three standard conversion offerings completed during 2022 equaled 56.9%. On average, the three standard conversion offerings reflected price appreciation of 36.4% after the first week of trading. As of October 28, 2022, the three standard conversion offerings reflected a 31.7% increase in price on average from their IPO prices. Of the two standard conversion offerings completed during the past three months, the offering completed by VWF Bancorp, Inc. of Ohio ("VWF Bancorp") on July 28, 2022 was considered to be most comparable to Elberton's offering given the size of the stock offering and that the stock is traded

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 15*** |

---

**Table 4.2**

**Pricing Characteristics and After-Market Trends**

**Conversions Completed in Trailing 12 Months**

---

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Institutional Information | Institutional Information | Institutional Information | Pre-Conversion Data | Pre-Conversion Data | Pre-Conversion Data | Pre-Conversion Data | Offering Information | Offering Information | Offering Information | Offering Information | Contribution to<br>Char. Found. | Contribution to<br>Char. Found. | Insider Purchases | Insider Purchases | Insider Purchases | Insider Purchases |  | Pro Forma Data | Pro Forma Data | Pro Forma Data | Pro Forma Data | Pro Forma Data | Pro Forma Data |  | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends |
|  |  |  | Financial Info. | Financial Info. | Asset Quality | Asset Quality |  |  |  |  | Contribution to<br>Char. Found. | Contribution to<br>Char. Found. | % Off Incl. Fdn.+Merger<br>Shares | % Off Incl. Fdn.+Merger<br>Shares | % Off Incl. Fdn.+Merger<br>Shares | % Off Incl. Fdn.+Merger<br>Shares |  | Pricing<br>Ratios(2)(5) | Pricing<br>Ratios(2)(5) | Pricing<br>Ratios(2)(5) | Financial<br>Charac. | Financial<br>Charac. | Financial<br>Charac. |  | Closing Price: | Closing Price: | Closing Price: | Closing Price: | Closing Price: | Closing Price: | Closing Price: | Closing Price: |
|  |  |  |  |  |  |  | Excluding Foundation | Excluding Foundation | Excluding Foundation | Excluding Foundation |  | % of | Benefit Plans | Benefit Plans | Benefit Plans |  | Initial |  |  |  |  |  |  |  | First |  | After |  | After |  |  |  |
|  | Conversion |  |  | Equity/ | NPAs/ | Res. | Gross | % | % of | Exp./ |  | Public Off. |  | Recog. | Stk | Mgmt.& | Div. |  | Core |  | Core |  | Core | IPO | Trading | % | First | % | First | % | **Thru** | % |
| Institution | Date | Ticker | Assets | Assets | Assets | Cov. | Proc. | Offer | Mid. | Proc. | Form | Inc. Fdn. | ESOP | Plans | Option | Dirs. | Yield | P/TB | P/E | P/A | ROA | TE/A | ROE | Price | Day | Chg | Week(3) | Chg | Month(4) | Chg | **10/28/22** | Chg |
|  |  |  | ($Mil) | (%) | (%) | (%) | ($Mil.) | (%) | (%) | (%) |  | (%) | (%) | (%) | (%) | (%)(1) | (%) | (%) | (x) | (%) | (%) | (%) | (%) | ($) | ($) | (%) | ($) | (%) | ($) | (%) | **($)** | (%) |
|  ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** | ***<u>Standard Conversions</u>*** |
|  **ECB Bancorp, Inc., MA** | 7/28/22 | ECBK-NASDAQ | $689 | 11.42% | 0.11% | 589% | $89.2 | 100% | 96% | 2.7% | **C/S** | $**600/2.83%** | 8.0% | 4.0% | 10.0% | 3.8% | 0.00% | 59.3% | 19.1x | 12.0% | 0.6% | 20.2% | 3.1% | $10.00 | $14.09 | 40.9% | $14.13 | 41.3% | $14.06 | 40.6% | $**15.79** | 57.9% |
|  **VWF Bancorp, Inc., OH** | 7/14/22 | VWFB-OTCQB | $137 | 17.62% | 0.17% | 96% | $19.2 | 100% | 87% | 7.8% | **N.A.** | **N.A.** | 8.0% | 4.0% | 10.0% | 25.1% | 0.00% | 51.8% | NM | 12.8% | 0.1% | 24.8% | 0.3% | $10.00 | $12.90 | 29.0% | $14.50 | 45.0% | $14.90 | 49.0% | $**12.89** | 28.9% |
|  **NSTS Bancorp, Inc., IL** | 1/19/22 | NSTS-NASDAQ | $260 | 17.68% | 0.70% | 529% | $52.9 | 100% | 132% | 3.7% | **C/S** | $**150/2.00%** | 8.0% | 4.0% | 10.0% | 5.0% | 0.00% | 59.5% | NM | 17.7% | -0.2% | 29.8% | -0.6% | $10.00 | $12.59 | 25.9% | $12.30 | 23.0% | $12.50 | 25.0% | $**10.83** | 8.3% |
|  Catalyst Bancorp, Inc., LA\* | 10/13/21 | CLST-NASDAQ | $239 | 21.26% | 2.19% | 190% | $52.9 | 100% | 132% | 3.0% | **N.A.** | **N.A.** | 8.0% | 4.0% | 10.0% | 2.9% | 0.00% | 55.3% | NM | 18.7% | -0.1% | 33.7% | -0.2% | $10.00 | $13.56 | 35.6% | $13.85 | 38.5% | $13.76 | 37.6% | $**13.05** | 30.5% |
|  | **Averages - Standard<br>Conversions:** | **Averages - Standard<br>Conversions:** | $**331** | **17.00%** | **0.79%** | **351%** | $**53.5** | **100%** | **112%** | **4.3%** | **N.A.** | **N.A.** | **8.0%** | **4.0%** | **10.0%** | **9.2%** | **0.00%** | **56.5%** | **19.1x** | **15.3%** | **0.1%** | **27.1%** | **0.7%** | $**10.00** | $**13.29** | **32.9%** | $**13.70** | **37.0%** | $**13.81** | **38.1%** | $**13.14** | **31.4%** |
|  | **Medians - Standard<br>Conversions:** | **Medians - Standard<br>Conversions:** | $**249** | **17.65%** | **0.44%** | **359%** | $**52.9** | **100%** | **114%** | **3.3%** | **N.A.** | **N.A.** | **8.0%** | **4.0%** | **10.0%** | **4.4%** | **0.00%** | **57.3%** | **19.1x** | **15.3%** | **0.0%** | **27.3%** | **0.1%** | $**10.00** | $**13.23** | **32.3%** | $**13.99** | **39.9%** | $**13.91** | **39.1%** | $**12.97** | **29.7%** |
|  ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** | ***<u>Second Step Conversions</u>*** |
|  Ponce Financial Group, Inc., NY\* | 1/28/22 | PDLB-NASDAQ | $1561 | 11.14% | 1.05% | 157% | $133.2 | 54% | 127% | 3.0% | **C/S** | $**1.0M/2.91%** | 8.0% | 4.0% | 10.0% | 0.9% | 0.00% | 85.9% | 34.6x | 14.8% | 0.4% | 17.2% | 2.5% | $10.00 | $10.79 | 7.9% | $10.65 | 6.5% | $10.65 | 6.5% | $**9.27** | -7.3% |
|  | **Averages - Second Step<br>Conversions:** | **Averages - Second Step<br>Conversions:** | $**1561** | **11.14%** | **1.05%** | **157%** | $**133.2** | **54%** | **127%** | **3.0%** | **N.A.** | **N.A.** | **8.0%** | **4.0%** | **10.0%** | **0.9%** | **0.00%** | **85.9%** | **34.6x** | **14.8%** | **0.4%** | **17.2%** | **2.5%** | $**10.00** | $**10.79** | **7.9%** | $**10.65** | **6.5%** | $**10.65** | **6.5%** | $**9.27** | **-7.3%** |
|  | **Medians - Second Step<br>Conversions:** | **Medians - Second Step<br>Conversions:** | $**1561** | **11.14%** | **1.05%** | **157%** | $**133.2** | **54%** | **127%** | **3.0%** | **N.A.** | **N.A.** | **8.0%** | **4.0%** | **10.0%** | **0.9%** | **0.00%** | **85.9%** | **34.6x** | **14.8%** | **0.4%** | **17.2%** | **2.5%** | $**10.00** | $**10.79** | **7.9%** | $**10.65** | **6.5%** | $**10.65** | **6.5%** | $**9.27** | **-7.3%** |
|  ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** | ***<u>Mutual Holding Companies</u>*** |
|  CFSB Bancorp, Inc., MA\* | 1/13/22 | CFSB-NASDAQ | $337 | 14.56% | 0.00% | NM | $28 | 43% | 130% | 5.4% | **C/S** | $**250/4.44%** | 8.7% | 4.4% | 10.9% | 5.2% | 0.00% | 63.2% | 75.4x | 16.7% | 0.3% | 20.0% | 1.6% | $10.00 | $10.18 | 1.80% | $10.65 | 6.5% | $10.63 | 6.3% | $**8.87** | -11.3% |
|  | **Averages - MHC<br>Conversions:** | **Averages - MHC<br>Conversions:** | $**337** | **14.56%** | **0.00%** | **NM** | $**28.0** | **43%** | **130%** | **5.4%** | **N.A.** | **N.A.** | **8.7%** | **4.4%** | **10.9%** | **5.2%** | **0.00%** | **63.2%** | **75.4x** | **16.7%** | **0.3%** | **20.0%** | **1.6%** | $**10.00** | $**10.18** | **1.8%** | $**10.65** | **6.5%** | $**10.63** | **6.3%** | $**8.87** | **-11.3%** |
|  | **Medians - MHC<br>Conversions:** | **Medians - MHC<br>Conversions:** | $**337** | **14.56%** | **0.00%** | **NM** | $**28.0** | **43%** | **130%** | **5.4%** | **N.A.** | **N.A.** | **8.7%** | **4.4%** | **10.9%** | **5.2%** | **0.00%** | **63.2%** | **75.4x** | **16.7%** | **0.3%** | **20.0%** | **1.6%** | $**10.00** | $**10.18** | **1.8%** | $**10.65** | **6.5%** | $**10.63** | **6.3%** | $**8.87** | **-11.3%** |
|  | **Averages - All<br>Conversions:** | **Averages - All<br>Conversions:** | $**537** | **15.61%** | **0.70%** | **312%** | $**62.6** | **83%** | **118%** | **4.3%** | **N.A.** | **N.A.** | **8.1%** | **4.1%** | **10.1%** | **7.1%** | **0.00%** | **62.5%** | **43.1x** | **15.4%** | **0.2%** | **24.3%** | **1.1%** | $**10.00** | $**12.35** | **23.5%** | $**12.68** | **26.8%** | $**12.75** | **27.5%** | $**11.78** | **17.8%** |
|  | **Medians - All<br>Conversions:** | **Medians - All<br>Conversions:** | $**298** | **16.09%** | **0.44%** | **190%** | $**52.9** | **100%** | **129%** | **3.3%** | **N.A.** | **N.A.** | **8.0%** | **4.0%** | **10.0%** | **4.4%** | **0.00%** | **59.4%** | **34.6x** | **15.7%** | **0.2%** | **22.5%** | **1.0%** | $**10.00** | $**12.75** | **27.5%** | $**13.08** | **30.8%** | $**13.13** | **31.3%** | $**11.86** | **18.6%** |

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| | | |
|:---|:---|:---|
|  Note: \* - Appraisal performed by RP Financial; BOLD = RP Financial assisted in the business plan preparation, "NT" - Not Traded; "NA" - Not Applicable, Not Available; C/S-Cash/Stock. | Note: \* - Appraisal performed by RP Financial; BOLD = RP Financial assisted in the business plan preparation, "NT" - Not Traded; "NA" - Not Applicable, Not Available; C/S-Cash/Stock. | Note: \* - Appraisal performed by RP Financial; BOLD = RP Financial assisted in the business plan preparation, "NT" - Not Traded; "NA" - Not Applicable, Not Available; C/S-Cash/Stock. |
| (1) As a percent of MHC offering for MHC transactions. | (5) Mutual holding company pro forma data on full conversion basis. |  |
| (2) Does not take into account the adoption of SOP 93-6. | (6) Simultaneously completed acquisition of another financial institution. |  |
| (3) Latest price if offering is less than one week old. | (7) Simultaneously converted to a commercial bank charter. |  |
| (4) Latest price if offering is more than one week but less than one month old. | (8) Former credit union. | October 28, 2022 |

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 16*** |

---

on the over-the-counter exchange. VWF Bancorp raised gross proceeds of $19.2 million, which was slightly above the minimum of its offering range. VWF Bancorp's closing pro forma price/tangible book ratio equaled 51.8%. VWF Bancorp's stock price was up 45.0% after the first week of trading. As of October 28, 2022, VWF Bancorp's stock price was up 28.9% from its IPO price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. <u>The Acquisition Market</u> 

Also considered in the valuation was the potential impact on Elberton's stock price of recently completed and pending acquisitions of other thrift institutions operating in Georgia. As shown in Exhibit IV-4, there were four Georgia thrift acquisitions announced or completed from the beginning of 2014 through October 28, 2022, including one most recently completed in 2021. The acquisition activity involving Georgia savings institutions may imply a certain degree of acquisition speculation for the Association's stock. To the extent that acquisition speculation may impact the Association's offering, we have largely taken this into account in selecting companies for the Peer Group which operate in markets that have experienced a comparable level of acquisition activity as the Association's market and, thus, are subject to the same type of acquisition speculation that may influence Elberton's stock. However, since converting thrifts are subject to a three-year regulatory moratorium from being acquired, acquisition speculation in Elberton's stock would tend to be less compared to the stocks of the Peer Group companies.

\* \* \* \* \* \* \* \* \* \* \*

In determining the valuation adjustment for marketing of the issue, we considered trends in both the overall market for thrift stocks, the new issue market, and the local acquisition market for thrift stocks. Taking these factors and trends into account, RP Financial concluded that a slight downward adjustment was appropriate in the valuation analysis for purposes of marketing of the issue.

8. <u>Management</u> 

Given the Association's small size and limited products and operations, Elberton's President and CEO also functions as the Association's Chief Lending Officer and Chief Financial Officer. The President and CEO appears to have experience and expertise in all the key areas of the Association's operations, and the generally consistent profitability and growth in recent years suggest that the Board and senior management have been effective in implementing an operating strategy that can be well managed by the Association's present organizational structure. The Association currently does not have any senior management positions that are vacant.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 17*** |

---

Similarly, the returns, capital positions and other operating measures of the Peer Group companies are indicative of well-managed financial institutions, which have Boards and management teams that have been effective in implementing competitive operating strategies. Given that there is no successor for the CEO in the event he becomes incapacitated or leaves and the limited ability to hire other senior officers given the small size, therefore, on balance, we concluded with a moderate downward valuation adjustment relative to the Peer Group was appropriate for this factor.

9. <u>Effect of Government Regulation and Regulatory Reform</u> 

As a fully-converted, federally-insured thrift institution Elberton will be operating in substantially the same regulatory environment as the Peer Group members — all of whom are adequately capitalized institutions and are operating with no apparent restrictions. The Association's post-conversion pro forma regulatory capital ratios will be enhanced from the already strong levels. Accordingly, no adjustment has been applied for the effect of government regulation and regulatory reform.

<u>Summary of Adjustments</u> 

Based on the factors discussed above, we concluded that the Association's pro forma market value should reflect the following valuation adjustments relative to the Peer Group:

Table 4.3

Elberton Federal Savings & Loan Association

Valuation Adjustments

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| | |
|:---|:---|
| Key Valuation Parameters: | Valuation Adjustment |
| Financial Condition | Slight Downward |
| Profitability, Growth and Viability of Earnings | Moderate Downward |
| Asset Growth | Moderate Downward |
| Primary Market Area | No Adjustment |
| Dividends | Slight Downward |
| Liquidity of the Shares | Moderate Downward |
| Marketing of the Issue | Slight Downward |
| Management | Moderate Downward |
| Effect of Government Regulations and Regulatory Reform | No Adjustment |

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 18*** |

---

<u>Valuation Approaches</u> 

In applying the accepted valuation methodology promulgated by the federal banking regulators, i.e., the pro forma market value approach, we considered the three key pricing ratios in valuing the Association's to-be-issued stock if it were to pursue a stand-alone conversion – price/earnings ("P/E"), price/book ("P/B"), and price/assets ("P/A") approaches – all performed on a pro forma basis including the effects of the stock proceeds and the stock benefit plans. In computing the pro forma impact of the conversion and the related pricing ratios, we have incorporated certain commonly used valuation parameters for the effective tax rate, stock benefit plan assumptions and offering expenses (summarized in Exhibits IV-5 and IV-6).

In our estimate of value, we assessed the relationship of the pro forma pricing ratios relative to the Peer Group, taking into consideration the valuation adjustments, as well as the pricing at closing of recent conversions.

RP Financial's valuation placed an emphasis on the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>P/E Approach</u>. The P/E approach is generally the best indicator of long-term value for a stock. The P/E
approach in a conversion valuation reflects the expectations that earnings will grow as the proceeds are reinvested and leveraged, which involves assumptions regarding the use of proceeds. As a result, the P/E in conversion pricing typically
reflects a premium over the Peer Group companies, and the expectation that such premium will remain for a sustained period as the implementation of the plan to reinvest and leverage the proceeds may take several years. In comparison, a number of the
Peer Group members are relatively recently converted thrifts that will also be striving to leverage capital raised in their offerings. Thus, it is typical that other valuation approaches will reflect a valuation discount to the Peer Group pricing to
counterbalance the premium P/E multiple. In evaluating earnings, it is essential to evaluate core earnings, that is, earnings adjusted for nonrecurring items on an after-tax basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>P/B Approach</u>. The P/B approach is a valuable valuation method for mutual-to-stock conversions, recognizing that in a conversion scenario the P/B ratios must be discounted from pro forma book value in that the converting mutual already has existing capital. This expected
pricing discount to book value is the counterbalance to the expected premium P/E multiple described above. It is essential to modify the P/B approach to exclude the impact of intangible assets (i.e., price/tangible book value or "P/TB"),
in that the investment community also adjusts book value to exclude goodwill and other acquisition related intangible assets in making investment decisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>P/A Approach</u>. P/A ratios are generally a less reliable indicator of market value, as investors typically
assign less weight to balance sheet size given the preference to attribute greater weight to book value and earnings. Furthermore, this approach as set forth in the regulatory valuation guidelines does not consider the amount of stock purchases
funded by deposit withdrawals, thus understating the pro forma P/A ratio.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 19*** |

---

At the same time, the P/A ratio is an indicator of franchise value, and, in the case of highly capitalized institutions, high P/A ratios may limit the investment community's willingness to pay market multiples for earnings or book value when the pro forma ROE is expected to be low.

Based on the application of the three valuation approaches, taking into consideration the valuation adjustments discussed above, RP Financial concluded that as of October 28, 2022, the pro forma market value of Elberton's conversion stock, if the Association were to pursue a stand-alone standard conversion, equaled $3,750,000 at the midpoint, equal to 375,000 shares at $10.00 per share. (Note: the $10.00 per share offering price assumption is based on the standard for thrift conversion transactions. In the case of the Merger Conversion, the pricing mechanism will result in a different number of shares being issue and offering price per share). Thus, for purposes of this valuation, the aggregate value is more important than the price per share and number of shares issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Price-to-Earnings ("P/E")</u>. The application of the P/E valuation method requires calculating the Association's pro forma market value by applying a valuation P/E multiple to the pro forma earnings base. In applying this technique, we considered both reported earnings and a recurring earnings base, that is, earnings adjusted to exclude any one-time non-operating items, plus the estimated after-tax earnings benefit of the reinvestment of the net proceeds and the after-tax cost of the stock benefit plans. Elberton reported a net loss of ($188,000) for the 12 months ended September 30, 2022. Based on information provided by the Association, non-recurring items in the income statement during the most recent 12-month period consisted of merger-related expenses that were not capitalized. The Association has indicated that such expenses totaled $167,000 for the 12 months ended September 30, 2022. Thus, excluding these expenses, and assuming a zero percent tax rate, core earnings (the valuation earnings base) were assumed to be equal to a net loss of $21,000 for the 12 months ended September 30, 2022.

We also noted that as part of the pro forma valuation calculations, the pro forma income statement included the annual expense related to implementation of a restricted stock plan and a stock option plan, as is shown in Exhibit IV-5. This expense offsets in part the assumed income from reinvestment of the net conversion proceeds, and thus the pro forma earning calculation from the $21,000 net loss for the period ended September 30, 2022 was changed to a low level of net income. Given the very modest pro forma net income, the valuation calculations resulted in "not meaningful" price/earnings multiples (in excess of 100x pro forma core earnings). We thus were unable to apply the price/earnings valuation method to the appraisal valuation of Elberton.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 20*** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Price-to-Book ("P/B")</u>. The application of the P/B valuation method requires calculating the Association's pro forma market value by applying a valuation P/B ratio, as derived from the Peer Group's P/B ratio to Elberton's pro forma book value. Based on the $3.750 million midpoint valuation, Elberton's pro forma P/B and P/TB ratios both equaled 50.45%. In comparison to the average P/B and P/TB ratios for the Peer Group of 86.90% and 87.31%, respectively, the Association's ratios reflected a discount of 41.94% on a P/B basis and a discount of 42.22% on a P/TB basis. In comparison to the Peer Group's median P/B and P/TB ratios of 83.67% and 83.77%, respectively, the Association's pro forma P/B and P/TB ratios at the midpoint value reflected discounts of 39.70% and 39.78%, respectively. See Table 4.4 for the detailed pricing information comparison to the Peer Group.

RP Financial considered the discounts under the book value approach to be reasonable, given the nature of the calculation of the P/B ratio which mathematically results in a ratio discounted to book value given that the Association already has equity. As noted earlier, the discounts reflected under the book value approach takes into consideration the "not meaningful premiums over the Peer Group multiples reflected in the Association's P/E multiples.

3. <u>Price-to-Assets ("P/A")</u>. The P/A valuation methodology determines market value by applying a valuation P/A ratio to the Association's pro forma asset base, conservatively assuming no deposit withdrawals are made to fund stock purchases. In all likelihood there will be deposit withdrawals, which results in understating the pro forma P/A ratio which is computed herein. At the $3.750 million midpoint of the valuation range, Elberton's pro forma P/A ratio equaled 12.88% of pro forma assets. Comparatively, the Peer Group companies exhibited an average P/A ratio of 14.97%, which implies a discount of 13.96% for the Association's pro forma P/A ratio. In comparison to the Peer Group's median P/A ratio of 14.68%, the Association's pro forma P/A ratio at the midpoint value reflects a discount of 12.26%.

<u>Comparison to Recent Offerings</u> 

As indicated at the beginning of this chapter, RP Financial's analysis of recent conversion offering pricing characteristics at closing and in the aftermarket has been limited to a "technical" analysis and, thus, the pricing characteristics of recent conversion offerings cannot be a primary determinate of value. Focus was placed on the P/TB approach in this analysis, since the P/E multiples do not reflect the actual impact of reinvestment and the source of the stock proceeds (i.e., external funds vs. deposit withdrawals).

------

---

| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 21*** |

---

Table 4.4

Public Market Pricing Versus Peer Group

Elberton Federal Savings and Loan Association

As of October 28, 2022

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| | | | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | Market | Market | Per Share Data | Per Share Data | | | | | | | | | | | | | | | |
|  |  |  | Capitalization | Capitalization | | | | | | | | Dividends(4) | Dividends(4) | Dividends(4) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) |
|  |  |  | | | | | Pricing Ratios(3) | Pricing Ratios(3) | Pricing Ratios(3) | Pricing Ratios(3) | Pricing Ratios(3) | | | | | | | Reported (5) | Reported (5) | Core (5) | Core (5) |
| | |  | Price/<br>Share(1) | Market<br>Value | Core<br>12 Month<br>EPS(2) | Book<br>Value/<br>Share | P/E | P/B | P/A | P/TB | P/Core | Amount/<br>Share |<br>Yield | Payout<br>Ratio | Total<br>Assets | Tang. Eq./<br>T. Assets | NPAs/<br>Assets | ROAA | ROAE | ROAA | ROAE |
|  |  |  | ($) | ($Mil) | ($) | ($) | (x) | (%) | (%) | (%) | (x) | ($) | (%) | (%) | ($Mil) | (%) | (%) | (%) | (%) | (%) | (%) |
|  <u>Elberton Federal Savings and Loan Association</u> | <u>Elberton Federal Savings and Loan Association</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Maximum | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Maximum |  | $10.00 | $4.31 | $0.08 | $18.50 | NM | 54.05% | 14.54% | 54.05% | NM | $0.00 | 0.00% | 0.00% | $30 | 26.89% | 0.44% | -0.45% | -1.68% | 0.11% | 0.41% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Midpoint | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Midpoint |  | $10.00 | $3.75 | $0.06 | $19.82 | NM | 50.45% | 12.88% | 50.45% | NM | $0.00 | 0.00% | 0.00% | $29 | 25.52% | 0.45% | -0.50% | -1.95% | 0.08% | 0.29% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Minimum | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Minimum |  | $10.00 | $3.19 | $0.03 | $21.60 | NM | 46.30% | 11.16% | 46.30% | NM | $0.00 | 0.00% | 0.00% | $28 | 24.10% | 0.46% | -0.55% | -2.27% | 0.04% | 0.16% |
|  <u>Thrift Industry (No MHC or Under Acquisition) (46 Institutions)</u> | <u>Thrift Industry (No MHC or Under Acquisition) (46 Institutions)</u> | <u>Thrift Industry (No MHC or Under Acquisition) (46 Institutions)</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages |  | $21.68 | $471.16 | $2.12 | $20.30 | 14.15 | 96.06% | 12.49% | 106.45% | 14.87 | $0.49 | 2.44% | 49.92% | $4377 | 13.37% | 0.69% | 0.76% | 6.22% | 0.83% | 6.86% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians |  | $14.06 | $169.76 | $1.09 | $15.65 | 11.98 | 91.14% | 12.39% | 97.61% | 11.86 | $0.34 | 2.09% | 27.97% | $1736 | 11.58% | 0.35% | 0.76% | 6.68% | 0.90% | 7.21% |
|  <u>Peer Group</u> | <u>Peer Group</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages |  | $12.72 | $53.06 | $0.51 | $14.87 | 25.76 | 86.90% | 14.97% | 87.31% | 26.53 | $0.15 | 1.21% | 165.52% | $363 | 17.36% | 0.71% | 0.43% | 2.35% | 0.50% | 2.88% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians |  | $12.64 | $54.96 | $0.51 | $15.01 | 25.03 | 83.67% | 14.68% | 83.77% | 27.22 | $0.12 | 1.09% | 35.29% | $372 | 14.94% | 0.68% | 0.44% | 2.44% | 0.48% | 3.20% |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | (7) WI | $10.05 | $64.05 | NA | $12.71 | NA | 79.10% | 11.96% | 79.10% | NA | NA | NA | NA | $536 | 15.12% | NA | -0.13% | -0.86% | 0.00% | 0.02% |
|  CLST | Catalyst Bancorp, Inc. | (7) LA | $13.05 | $63.58 | NA | $17.47 | NA | 74.70% | 22.63% | 74.70% | NA | NA | NA | NA | $281 | 32.89% | 0.96% | 0.50% | 1.68% | NA | NA |
|  CNNB | Cincinnati Bancorp, Inc. | (7) OH | $14.76 | $43.76 | $0.43 | $13.45 | NM | 109.71% | 15.51% | 110.09% | 34.00x | NA | NA | 434.78% | $282 | 14.10% | 0.29% | 0.26% | 1.74% | 0.50% | 3.38% |
|  CULL | Cullman Bancorp, Inc. | (7) AL | $10.97 | $81.24 | $0.52 | $13.33 | 32.26x | 82.32% | 21.16% | 82.32% | 20.98x | $0.12 | 1.09% | 35.29% | $384 | 25.70% | 0.78% | 0.67% | 2.47% | 1.01% | 3.73% |
|  FFBW | FFBW, Inc. | (7) WI | $11.87 | $68.70 | $0.34 | $13.96 | 34.91x | 85.02% | 20.79% | 85.22% | 34.91x | NA | NA | NA | $330 | NA | 0.09% | 0.59% | 2.41% | 0.59% | 2.41% |
|  GBNY | Generations Bancorp NY, Inc. | (7) NY | $10.87 | $26.40 | $0.73 | $16.05 | 17.82x | 67.71% | 7.14% | 70.49% | 14.84x | NA | NA | NA | $370 | 10.18% | 1.59% | 0.38% | 3.37% | 0.46% | 4.08% |
|  MSVB | Mid-Southern Bancorp, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN | $12.76 | $36.62 | NA | $10.74 | 18.76x | 118.84% | 13.84% | 118.84% | NA | $0.24 | 1.88% | 26.47% | $265 | 11.65% | NA | 0.72% | 4.69% | NA | NA |
|  PBBK | PB Bankshares, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PA | $12.52 | $32.12 | $0.54 | $16.29 | 25.03x | 76.84% | 8.52% | 76.84% | 23.27x | NA | NA | NA | $377 | 11.84% | NA | 0.35% | 2.71% | 0.38% | 2.91% |
|  TCBC | TC Bancshares, Inc. | (7) GA | $14.97 | $67.77 | NA | $17.46 | NA | 85.76% | 15.71% | 85.76% | NA | $0.10 | 0.67% | NA | $431 | 19.83% | NA | 0.67% | 3.46% | 0.67% | 3.46% |
|  TCBS | Texas Community Bancshares, Inc. | (7) TX | $15.36 | $46.34 | $0.49 | $17.27 | NM | 88.96% | 12.40% | 89.70% | 31.16x | NA | NA | NA | $374 | 14.94% | 0.58% | 0.25% | 1.83% | 0.41% | 3.02% |

---

(1) Closing price at date indicated, market value equal to public (minority shares) times current stock price.

(2) Core earnings reflect net income less non-recurring items

(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and
P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x.

(4) Dividend is as of most recent quarterly dividend. Indicated 12 month dividend as a percent of trailing 12 month
earnings.

(5) ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12
month earnings and average equity and assets balances.

(6) Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or
unusual operating characteristics.

(7) Current Quarter is September 30, 2022, footnote reflects data as of June 30, 2022.

Source: S&P Global Market Intelligence and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

------

---

| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV. 22*** |

---

As discussed previously, three standard conversion offerings have been completed in 2022. These three offerings closed at an average pro forma P/TB ratio of 56.9%. In comparison, the Association's pro forma P/TB ratio of 50.45% at the midpoint value reflects an implied discount of 11.34%. The current P/TB ratio of these three recent standard conversion offerings equaled an estimated 74.9%, based on closing stock prices as of October 28, 2022. In comparison to the current P/TB average ratio of these three recent conversions, the Association's P/TB ratio at the midpoint value reflects an implied discount of 32.64%.

<u>Valuation Conclusion</u> 

Based on the foregoing, it is our opinion that, as of October 28, 2022, the estimated aggregate pro forma market value of Elberton in a standard (stand-alone) conversion equaled $3,750,000 at the midpoint. Pursuant to the conversion guidelines, the 15% valuation range indicates a minimum value of $3,187,500 and a maximum value of $4,312,500. The pro forma valuation calculations relative to the Peer Group are shown in Table 4.4 and are detailed in Exhibit IV-5 and Exhibit IV-6.

Shares to be sold in the Subscription, Community and Syndicated Community Offerings (as necessary) will be sold at a 15% discount to the prevailing Oconee stock price based on a specific calculation method, subject to an overall range of value of the Oconee per share price. The closing of the Merger Conversion and stock sale is targeted for the first half of 2023.

------

**EXHIBITS** 

------

*RP****<sup>®</sup>*** *Financial, LC.* 

***LIST OF EXHIBITS***

---

| | |
|:---|:---|
| Exhibit<br>Number | Description |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I-1 | Map of Branch Office Network |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I-2 | Audited and Internal Financial Statements |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I-3 | Summary Regulatory Financial Highlights |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I-4 | Summary Regulatory Financial Highlights-Balance Sheet |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I-5 | Investment Securities AFS |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I-6 | Summary Regulatory Financial Highlights-Income Statement |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I-7 | Loans and Leases |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I-8 | Asset Quality |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I-9 | Deposit Information |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; II-1 | Historical Interest Rates |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; II-2 | Market Area Demographic/Economic Information |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; III-1 | General Characteristics of Publicly-Traded Savings Institutions |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; III-2 | Peer Group Primary Market Area Data |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IV-1 | Thrift Industry Stock Prices: As of October 28, 2022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IV-2 | Historical Stock Price Indices |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IV-3 | Stock Market Price Indices |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IV-4 | Market Area Acquisition Activity |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IV-5 | Pro Forma Analysis Sheet – Fully Conversion Basis |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IV-6 | Pro Forma Effect of Conversion Proceeds – Fully Conversion Basis |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; V-1 | Firm Qualifications Statement |

---

------

EXHIBIT I-1

Elberton Federal Savings & Loan Association

Map of Branch Office Network

------

Exhibit 1

Elberton Federal Savings & Loan Association

Market Area Map

![LOGO](g406793page071.jpg)

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EXHIBIT I-2

Elberton Federal Savings & Loan Association

Internal Financial Statements

Historical Financial Statements

Audited Financial Statements

(Incorporated by Reference)

------

---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 7 |

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**Schedule RI - Income Statement (Form Type - 051)** 

---

| | | | |
|:---|:---|:---|:---|
| Dollar amounts in thousands |  |  |  |
| 1. Interest income: |  |  | 1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Interest and fee income on loans: |  |  | 1.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Loans secured by real estate: |  |  | 1.a.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Loans secured by 1-4 family residential properties | RIAD4435 | **585** | 1.a.1.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. All other loans secured by real estate | RIAD4436 | **26** | 1.a.1.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Commercial and industrial loans | RIAD4012 | **0** | 1.a.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Loans to individuals for household, family, and other personal expenditures: |  |  | 1.a.3. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Credit cards | RIADB485 | **0** | 1.a.3.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Other (includes revolving credit plans other than credit cards, automobile loans, and other consumer loans) | RIADB486 | **5** | 1.a.3.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Not applicable |  |  | 1.a.4. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. All other loans<sup>1</sup>  | RIAD4058 | **0** | 1.a.5. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Total interest and fee income on loans (sum of items 1.a.(1)(a) through 1.a.(5)) | RIAD4010 | **616** | 1.a.6. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Income from lease financing receivables | RIAD4065 | **0** | 1.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Interest income on balances due from depository institutions<sup>2</sup>  | RIAD4115 | **8** | 1.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Interest and dividend income on securities: |  |  | 1.d. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. U.S. Treasury securities and U.S. Government agency obligations (excluding mortgage-backed securities). | RIADB488 | **9** | 1.d.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Mortgage-backed securities | RIADB489 | **11** | 1.d.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. All other securities (includes securities issued by states and political subdivisions in the U.S.) | RIAD4060 | **52** | 1.d.3. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Not applicable |  |  | 1.e. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Interest income on federal funds sold and securities purchased under agreements to resell | RIAD4020 | **0** | 1.f. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Other interest income | RIAD4518 | **0** | 1.g. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. Total interest income (sum of items 1.a.(6) through 1.g) | RIAD4107 | **696** | 1.h. |
| 2. Interest expense: |  |  | 2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Interest on deposits: |  |  | 2.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Transaction accounts (interest-bearing demand deposits, NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) | RIAD4508 | **0** | 2.a.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Nontransaction accounts: |  |  | 2.a.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Savings deposits (includes MMDAs) | RIAD0093 | **31** | 2.a.2.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Time deposits of $250,000 or less | RIADHK03 | **43** | 2.a.2.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Time deposits of more than $250,000 | RIADHK04 | **14** | 2.a.2.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Expense of federal funds purchased and securities sold under agreements to repurchase | RIAD4180 | **0** | 2.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Other interest expense | RIADGW44 | **21** | 2.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Not applicable |  |  | 2.d. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Total interest expense (sum of items 2.a through 2.c) | RIAD4073 | **109** | 2.e. |
| 3. Net interest income (item 1.h minus 2.e) | RIAD4074 | **587** | 3. |
| 4. Provision for loan and lease losses<sup>3</sup>  | RIADJJ33 | **0** | 4. |
| 5. Noninterest income: |  |  | 5. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Income from fiduciary activities <sup>2</sup>  | RIAD4070 | **0** | 5.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Service charges on deposit accounts | RIAD4080 | **0** | 5.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Not applicable |  |  | 5.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Income from securities-related and insurance activities |  |  | 5.d. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Fees and commissions from securities brokerage, investment banking, advisory, and underwriting activities | RIADHT73 | **0** | 5.d.1. |

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------

1. Includes interest and fee income on "Loans to depository institutions and acceptances of other
banks," "Loans to finance agricultural production and other loans to farmers," "Obligations (other than securities and leases) of states and political subdivisions in the U.S.," and "Loans to nondepository financial
institutions and other loans"

2. Includes interest income on time certificates of deposit not held for trading.

3. Institutions that have adopted ASU 2016-13 should report in item 4 the
provisions for credit losses for all financial assets and off-balance-sheet credit exposures that fall within the scope of the standard.

2. For banks required to complete Schedule RC-T, items 14 through 22,
income from fiduciary activities reported in Schedule RI, item 5.a, must equal the amount reported in Schedule RC-T, item 22.

------

---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 8 |

---

---

| | | | |
|:---|:---|:---|:---|
| Dollar amounts in thousands |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Income from insurance activities<sup>3</sup>  | RIADHT74 | **0** | 5.d.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Not applicable |  |  | 5.e. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Net servicing fees | RIADB492 | **0** | 5.f. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Not applicable |  |  | 5.g. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. Not applicable |  |  | 5.h. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Net gains (losses) on sales of loans and leases | RIAD5416 | **0** | 5.i. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. Net gains (losses) on sales of other real estate owned | RIAD5415 | **0** | 5.j. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k. Net gains (losses) on sales of other assets<sup>3</sup>  | RIADB496 | **0** | 5.k. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l. Other noninterest income<sup>\*</sup>  | RIADB497 | **0** | 5.l. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m. Total noninterest income (sum of items 5.a through 5.l) | RIAD4079 | **0** | 5.m. |
| 6. Not available |  |  | 6. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Realized gains (losses) on held-to-maturity securities | RIAD3521 | **0** | 6.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Realized gains (losses) on available-for-sale debt securities | RIAD3196 | **0** | 6.b. |
| 7. Noninterest expense: |  |  | 7. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Salaries and employee benefits | RIAD4135 | **327** | 7.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Expenses of premises and fixed assets (net of rental income) (excluding salaries and employee benefits and mortgage interest) | RIAD4217 | **73** | 7.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Not available |  |  | 7.c. |
| 1. Goodwill impairment losses | RIADC216 | **0** | 7.c.1. |
| 2. Amortization expense and impairment losses for other intangible assets | RIADC232 | **0** | 7.c.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Other noninterest expense<sup>\*</sup>  | RIAD4092 | **247** | 7.d. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Total noninterest expense (sum of items 7.a through 7.d) | RIAD4093 | **647** | 7.e. |
| 8. Not available |  |  | 8. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Income (loss) before change in net unrealized holding gains (losses) on equity securities not held for trading, applicable income taxes, and discontinued operations (item 3 plus or minus items 4, 5.m, 6.a, 6.b, and 7.e) | RIADHT69 | **-60** | 8.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Change in net unrealized holding gains (losses) on equity securities not held for trading<sup>4</sup>  | RIADHT70 | **-5** | 8.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Income (loss) before applicable income taxes and discontinued operations (sum of items 8.a and 8.b) | RIAD4301 | **-65** | 8.c. |
| 9. Applicable income taxes (on item 8.c) | RIAD4302 | **0** | 9. |
| 10. Income (loss) before discontinued operations (item 8.c minus item 9) | RIAD4300 | **-65** | 10. |
| 11. Discontinued operations, net of applicable income taxes<sup>\*</sup>  | RIADFT28 | **0** | 11. |
| 12. Net income (loss) attributable to bank and noncontrolling (minority) interests (sum of items 10 and 11) | RIADG104 | **-65** | 12. |
| 13. LESS: Net income (loss) attributable to noncontrolling (minority) interests (if net income, report as a positive value; if net loss, report as a negative value) | RIADG103 | **0** | 13. |
| 14. Net income (loss) attributable to bank (item 12 minus item 13) | RIAD4340 | **-65** | 14. |
| 1. Not applicable |  |  | M.1. |
| 2. Not applicable |  |  | M.2. |
| 3. Income on tax-exempt loans and leases to states and political subdivisions in the U.S. (included in Schedule RI, items 1.a and 1.b) | RIAD4313 | **0** | M.3. |
| 4. Income on tax-exempt securities issued by states and political subdivisions in the U.S. (included in Schedule RI, item 1.d. (3)) | RIAD4507 | **0** | M.4. |
| 5. Number of full-time equivalent employees at end of current period (round to nearest whole number) | RIAD4150 | **4** | M.5. |
|  *Memorandum item 6 is to be completed by:* |  |  |  |
|  *\* banks with $300 million or more in total assets, and* |  |  |  |
|  *\* banks with less than $300 million in total assets that have loans to finance agricultural production and other loans to farmers (Schedule RC-C, Part I, item 3) exceeding 5 percent of total loans* | RIAD4024 | **NR** | M.6. |
| 6. Interest and fee income on loans to finance agricultural production and other loans to farmers (included in Schedule RI, item 1.a.(5))<sup>1</sup> |  |  |  |
| 7. If the reporting institution has applied pushdown accounting this calendar year, report the date of the institution's acquisition (see instructions)<sup>2</sup> | RIAD9106 | **0** | M.7. |

---

------

3. Includes underwriting income from insurance and reinsurance activities.

3. Exclude net gains (losses) on sales of trading assets and held-to-maturity and available-for-sale debt securities.

\*. Describe on Schedule RI-E-Explanations.

\*. Describe on Schedule RI-E-Explanations.

4. Item 8.b is to be completed by all institutions. See the instructions for this item and the Glossary entry for
"Securities Activities" for further detail on accounting for investments in equity securities.

\*. Describe on Schedule RI-E - Explanations.

1. The $300 million asset-size test and the 5 percent of total
loans test are based on the total assets and total loans reported in the June 30, 2018, Report of Condition.

2. Report the date in YYYYMMDD format. For example, a bank acquired on March 1, 2022, would report 20220301.

------

---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 9 |

---

---

| | | | |
|:---|:---|:---|:---|
| Dollar amounts in thousands |  |  |  |
| 8. Not applicable |  |  | M.8. |
| 9. Not applicable |  |  | M.9. |
| 10. Not applicable |  |  | M.10. |
| 11. Does the reporting bank have a Subchapter S election in effect for federal income tax purposes for the current tax year? | RIADA530 | **No** | M.11. |
|  *Memorandum item 12 is to be completed by banks that are required to complete Schedule RC-C, Part I, Memorandum items 8.b and 8.c, and is to be completed annually in the December report only.* | RIADF228 | **NR** | M.12. |
| 12. Noncash income from negative amortization on closed-end loans secured by 1-4 family residential properties (included in Schedule RI, item 1.a.(1)(a)) |  |  |  |
| 13. Not applicable |  |  | M.13. |
|  *Memorandum item 14 is to be completed semiannually in the June and December reports only.* |  |  |  |
| 14. Other-than-temporary impairment losses on held-to-maturity and available-for-sale debt securities recognized in earnings (included in Schedule RI, items 6.a and 6.b)<sup>3</sup>  | RIADJ321 | **NR** | M.14. |
|  *Memorandum item 15 is to be completed annually in the December report only by institutions with $1 billion or more in total assets1 that answered "Yes" to Schedule RC-E, Memorandum item 5.* |  |  | M.15. |
| 15. Components of service charges on deposit accounts (sum of Memorandum items 15.a through 15.d must equal Schedule RI, item 5.b): |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Consumer overdraft-related service charges levied on those transaction account and nontransaction savings account deposit products intended primarily for individuals for personal, household, or family use | RIADH032 | **NR** | M.15.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Consumer account periodic maintenance charges levied on those transaction account and nontransaction savings account deposit products intended primarily for individuals for personal, household, or family use | RIADH033 | **NR** | M.15.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Consumer customer automated teller machine (ATM) fees levied on those transaction account and nontransaction savings account deposit products intended primarily for individuals for personal, household, or family use | RIADH034 | **NR** | M.15.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. All other service charges on deposit accounts | RIADH035 | **NR** | M.15.d. |

---

**Schedule RI-A - Changes in Bank Equity Capital (Form Type - 051)** 

---

| | | | |
|:---|:---|:---|:---|
| Dollar amounts in thousands |  |  |  |
| 1. Total bank equity capital most recently reported for the December 31, 2021, Reports of Condition and Income (i.e., after adjustments from amended Reports of Income) | RIAD3217 | **4983** | 1. |
| 2. Cumulative effect of changes in accounting principles and corrections of material accounting errors<sup>\*</sup>  | RIADB507 | **0** | 2. |
| 3. Balance end of previous calendar year as restated (sum of items 1 and 2) | RIADB508 | **4983** | 3. |
| 4. Net income (loss) attributable to bank (must equal Schedule RI, item 14) | RIAD4340 | **-65** | 4. |
| 5. Sale, conversion, acquisition, or retirement of capital stock, net (excluding treasury stock transactions) | RIADB509 | **0** | 5. |
| 6. Treasury stock transactions, net | RIADB510 | **0** | 6. |
| 7. Changes incident to business combinations, net | RIAD4356 | **0** | 7. |
| 8. LESS: Cash dividends declared on preferred stock | RIAD4470 | **0** | 8. |
| 9. LESS: Cash dividends declared on common stock | RIAD4460 | **0** | 9. |
| 10. Other comprehensive income<sup>1</sup>  | RIADB511 | **-124** | 10. |
| 11. Other transactions with stockholders (including a parent holding company) (not included in items 5, 6, 8, or 9 above) \* | RIAD4415 | 0 | 11. |
| 12. Total bank equity capital end of current period (sum of items 3 through 11) (must equal Schedule RC, item 27.a) | RIAD3210 | **4794** | 12. |

---

------

3. Memorandum item 14 is to be completed only by institutions that have not adopted ASU 2016-13.

\*. Describe on Schedule RI-E - Explanations.

1. Includes, but is not limited to, changes in net unrealized holding gains (losses) on available-for-sale debt securities, changes in accumulated net gains (losses) on cash flow hedges, and pension and other postretirement plan-related changes other than net
periodic benefit cost.

\*. Describe on Schedule RI-E - Explanations.

------

---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 10 |

---

**Schedule RI-B Part I - Charge-offs and Recoveries on Loans and Leases (Form Type - 051)** 

*Part I includes charge-offs and recoveries through the allocated transfer risk reserve.* 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Dollar amounts in thousands | **(Column A) Charge-offs<br>Calendar year-to-date** | **(Column A) Charge-offs<br>Calendar year-to-date** | **(Column B) Recoveries Calendar<br>year-to-date** | **(Column B) Recoveries Calendar<br>year-to-date** |  |
| 1. Loans secured by real estate: |  |  |  |  | 1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Construction, land development, and other land loans: |  |  |  |  | 1.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. 1-4 family residential construction loans | RIADC891 | **0** | RIADC892 | **0** | 1.a.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Other construction loans and all land development and other land loans | RIADC893 | **0** | RIADC894 | **0** | 1.a.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Secured by farmland | RIAD3584 | **0** | RIAD3585 | **0** | 1.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Secured by 1-4 family residential properties: |  |  |  |  | 1.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Revolving, open-end loans secured by 1-4 family residential properties and extended under lines of credit | RIAD5411 | **0** | RIAD5412 | **0** | 1.c.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Closed-end loans secured by 1-4 family residential properties: |  |  |  |  | 1.c.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Secured by first liens | RIADC234 | **0** | RIADC217 | **0** | 1.c.2.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Secured by junior liens | RIADC235 | **0** | RIADC218 | **0** | 1.c.2.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Secured by multifamily (5 or more) residential properties | RIAD3588 | **0** | RIAD3589 | **0** | 1.d. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Secured by nonfarm nonresidential properties: |  |  |  |  | 1.e. |
| 1. Loans secured by owner-occupied nonfarm nonresidential properties | RIADC895 | **0** | RIADC896 | **0** | 1.e.1. |
| 2. Loans secured by other nonfarm nonresidential properties | RIADC897 | **0** | RIADC898 | **0** | 1.e.2. |
| 2. Not applicable |  |  |  |  | 2. |
| 3. Not applicable |  |  |  |  | 3. |
| 4. Commercial and industrial loans | RIAD4638 | **0** | RIAD4608 | **0** | 4. |
| 5. Loans to individuals for household, family, and other personal expenditures: |  |  |  |  | 5. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Credit cards | RIADB514 | **0** | RIADB515 | **0** | 5.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Automobile loans | RIADK129 | **0** | RIADK133 | **0** | 5.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Other (includes revolving credit plans other than credit cards and other consumer loans) | RIADK205 | **0** | RIADK206 | **0** | 5.c. |
| 6. Not applicable |  |  |  |  | 6. |
| 7. All other loans<sup>2</sup>  | RIAD4644 | **0** | RIAD4628 | **0** | 7. |
| 8. Lease financing receivables | RIAD4266 | **0** | RIAD4267 | **0** | 8. |
| 9. Total (sum of items 1 through 8) | RIAD4635 | **0** | RIAD4605 | **0** | 9. |
| 1. Loans to finance commercial real estate, construction, and land development activities (not secured by real estate) included in Schedule RI-B, Part I, items 4 and 7, above | RIAD5409 | **0** | RIAD5410 | **0** | M.1. |
| 2. Not applicable |  |  |  |  | M.2. |
|  *Memorandum item 3 are to be completed by:* |  |  |  |  |  |
|  *\* banks with $300 million or more in total assets, and* |  |  |  |  |  |
|  *\* banks with less than $300 million in total assets that have loans to finance agricultural production and other loans to farmers (Schedule RC-C, Part I, item 3) exceeding 5 percent of total loans* | RIAD4655 | **NR** | RIAD4665 | **NR** | M.3. |
| 3. Loans to finance agricultural production and other loans to farmers (included in Schedule RI-B, Part I, item 7, above)<sup>2</sup>  |  |  |  |  |  |

---

------

2. Includes charge-offs and recoveries on "Loans to depository institutions and acceptances of other
banks," "Loans to finance agricultural production and other loans to farmers," "Obligations (other than securities and leases) of states and political subdivisions in the U.S.," and "Loans to nondepository financial
institutions and other loans."

2. The $300 million asset-size test and the 5 percent of total
loans test are based on the total assets and total loans reported on the June 30, 2018, Report of Condition.

------

---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 15 |

---

**Schedule RC - Balance Sheet(Form Type - 051)** 

*All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter.* 

---

| | | | |
|:---|:---|:---|:---|
| Dollar amounts in thousands |  |  |  |
| 1. Cash and balances due from depository institutions: |  |  | 1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Noninterest-bearing balances and currency and coin<sup>1</sup>  | RCON0081 | **430** | 1.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Interest-bearing balances<sup>2</sup>  | RCON0071 | **344** | 1.b. |
| 2. Securities: |  |  | 2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Held-to-maturity securities (from Schedule RC-B, column A)<sup>3</sup>  | RCONJJ34 | **0** | 2.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Available-for-sale debt securities (from Schedule RC-B, column D) | RCON1773 | **2268** | 2.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Equity securities with readily determinable fair values not held for trading<sup>4</sup>  | RCONJA22 | **8** | 2.c. |
| 3. Federal funds sold and securities purchased under agreements to resell: |  |  | 3. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Federal funds sold | RCONB987 | **0** | 3.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Securities purchased under agreements to resell<sup>5</sup>  | RCONB989 | **0** | 3.b. |
| 4. Loans and lease financing receivables (from Schedule RC-C): |  |  | 4. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Loans and leases held for sale | RCON5369 | **0** | 4.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Loans and leases held for investment | RCONB528 | **22892** | 4.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. LESS: Allowance for loan and lease losses<sup>7</sup>  | RCON3123 | **41** | 4.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Loans and leases held for investment, net of allowance (item 4.b minus 4.c) | RCONB529 | **22851** | 4.d. |
| 5. Trading assets | RCON3545 | **0** | 5. |
| 6. Premises and fixed assets (including capitalized leases) | RCON2145 | **220** | 6. |
| 7. Other real estate owned (from Schedule RC-M) | RCON2150 | **0** | 7. |
| 8. Investments in unconsolidated subsidiaries and associated companies | RCON2130 | **0** | 8. |
| 9. Direct and indirect investments in real estate ventures | RCON3656 | **0** | 9. |
| 10. Intangible assets (from Schedule RC-M) | RCON2143 | **0** | 10. |
| 11. Other assets (from Schedule RC-F)<sup>6</sup>  | RCON2160 | **361** | 11. |
| 12. Total assets (sum of items 1 through 11) | RCON2170 | **26482** | 12. |
| 13. Deposits: |  |  | 13. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. In domestic offices (sum of totals of columns A and C from Schedule RC-E) | RCON2200 | **20631** | 13.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Noninterest-bearing<sup>8</sup>  | RCON6631 | **0** | 13.a.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Interest-bearing | RCON6636 | **20631** | 13.a.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Not applicable |  |  | 13.b. |
| 14. Federal funds purchased and securities sold under agreements to repurchase: |  |  | 14. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Federal funds purchased<sup>9</sup>  | RCONB993 | **0** | 14.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Securities sold under agreements to repurchase<sup>10</sup>  | RCONB995 | **0** | 14.b. |
| 15. Trading liabilities | RCON3548 | **0** | 15. |
| 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases) (from Schedule RC-M) | RCON3190 | **1000** | 16. |
| 17. Not applicable |  |  | 17. |
| 18. Not applicable |  |  | 18. |
| 19. Subordinated notes and debentures<sup>11</sup>  | RCON3200 | **0** | 19. |
| 20. Other liabilities (from Schedule RC-G) | RCON2930 | **57** | 20. |
| 21. Total liabilities (sum of items 13 through 20) | RCON2948 | **21688** | 21. |

---

------

1. Includes cash items in process of collection and unposted debits.

2. Includes time certificates of deposit not held for trading.

3. Institutions that have adopted ASU 2016-13 should report in item 2.a,
amounts net of any applicable allowance for credit losses, and should equal to Schedule RC-B, item 8, column A less Schedule RI-B, Part II, item 7, column B.

4. Item 2.c is to be completed by all institutions. See the instructions for this item and the Glossary entry for
"Securities Activities" for further detail on accounting for investments in equity securities.

5. Includes all securities resale agreements, regardless of maturity.

7. Institutions that have adopted ASU 2016-13 should report in item 4.c
the allowance for credit losses on loans and leases.

6. Institutions that have adopted ASU 2016-13 should report in items 3.b
and 11 amounts net of any applicable allowance for credit losses.

8. Includes noninterest-bearing demand, time, and savings deposits.

9. Report overnight Federal Home Loan Bank advances in Schedule RC, item 16, "Other borrowed money."

10. Includes all securities repurchase agreements, regardless of maturity.

11. Includes limited-life preferred stock and related surplus.

------

---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 16 |

---

---

| | | | |
|:---|:---|:---|:---|
| Dollar amounts in thousands |  |  |  |
| 22. Not applicable |  |  | 22. |
| 23. Perpetual preferred stock and related surplus | RCON3838 | **0** | 23. |
| 24. Common stock | RCON3230 | **0** | 24. |
| 25. Surplus (exclude all surplus related to preferred stock) | RCON3839 | **0** | 25. |
| 26. Not available |  |  | 26. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Retained earnings | RCON3632 | **4865** | 26.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Accumulated other comprehensive income<sup>1</sup>  | RCONB530 | **-71** | 26.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Other equity capital components<sup>2</sup>  | RCONA130 | **0** | 26.c. |
| 27. Not available |  |  | 27. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Total bank equity capital (sum of items 23 through 26.c) | RCON3210 | **4794** | 27.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Noncontrolling (minority) interests in consolidated subsidiaries | RCON3000 | **0** | 27.b. |
| 28. Total equity capital (sum of items 27.a and 27.b) | RCONG105 | **4794** | 28. |
| 29. Total liabilities and equity capital (sum of items 21 and 28) | RCON3300 | **26482** | 29. |
|  *To be reported with the March Report of Condition.* |  |  |  |
|  *1a = An integrated audit of the reporting institution's financial statements and its internal control over financial reporting conducted in accordance with the standards of the American Institute of Certified Public Accountants (AICPA) or the Public Company Accounting Oversight Board (PCAOB) by an independent public accountant that submits a report on the institution.* |  |  |  |
|  *1b = An audit of the reporting institution's financial statements only conducted in accordance with the auditing standards of the AICPA or the PCAOB by an independent public accountant that submits a report on the institution.* |  |  |  |
|  *2a = An integrated audit of the reporting institution's parent holding company's consolidated financial statements and its internal control over financial reporting conducted in accordance with the standards of the AICPA or the PCAOB by an independent public accountant that submits a report on the consolidated holding company (but not on the institution separately).* |  |  |  |
|  *2b = An audit of the reporting institution's parent holding company's consolidated financial statements only conducted in accordance with the auditing standards of the AICPA or the PCAOB by an independent public accountant that submits a report on the consolidated holding company (but not on the institution separately).* |  |  |  |
|  *3 = This number is not to be used.* | RCON6724 | **NR** | M.1. |
|  *4 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state-chartering authority)* |  |  |  |
|  *5 = Directors' examination of the bank performed by other external auditors (may be required by state-chartering authority)* |  |  |  |
|  *6 = Review of the bank's financial statements by external auditors* |  |  |  |
|  *7 = Compilation of the bank's financial statements by external auditors* |  |  |  |
|  *8 = Other audit procedures (excluding tax preparation work)* |  |  |  |
|  *9 = No external audit work* |  |  |  |
| 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external auditors as of any date during 2021 |  |  |  |
|  *To be reported with the March Report of Condition.* | RCON8678 | **NR** | M.2. |
| 2. Bank's fiscal year-end date (report the date in MMDD format) |  |  |  |

---

------

1. Includes, but is not limited to, net unrealized holding gains (losses) on available-for-sale securities, accumulated net gains (losses) on cash flow hedges, and accumulated defined benefit pension and other postretirement plan adjustments.

2. Includes treasury stock and unearned Employee Stock Ownership Plan shares.

------

---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 19 |

---

**Schedule RC-C Part I - Loans and Leases(Form Type - 051)** 

*Do not deduct the allowance for loan and lease losses or the allocated transfer risk reserve from amounts reported in this schedule. Report (1) loans and leases held for sale at the lower of cost or fair value, (2) loans and leases held for investment, net of unearned income, and (3) loans and leases accounted for at fair value under a fair value option. Exclude assets held for trading and commercial paper.* 

---

| | | | |
|:---|:---|:---|:---|
| Dollar amounts in thousands | Dollar amounts in thousands | Dollar amounts in thousands | Dollar amounts in thousands |
| 1. Loans secured by real estate: |  |  | 1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Construction, land development, and other land loans: |  |  | 1.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. 1-4 family residential construction loans | RCONF158 | **0** | 1.a.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Other construction loans and all land development and other land loans | RCONF159 | **28** | 1.a.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Secured by farmland (including farm residential and other improvements) | RCON1420 | **73** | 1.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Secured by 1-4 family residential properties: |  |  | 1.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Revolving, open-end loans secured by 1-4 family residential properties and extended under lines of credit. | RCON1797 | **0** | 1.c.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Closed-end loans secured by 1-4 family residential properties: |  |  | 1.c.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Secured by first liens | RCON5367 | **22216** | 1.c.2.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Secured by junior liens | RCON5368 | **0** | 1.c.2.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Secured by multifamily (5 or more) residential properties | RCON1460 | **0** | 1.d. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Secured by nonfarm nonresidential properties: |  |  | 1.e. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Loans secured by owner-occupied nonfarm nonresidential properties | RCONF160 | **389** | 1.e.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Loans secured by other nonfarm nonresidential properties | RCONF161 | **0** | 1.e.2. |
| 2. Loans to depository institutions and acceptances of other banks | RCON1288 | **0** | 2. |
| 3. Loans to finance agricultural production and other loans to farmers | RCON1590 | **0** | 3. |
| 4. Commercial and industrial loans | RCON1766 | **0** | 4. |
| 5. Not applicable |  |  | 5. |
| 6. Loans to individuals for household, family, and other personal expenditures (i.e., consumer loans) (includes purchased paper): |  |  | 6. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Credit cards | RCONB538 | **0** | 6.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Other revolving credit plans | RCONB539 | **0** | 6.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Automobile loans | RCONK137 | **0** | 6.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Other consumer loans (includes single payment and installment, loans other than automobile loans, and all student loans) | RCONK207 | **186** | 6.d. |
| 7. Not applicable |  |  | 7. |
| 8. Obligations (other than securities and leases) of states and political subdivisions in the U.S | RCON2107 | **0** | 8. |
| 9. Loans to nondepository financial institutions and other loans: |  |  | 9. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Loans to nondepository financial institutions | RCONJ454 | **0** | 9.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Other loans | RCONJ464 | **0** | 9.b. |
| 10. Lease financing receivables (net of unearned income) | RCON2165 | **0** | 10. |
| 11. LESS: Any unearned income on loans reflected in items 1-9 above | RCON2123 | **0** | 11. |
| 12. Total loans and leases held for investment and held for sale (sum of items 1 through 10 minus item 11) (must equal Schedule RC, sum of items 4.a and 4.b) | RCON2122 | **22892** | 12. |

---

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---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 25 |

---

**Schedule RC-E - Deposit Liabilities(Form Type - 051)** 

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Dollar amounts in thousands** | **(Column A)<br>Transaction**<br>**Accounts Total<br>transaction**<br>**accounts<br>(including total**<br>**demand deposits)** | **(Column A)<br>Transaction**<br>**Accounts Total<br>transaction**<br>**accounts<br>(including total**<br>**demand deposits)** | **(Column B)<br>Transaction**<br>**Accounts Memo:<br>Total**<br>**demand deposits**<br>**(included in<br>column A)** | **(Column B)<br>Transaction**<br>**Accounts Memo:<br>Total**<br>**demand deposits**<br>**(included in<br>column A)** | **(Column C)**<br>**Nontransaction Accounts**<br>**Total nontransaction**<br>**accounts (including**<br>**MMDAs)** | **(Column C)**<br>**Nontransaction Accounts**<br>**Total nontransaction**<br>**accounts (including**<br>**MMDAs)** | |  |  |  |  |  |  |
| **Dollar amounts in thousands** | **(Column A)<br>Transaction**<br>**Accounts Total<br>transaction**<br>**accounts<br>(including total**<br>**demand deposits)** | **(Column A)<br>Transaction**<br>**Accounts Total<br>transaction**<br>**accounts<br>(including total**<br>**demand deposits)** | **(Column B)<br>Transaction**<br>**Accounts Memo:<br>Total**<br>**demand deposits**<br>**(included in<br>column A)** | **(Column B)<br>Transaction**<br>**Accounts Memo:<br>Total**<br>**demand deposits**<br>**(included in<br>column A)** | **(Column C)**<br>**Nontransaction Accounts**<br>**Total nontransaction**<br>**accounts (including**<br>**MMDAs)** | **(Column C)**<br>**Nontransaction Accounts**<br>**Total nontransaction**<br>**accounts (including**<br>**MMDAs)** |  | Deposits of: |  |  |  |  |  |
| **Dollar amounts in thousands** | **(Column A)<br>Transaction**<br>**Accounts Total<br>transaction**<br>**accounts<br>(including total**<br>**demand deposits)** | **(Column A)<br>Transaction**<br>**Accounts Total<br>transaction**<br>**accounts<br>(including total**<br>**demand deposits)** | **(Column B)<br>Transaction**<br>**Accounts Memo:<br>Total**<br>**demand deposits**<br>**(included in<br>column A)** | **(Column B)<br>Transaction**<br>**Accounts Memo:<br>Total**<br>**demand deposits**<br>**(included in<br>column A)** | **(Column C)**<br>**Nontransaction Accounts**<br>**Total nontransaction**<br>**accounts (including**<br>**MMDAs)** | **(Column C)**<br>**Nontransaction Accounts**<br>**Total nontransaction**<br>**accounts (including**<br>**MMDAs)** |  | 1. Individuals, partnerships, and corporations | RCONB549 | **0** | RCONB550 | **20152** | 1. |
| **Dollar amounts in thousands** | **(Column A)<br>Transaction**<br>**Accounts Total<br>transaction**<br>**accounts<br>(including total**<br>**demand deposits)** | **(Column A)<br>Transaction**<br>**Accounts Total<br>transaction**<br>**accounts<br>(including total**<br>**demand deposits)** | **(Column B)<br>Transaction**<br>**Accounts Memo:<br>Total**<br>**demand deposits**<br>**(included in<br>column A)** | **(Column B)<br>Transaction**<br>**Accounts Memo:<br>Total**<br>**demand deposits**<br>**(included in<br>column A)** | **(Column C)**<br>**Nontransaction Accounts**<br>**Total nontransaction**<br>**accounts (including**<br>**MMDAs)** | **(Column C)**<br>**Nontransaction Accounts**<br>**Total nontransaction**<br>**accounts (including**<br>**MMDAs)** |  | 2. U.S. Government | RCON2202 | **0** | RCON2520 | **0** | 2. |
| **Dollar amounts in thousands** | **(Column A)<br>Transaction**<br>**Accounts Total<br>transaction**<br>**accounts<br>(including total**<br>**demand deposits)** | **(Column A)<br>Transaction**<br>**Accounts Total<br>transaction**<br>**accounts<br>(including total**<br>**demand deposits)** | **(Column B)<br>Transaction**<br>**Accounts Memo:<br>Total**<br>**demand deposits**<br>**(included in<br>column A)** | **(Column B)<br>Transaction**<br>**Accounts Memo:<br>Total**<br>**demand deposits**<br>**(included in<br>column A)** | **(Column C)**<br>**Nontransaction Accounts**<br>**Total nontransaction**<br>**accounts (including**<br>**MMDAs)** | **(Column C)**<br>**Nontransaction Accounts**<br>**Total nontransaction**<br>**accounts (including**<br>**MMDAs)** |  | 3. States and political subdivisions in the U.S | RCON2203 | **0** | RCON2530 | **479** | 3. |
| 4. Commercial banks and other depository institutions in the U.S | RCONB551 | **0** |  |  | RCONB552 | **0** | 4. |  |  |  |  |  |  |
| 5. Banks in foreign countries | RCON2213 | **0** |  |  | RCON2236 | **0** | 5. |  |  |  |  |  |  |
| 6. Foreign governments and official institutions (including foreign central banks) | RCON2216 | **0** |  |  | RCON2377 | **0** | 6. |  |  |  |  |  |  |
| 7. Total (sum of items 1 through 6) (sum of columns A and C must equal Schedule RC, item 13.a) | RCON2215 | **0** | RCON2210 | **0** | RCON2385 | **20631** | 7. |  |  |  |  |  |  |

---

------

---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 26 |

---

---

| | | | |
|:---|:---|:---|:---|
| Dollar amounts in thousands |  |  |  |
| 1. Selected components of total deposits (i.e., sum of item 7, columns A and C): |  |  | M.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Memorandum item 1.a is to be completed semiannually in the June and December reports only.* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts | RCON6835 | **NR** | M.1.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Total brokered deposits | RCON2365 | **0** | M.1.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Brokered deposits of $250,000 or less (fully insured brokered deposits)<sup>2</sup>  | RCONHK05 | **0** | M.1.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Maturity data for brokered deposits: |  |  | M.1.d. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Brokered deposits of $250,000 or less with a remaining maturity of one year or less (included in Memorandum item 1.c above) | RCONHK06 | **0** | M.1.d.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Not applicable |  |  | M.1.d.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Brokered deposits of more than $250,000 with a remaining maturity of one year or less (included in Memorandum item 1.b above) | RCONK220 | **0** | M.1.d.3. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. reported in item 3 above which are secured or collateralized as required under state law) (to be completed for the December report only). | RCON5590 | **NR** | M.1.e. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Estimated amount of deposits obtained through the use of deposit listing services that are not brokered deposits | RCONK223 | **0** | M.1.f. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Total reciprocal deposits (as of the report date) | RCONJH83 | **0** | M.1.g. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Memorandum items 1.h.(1) through 1.h.(4) and 1.i. are to be completed semiannually in the June and December reports only.* |  |  | M.1.h. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. Sweep deposits: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Fully insured, affiliate sweep deposits | RCONMT87 | **NR** | M.1.h.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Not fully insured, affiliate sweep deposits | RCONMT89 | **NR** | M.1.h.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Fully insured, non-affiliate sweep deposits | RCONMT91 | **NR** | M.1.h.3. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Not fully insured, non-affiliate sweep deposits | RCONMT93 | **NR** | M.1.h.4. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Total sweep deposits that are not brokered deposits | RCONMT95 | **NR** | M.1.i. |
| 2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d must equal item 7, column C above): |  |  | M.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Savings deposits: |  |  | M.2.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Money market deposit accounts (MMDAs) | RCON6810 | **10054** | M.2.a.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Other savings deposits (excludes MMDAs) | RCON0352 | **1656** | M.2.a.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Total time deposits of less than $100,000 | RCON6648 | **3294** | M.2.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Total time deposits of $100,000 through $250,000 | RCONJ473 | **4553** | M.2.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Total time deposits of more than $250,000 | RCONJ474 | **1074** | M.2.d. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Individual Retirement Accounts (IRAs) and Keogh Plan accounts of $100,000 or more included in Memorandum items 2.c and 2.d above | RCONF233 | **0** | M.2.e. |
| 3. Maturity and repricing data for time deposits of $250,000 or less: |  |  | M.3. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Time deposits of $250,000 or less with a remaining maturity or next repricing date of: |  |  | M.3.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Three months or less | RCONHK07 | **1505** | M.3.a.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Over three months through 12 months | RCONHK08 | **1967** | M.3.a.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Over one year through three years | RCONHK09 | **3193** | M.3.a.3. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Over three years | RCONHK10 | **1182** | M.3.a.4. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Time deposits of $250,000 or less with a REMAINING MATURITY of one year or less (included in Memorandum 3 items 3.a.(1) and 3.a.(2) above | RCONHK11 | **3472** | M.3.b. |
| 4. Maturity and repricing data for time deposits of more than $250,000: |  |  | M.4. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Time deposits of more than $250,000 with a remaining maturity or next repricing date of: |  |  | M.4.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Three months or less | RCONHK12 | **0** | M.4.a.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Over three months through 12 months | RCONHK13 | **0** | M.4.a.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Over one year through three years | RCONHK14 | **1074** | M.4.a.3. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Over three years | RCONHK15 | **0** | M.4.a.4. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Time deposits of more than $250,000 with a REMAINING MATURITY of one year or less (included in Memorandum items 4.a.(1) and 4.a.(2) above)<sup>3</sup> | RCONK222 | **0** | M.4.b. |
|  *Memorandum item 5 is to be completed semiannually in the June and December reports only.* |  |  |  |
| 5. Does your institution offer one or more consumer deposit account products, i.e., transaction account or nontransaction savings account deposit products intended primarily for individuals for personal, household, or family use? | RCONP752 | **NR** | M.5. |

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2. The dollar amounts used as the basis for reporting in Memorandum items 1.c reflect the deposit insurance limits
in effect on the report date.

3. Report both fixed-and floating-rate time deposits by remaining
maturity. Exclude floating-rate time deposits with a next repricing date of one year or less that have a remaining maturity of over one year.

------

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| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 36 |

---

**Schedule RC-N - Past Due and Nonaccrual Loans Leases and Other Assets(Form Type - 051)** 

*Amounts reported in Schedule RC-N, items 1 through 8, include guaranteed and unguaranteed portions of past due and nonaccrual loans and leases. Report in items 10 and 11 below certain guaranteed loans and leases that have already been included in the amounts reported in items 1 through 8* 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Dollar amounts in thousands | **(Column A) Past due 30<br>through 89 days and still<br>accruing** | **(Column A) Past due 30<br>through 89 days and still<br>accruing** | **(Column B) Past due 90<br>days or more and still<br>accruing** | **(Column B) Past due 90<br>days or more and still<br>accruing** | **(Column C) Nonaccrual** | **(Column C) Nonaccrual** |  |
| 1. Loans secured by real estate: |  |  |  |  |  |  | 1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Construction, land development, and other land loans: |  |  |  |  |  |  | 1.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. 1-4 family residential construction loans | RCONF172 | **0** | RCONF174 | **0** | RCONF176 | **0** | 1.a.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Other construction loans and all land development and other land loans | RCONF173 | **0** | RCONF175 | **0** | RCONF177 | **0** | 1.a.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Secured by farmland | RCON3493 | **0** | RCON3494 | **0** | RCON3495 | **0** | 1.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Secured by 1-4 family residential properties: |  |  |  |  |  |  | 1.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Revolving, open-end loans secured by 1-4 family residential properties and extended under lines of credit | RCON5398 | **0** | RCON5399 | **0** | RCON5400 | **0** | 1.c.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Closed-end loans secured by 1-4 family residential properties: |  |  |  |  |  |  | 1.c.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Secured by first liens | RCONC236 | **750** | RCONC237 | **0** | RCONC229 | **132** | 1.c.2.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Secured by junior liens | RCONC238 | **0** | RCONC239 | **0** | RCONC230 | **0** | 1.c.2.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Secured by multifamily (5 or more) residential properties | RCON3499 | **0** | RCON3500 | **0** | RCON3501 | **0** | 1.d. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Secured by nonfarm nonresidential properties: |  |  |  |  |  |  | 1.e. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Loans secured by owner-occupied nonfarm nonresidential properties | RCONF178 | **0** | RCONF180 | **0** | RCONF182 | **0** | 1.e.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Loans secured by other nonfarm nonresidential properties | RCONF179 | **0** | RCONF181 | **0** | RCONF183 | **0** | 1.e.2. |
| 2. Loans to depository institutions and acceptances of other banks | RCONB834 | **0** | RCONB835 | **0** | RCONB836 | **0** | 2. |
| 3. Not applicable |  |  |  |  |  |  | 3. |
| 4. Commercial and industrial loans | RCON1606 | **0** | RCON1607 | **0** | RCON1608 | **0** | 4. |
| 5. Loans to individuals for household, family, and other personal expenditures: |  |  |  |  |  |  | 5. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Credit cards | RCONB575 | **0** | RCONB576 | **0** | RCONB577 | **0** | 5.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Automobile loans | RCONK213 | **0** | RCONK214 | **0** | RCONK215 | **0** | 5.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Other (includes revolving credit plans other than credit cards and other consumer loans) | RCONK216 | **0** | RCONK217 | **0** | RCONK218 | **0** | 5.c. |
| 6. Not applicable |  |  |  |  |  |  | 6. |
| 7. All other loans<sup>1</sup>  | RCON5459 | **0** | RCON5460 | **0** | RCON5461 | **0** | 7. |
| 8. Lease financing receivables | RCON1226 | **0** | RCON1227 | **0** | RCON1228 | **0** | 8. |
| 9. Total loans and leases (sum of items 1 through 8) | RCON1406 | **750** | RCON1407 | **0** | RCON1403 | **132** | 9. |
| 10. Debt securities and other assets (exclude other real estate owned and other repossessed assets) | RCON3505 | **0** | RCON3506 | **0** | RCON3507 | **0** | 10. |
| 11. Loans and leases reported in items 1 through 8 above that are wholly or partially guaranteed by the U.S. Government, excluding loans and leases covered by loss-sharing agreements with the FDIC | RCONK036 | **0** | RCONK037 | **0** | RCONK038 | **0** | 11. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Guaranteed portion of loans and leases included in item 11 above, excluding rebooked "GNMA loans" | RCONK039 | **0** | RCONK040 | **0** | RCONK041 | **0** | 11.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Rebooked "GNMA loans" that have been repurchased or are eligible for repurchase included in item 11 above | RCONK042 | **0** | RCONK043 | **0** | RCONK044 | **0** | 11.b. |
|  *Memorandum items 1.a.(1) through 1.f.(5) are to be completed semiannually in the June and December reports only. Memorandum item 1.g is to be completed quarterly.* |  |  |  |  |  |  |  |
| 1. Loans restructured in troubled debt restructurings included in Schedule RC-N, items 1 through 7, above (and not reported in Schedule RC-C, Part 1, Memorandum item 1): |  |  |  |  |  |  | M.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Construction, land development, and other land loans: |  |  |  |  |  |  | M.1.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. 1-4 family residential construction loans | RCONK105 | **NR** | RCONK106 | **NR** | RCONK107 | **NR** | M.1.a.1. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Other construction loans and all land development and other land loans | RCONK108 | **NR** | RCONK109 | **NR** | RCONK110 | **NR** | M.1.a.2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Loans secured by 1-4 family residential properties | RCONF661 | **NR** | RCONF662 | **NR** | RCONF663 | **NR** | M.1.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Secured by multifamily (5 or more) residential properties | RCONK111 | **NR** | RCONK112 | **NR** | RCONK113 | **NR** | M.1.c. |

---

------

1. Includes past due and nonaccrual "Loans to finance agricultural productions and other loans to
farmers," "Obligations (other than securities and leases) of states and political subdivisions in the U.S.," and "Loans to nondepository financial institutions and other loans."

------

---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 41 |

---

**Schedule RC-R Part I - Regulatory Capital Components and Ratios(Form Type - 051)** 

*Part I is to be completed on a consolidated basis.* 

---

| | | | |
|:---|:---|:---|:---|
| Dollar amounts in thousands |  |  |  |
| 1. Common stock plus related surplus, net of treasury stock and unearned employee stock ownership plan (ESOP) shares | RCOAP742 | **0** | 1. |
| 2. Retained earnings<sup>1</sup>  | RCOAKW00 | **4865** | 2. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *To be completed only by institutions that have adopted ASU 2016-13:* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Does your institution have a CECL transition election in effect as of the quarter-end report date? (enter "0" for No; enter "1" for Yes with a 3-year CECL transition election; enter "2" for Yes with a 5-year 2020 CECL transition election.) | RCOAJJ29 | **NR** | 2.a. |
| 3. Accumulated other comprehensive income (AOCI) | RCOAB530 | **-71** | 3. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. AOCI opt-out election (enter "1" for Yes; enter "0" for No.) | RCOAP838 | **1** | 3.a. |
| 4. Common equity tier 1 minority interest includable in common equity tier 1 capital | RCOAP839 | **0** | 4. |
| 5. Common equity tier 1 capital before adjustments and deductions (sum of items 1 through 4) | RCOAP840 | **4794** | 5. |
| 6. LESS: Goodwill net of associated deferred tax liabilities (DTLs) | RCOAP841 | **0** | 6. |
| 7. LESS: Intangible assets (other than goodwill and mortgage servicing assets (MSAs)), net of associated DTLs | RCOAP842 | **0** | 7. |
| 8. LESS: Deferred tax assets (DTAs) that arise from net operating loss and tax credit carryforwards, net of any related valuation allowances and net of DTLs | RCOAP843 | **0** | 8. |
| 9. AOCI-related adjustments (if entered "1" for Yes in item 3.a, complete only items 9.a through 9.e; if entered "0" for No in item 3.a, complete only item 9.f): |  |  | 9. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. LESS: Net unrealized gains (losses) on available-for-sale debt securities (if a gain, report as a positive value; if a loss, report as a negative value) | RCOAP844 | **-71** | 9.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Not applicable. |  |  | 9.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. LESS: Accumulated net gains (losses) on cash flow hedges (if a gain, report as a positive value; if a loss, report as a negative value) | RCOAP846 | **0** | 9.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. LESS: Amounts recorded in AOCI attributed to defined benefit postretirement plans resulting from the initial and subsequent application of the relevant GAAP standards that pertain to such plans (if a gain, report as a positive value; if a loss, report as a negative value) | RCOAP847 | **0** | 9.d. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. LESS: Net unrealized gains (losses) on held-to-maturity securities that are included in AOCI (if a gain, report as a positive value; if a loss, report as a negative value) | RCOAP848 | **0** | 9.e. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. LESS: Accumulated net gain (loss) on cash flow hedges included in AOCI, net of applicable income taxes, that relate to the hedging of items that are not recognized at fair value on the balance sheet (if a gain, report as a positive value; if a loss, report as a negative value) (To be completed only by institutions that entered "0" for No in item 3.a) | RCOAP849 | **NR** | 9.f. |
| 10. Other deductions from (additions to) common equity tier 1 capital before threshold-based deductions: |  |  | 10. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. LESS: Unrealized net gain (loss) related to changes in the fair value of liabilities that are due to changes in own credit risk (if a gain, report as a positive value; if a loss, report as a negative value) | RCOAQ258 | **0** | 10.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. LESS: All other deductions from (additions to) common equity tier 1 capital before threshold-based deductions. | RCOAP850 | **0** | 10.b. |
| 11. Not applicable |  |  | 11. |
| 12. Subtotal (item 5 minus items 6 through 10.b) | RCOAP852 | **4865** | 12. |
| 13. LESS: Investments in the capital of unconsolidated financial institutions, net of associated DTLs, that exceed 25 percent of item 12 | RCOALB58 | **0** | 13. |
| 14. LESS: MSAs, net of associated DTLs, that exceed 25 percent of item 12 | RCOALB59 | **0** | 14. |
| 15. LESS: DTAs arising from temporary differences that could not be realized through net operating loss carrybacks, net of related valuation allowances and net of DTLs, that exceed 25 percent of 12 | RCOALB60 | **0** | 15. |
| 16. Not applicable |  |  | 16. |
| 17. LESS: Deductions applied to common equity tier 1 capital due to insufficient amounts of additional tier 1 capital and tier 2 capital to cover deductions<sup>1</sup> | RCOAP857 | **0** | 17. |
| 18. Total adjustments and deductions for common equity tier 1 capital (sum of items 13 through 17) | RCOAP858 | **0** | 18. |
| 19. Common equity tier 1 capital (item 12 minus item 18) | RCOAP859 | **4865** | 19. |
| 20. Additional tier 1 capital instruments plus related surplus | RCOAP860 | **0** | 20. |
| 21. Non-qualifying capital instruments subject to phase out from additional tier 1 capital | RCOAP861 | **0** | 21. |
| 22. Tier 1 minority interest not included in common equity tier 1 capital | RCOAP862 | **0** | 22. |
| 23. Additional tier 1 capital before deductions (sum of items 20, 21, and 22) | RCOAP863 | **0** | 23. |
| 24. LESS: Additional tier 1 capital deductions | RCOAP864 | **0** | 24. |
| 25. Additional tier 1 capital (greater of item 23 minus item 24, or zero) | RCOAP865 | **0** | 25. |
| 26. Tier 1 capital (sum of items 19 and 25) | RCOA8274 | **4865** | 26. |

---

------

---

| | |
|:---|:---|
| ELBERTON FEDERAL SAVINGS & LOAN ASSOCIATION | FFIEC 051 |
| RSSD-ID 615776 | Report Date 9/30/2022 |
| Last Updated on 10/17/2022 | 42 |

---

---

| | | | |
|:---|:---|:---|:---|
| Dollar amounts in thousands |  |  |  |
| 27. Average total consolidated assets<sup>2</sup> | RCOAKW03 | **26942** | 27. |
| 28. LESS: Deductions from common equity tier 1 capital and additional tier 1 capital (sum of items 6, 7, 8, 10.b, 13 through 15, 17, and certain elements of item 24 - see instructions) | RCOAP875 | **0** | 28. |
| 29. LESS: Other deductions from (additions to) assets for leverage ratio purposes | RCOAB596 | **0** | 29. |
| 30. Total assets for the leverage ratio (item 27 minus items 28 and 29) | RCOAA224 | **26942** | 30. |
| 31. Leverage ratio (item 26 divided by 30) | RCOA7204 | **18.0573%** | 31. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Does your institution have a community bank leverage ratio (CBLR) framework election in effect as of the quarter-end report date? (enter "1" for Yes; enter "0" for No) | RCOALE74 | **1** | 31.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Item 31.b is to be completed only by non-advanced approaches institutions that elect to use the Standardized Approach for Counterparty Credit Risk (SA-CCR) for purposes of the standardized approach.* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Standardized Approach for Counterparty Credit Risk opt-in election (enter "1" for Yes; leave blank for No.)<sup>1</sup>  | RCOANC99 | **NR** | 31.b. |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Dollar amounts in thousands | **(Column A) Amount** | **(Column A) Amount** | **(Column B) Percentage** | **(Column B) Percentage** |  |
| 32. Total assets (Schedule RC, item 12); (must be less than $10 billion) | RCOA2170 | **26482** |  |  | 32. |
| 33. Trading assets and trading liabilities (Schedule RC, sum of items 5 and 15). Report as a dollar amount in Column A and as a percentage of total assets (5% limit) in Column B | RCOAKX77 | **0** | RCOAKX78 | **0%** | 33. |
| 34. Off-balance sheet exposures: |  |  |  |  | 34. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Unused portion of conditionally cancellable commitments | RCOAKX79 | **0** |  |  | 34.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Securities lent and borrowed (Schedule RC-L, sum of items 6.a and 6.b) | RCOAKX80 | **0** |  |  | 34.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Other off-balance sheet exposures | RCOAKX81 | **0** |  |  | 34.c. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Total off-balance sheet exposures (sum of items 34.a through 34.c). Report as a dollar amount in Column A and as a percentage of total assets (25% limit) in Column B | RCOAKX82 | **0** | RCOAKX83 | **0%** | 34.d. |
| Dollar amounts in thousands |  |  |  |  |  |
| 35. Unconditionally cancellable commitments |  |  | RCOAS540 | **0** | 35. |
| 36. Investments in the tier 2 capital of unconsolidated financial institutions |  |  | RCOALB61 | **0** | 36. |
| 37. Allocated transfer risk reserve |  |  | RCOA3128 | **0** | 37. |
| 38. Amount of allowances for credit losses on purchased credit-deteriorated assets:<sup>1</sup>  | 38. Amount of allowances for credit losses on purchased credit-deteriorated assets:<sup>1</sup>  | 38. Amount of allowances for credit losses on purchased credit-deteriorated assets:<sup>1</sup>  |  |  | 38. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Loans and leases held for investment |  |  | RCOAJJ30 | **NR** | 38.a. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Held-to-maturity debt securities |  |  | RCOAJJ31 | **NR** | 38.b. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Other financial assets measured at amortized cost |  |  | RCOAJJ32 | **NR** | 38.c. |
| Dollar amounts in thousands |  |  |  |  |  |
| 39. Tier 2 capital instruments plus related surplus |  |  | RCOAP866 | **NR** | 39. |
| 40. Non-qualifying capital instruments subject to phase out from tier 2 capital | 40. Non-qualifying capital instruments subject to phase out from tier 2 capital | 40. Non-qualifying capital instruments subject to phase out from tier 2 capital | RCOAP867 | **NR** | 40. |
| 41. Total capital minority interest that is not included in tier 1 capital |  |  | RCOAP868 | **NR** | 41. |
| 42. Allowance for loan and lease losses includable in tier 2 capital<sup>1</sup>  |  |  | RCOA5310 | **NR** | 42. |
| 43. Not applicable. |  |  |  |  | 43. |
| 44. Tier 2 capital before deductions (sum of items 39 through 42) |  |  | RCOAP870 | **NR** | 44. |
| 45. LESS: Tier 2 capital deductions |  |  | RCOAP872 | **NR** | 45. |
| 46. Tier 2 capital (greater of item 44 minus item 45, or zero) |  |  | RCOA5311 | **NR** | 46. |
| 47. Total capital (sum of items 26 and 46) |  |  | RCOA3792 | **NR** | 47. |
| 48. Total risk-weighted assets (from Schedule RC-R, Part II, item 31) |  |  | RCOAA223 | **NR** | 48. |

---

------

1. Institutions that have adopted ASU 2016-13 and have elected to apply
the 3-year or the 5-year 2020 CECL transition provision should include the applicable portion of the CECL transitional amount or the modified CECL transitional amount,
respectively, in this item.

1. An institution that has a CBLR framework election in effect as of the quarter-end report date is neither required to calculate tier 2 capital nor make any deductions that would have been taken from tier 2 capital as of the report date.

------

**Elberton Federal Savings & Loan Association** 

**Balance Sheets** 

---

| | | |
|:---|:---|:---|
| *As of December 31, 2021 and 2020* | 2021 | 2020 |
|  **Assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and due from banks | $1941741 | $1114912 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing deposits with other banks | 654143 | 1316889 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 2595884 | 2431801 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities available for sale | 2720480 | 3263288 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marketable equity securities | 12589 | 35341 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other investments | 88500 | 206800 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans, net | 22454128 | 20717618 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment, net | 235579 | 244125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | 217891 | 111643 |
|  Total assets | $28325051 | $27010616 |
|  **Liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | $21307601 | $17931905 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank advances | 2000000 | 3850000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | 34486 | 51301 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 23342087 | 21833206 |
|  **Capital:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 4930399 | 5075064 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income | 52565 | 102346 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total capital | 4982964 | 5177410 |
|  Total liabilities and capital | $28325051 | $27010616 |

---

See accompanying notes to financial statements.

------

**Elberton Federal Savings & Loan Association** 

**Statements of Operations** 

---

| | | |
|:---|:---|:---|
| *Years Ended December 31, 2021 and 2020* | 2021 | 2020 |
|  Interest and dividend income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and fees on loans | $845583 | $828138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest on securities available for sale | 73489 | 89723 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and dividends on other investments | 37178 | 23438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest and dividend income | 956250 | 941299 |
|  Interest expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense - deposits | 121030 | 115967 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense - borrowings | 53371 | 62570 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | 174401 | 178537 |
|  Net interest income | 781849 | 762762 |
|  Provision for loan losses |  |  |
|  Net interest income after provision for loan losses | 781849 | 762762 |
|  Other income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sales of securities available for sale |  | 30138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other income | 2603 | 625 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income | 2603 | 30763 |
|  Other expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | 395986 | 384258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Occupancy and equipment | 89516 | 97178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Professional fees and expenses | 188979 | 53788 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Directors' fees | 78127 | 78752 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in fair value of equity securities | 22752 | 10163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 153757 | 146907 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | 929117 | 771046 |
|  Net (loss) earnings | $(144665) | $22479 |

---

See accompanying notes to financial statements.

------

**Elberton Federal Savings & Loan Association** 

**Statements of Comprehensive (Loss) Income** 

---

| | | |
|:---|:---|:---|
| *Years Ended December 31, 2021 and 2020* | 2021 | 2020 |
|  Net (loss) earnings | $(144665) | $22479 |
|  Other comprehensive (loss) income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized (loss) gain on securities | (67037) | 109103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassification adjustment for gains realized in net earnings |  | (30138) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net unrealized (loss) gain on securities | (67037) | 78965 |
|  Other comprehensive (loss) income before tax effect | (67037) | 78965 |
|  Tax effect of other comprehensive (loss) income items | 17256 | (20325) |
|  Other comprehensive (loss) income, net of tax | (49781) | 58640 |
|  Total comprehensive (loss) income | $(194446) | $81119 |

---

See accompanying notes to financial statements.

------

**Elberton Federal Savings & Loan Association** 

**Statements of Changes in Capital** 

---

| | | | |
|:---|:---|:---|:---|
|  |<br>Retained<br>Earnings | Accumulated<br>Other<br>Comprehensive<br>Income |<br><br>Total |
|  Balances at January 1, 2020 | $5052585 | $43706 | $5096291 |
|  Net earnings | 22479 |  | 22479 |
|  Other comprehensive income |  | 58640 | 58640 |
|  Balances at December 31, 2020 | 5075064 | 102346 | 5177410 |
|  Net loss | (144665) |  | (144665) |
|  Other comprehensive loss |  | (49781) | (49781) |
|  Balances at December 31, 2021 | $4930399 | $52565 | $4982964 |

---

See accompanying notes to financial statements.

------

**Elberton Federal Savings & Loan Association** 

**Statements of Cash Flows** 

---

| | | |
|:---|:---|:---|
| *Years Ended December 31, 2021 and 2020* | 2021 | 2020 |
|  Increase (decrease) in cash and cash equivalents: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net (loss) earnings | $(144665) | $22479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of securities available for sale |  | (30138) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for depreciation and amortization | 31432 | 31580 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in fair value of equity securities | 22752 | 10163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable and other assets | (106248) | 13621 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable and other liabilities | 441 | (4274) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash (used in) provided by operating activities | (196288) | 43431 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of securities available for sale |  | (500000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sales of securities available for sale |  | 566996 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from calls, paydowns and maturities of securities available for sale | 465413 | 586198 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of other investments |  | (500) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales of other investments | 118300 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net increase in loans | (1736510) | (1282337) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of premises and equipment | (12528) | (7638) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (1165325) | (637281) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net increase (decrease) in deposits | 3375696 | 2605809 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayment of Federal Home Loan Bank advances | (1850000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | 1525696 | 2605809 |
|  Net increase (decrease) in cash and cash equivalents | 164083 | 2011959 |
|  Cash and cash equivalents at beginning of year | 2431801 | 419842 |
|  Cash and cash equivalents at end of year | $2595884 | $2431801 |
|  **Supplemental cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid during the year for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest | $173834 | $177803 |

---

See accompanying notes to financial statements.

------

EXHIBIT I-3

Elberton Federal Savings & Loan Association

Summary Regulatory Financial Highlights

------

Exhibit I-3

Elberton Federal Savings & Loan Association

Summary Regulatory Financial Highlights

(Dollars in Thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| End of Period Date | **12/31/2018** | **12/31/2019** | **12/31/2020** | **12/31/2021** | **9/30/2022** |
|  **Balance Sheet Highlights** |  |  |  |  |  |
|  Total Assets | 23715 | 24292 | 26975 | 28307 | 26482 |
|  Asset Growth Rate (%) | 1.95 | 2.43 | 11.04 | 4.94 | (6.27) |
|  Total Loans & Leases (Incl HFI & HFS) | 18453 | 19475 | 20759 | 22495 | 22892 |
|  Loan Growth Rate (%) | (1.12) | 5.54 | 6.59 | 8.36 | 1.93 |
|  Total Loans & Leases/ Assets (%) | 77.81 | 80.17 | 76.96 | 79.47 | 86.44 |
|  Total Deposits (Incl Dom & For) | 15517 | 15326 | 17932 | 21308 | 20631 |
|  Deposit Growth Rate (%) | 0.76 | (1.23) | 17.00 | 18.83 | (2.03) |
|  Loans/ Deposits (%) | 118.92 | 127.07 | 115.77 | 105.57 | 110.96 |
|  Memo: Full-time Employees | 5 | 4 | 4 | 4 | 4 |
|  **Performance Measures** |  |  |  |  |  |
|  Net Income | (16) | 60 | 22 | (144) | (188) |
|  ROAA (%) | (0.07) | 0.25 | 0.09 | (0.51) | (0.68) |
|  ROAE (%) | (0.33) | 1.20 | 0.43 | (2.81) | (3.83) |
|  Interest Income/ Avg Assets (%) | 3.89 | 4.06 | 3.64 | 3.40 | 3.38 |
|  Interest Expense/ Average Assets (%) | 0.49 | 0.62 | 0.69 | 0.62 | 0.53 |
|  Net Interest Income/ Avg Assets (%) | 3.40 | 3.43 | 2.94 | 2.78 | 2.85 |
|  Noninterest Income/ Average Assets (%) | 0.01 | 0.00 | 0.00 | 0.01 | 0.00 |
|  Noninterest Expense/ Avg Assets (%) | 3.47 | 3.40 | 2.93 | 3.22 | 3.51 |
|  Net Interest Margin (%) | 3.51 | 3.52 | 3.18 | 3.06 | 3.11 |
|  Yield/ Cost Spread (%) | 3.40 | 3.37 | 2.95 | 2.91 | 2.86 |
|  Efficiency Ratio (FTE) (%) | 101.98 | 98.79 | 99.48 | 115.39 | 123.11 |
|  **Capitalization** |  |  |  |  |  |
|  GRB: Total Equity Capital | 4919 | 5096 | 5177 | 4983 | 4794 |
|  Tangible Equity | 4919 | 5096 | 5177 | 4983 | 4794 |
|  Tangible Common Equity | 4919 | 5096 | 5177 | 4983 | 4794 |
|  Tier 1 Capital | 4992 | 5068 | 5075 | 4930 | 4865 |
|  B3 or GRB: Tier 1 Common Capital (CET1) | 4992 | 5068 | 5075 | 4930 | 4865 |
|  Equity/ Assets (%) | 20.74 | 20.98 | 19.19 | 17.60 | 18.10 |
|  Tang Equity/ Tang Assets (%) | 20.74 | 20.98 | 19.19 | 17.60 | 18.10 |
|  Tang Common Eqty/ Tang Assts (%) | 20.74 | 20.98 | 19.19 | 17.60 | 18.10 |
|  Risk Based Capital Ratio (%) | 43.23 | 43.33 | NA | NA | NA |
|  Tier 1 Risk-based Ratio (%) | 42.88 | 42.99 | NA | NA | NA |
|  B3 or GRB: Tier 1 Common Capital (CET1) RB Ratio (%) | 42.88 | 42.99 | NA | NA | NA |
|  Leverage Ratio (%) | 21.26 | 20.73 | 19.01 | 17.58 | 18.06 |
|  Common Dividends Declared/ Net Income (%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Commercial RE Loans/ Total Risk-Based Capital (%) | 0.12 | 0.74 | 0.66 | 0.60 | 0.57 |
|  **Loan Composition (%)** |  |  |  |  |  |
|  Construction & Land Development Loans/ Loans | 0.03 | 0.20 | 0.16 | 0.13 | 0.12 |
|  Tot 1-4 Fam Loans/ Loans | 93.14 | 93.13 | 95.19 | 96.69 | 97.05 |
|  Multifamily Loans/ Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Farm Loans/ Loans | 1.40 | 1.10 | 0.40 | 0.34 | 0.32 |
|  CommRE(Nfarm/NRes)/ Loans | 4.83 | 4.01 | 2.99 | 1.92 | 1.70 |
|  Foreign RE Lns/ Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Real Estate Loans/ Loans | 99.41 | 98.44 | 98.74 | 99.09 | 99.19 |
|  Total C&I Loans/ Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Total Cons Lns/ Loans | 0.59 | 1.56 | 1.26 | 0.91 | 0.81 |
|  Agricultural Prod/ Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Other Loans/ Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Total Leases/ Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  LESS: Unearn Inc/ Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |

---

------

Exhibit I-3

Elberton Federal Savings & Loan Association

Summary Regulatory Financial Highlights

(Dollars in Thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| End of Period Date | **12/31/2018** | **12/31/2019** | **12/31/2020** | **12/31/2021** | **9/30/2022** |
|  **Deposit Composition (%)** |  |  |  |  |  |
|  Nonint-bear Dep/ Deposits | 0.00 | 0.00 | 100.00 | 0.00 | 0.00 |
|  Transaction Accounts/ Deposits | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  MMDAs+Savings/ Deposits | 60.35 | 58.14 | 52.55 | 55.42 | 56.76 |
|  Retail Time Dep/ Deposits | 36.42 | 38.59 | 39.78 | 38.13 | 38.03 |
|  Jumbo Time Deposits/ Deposits | 3.22 | 3.26 | 7.66 | 6.45 | 5.21 |
|  Foreign Deposits/ Deposits | NA | NA | NA | NA | NA |
|  **Asset Quality (%)** |  |  |  |  |  |
|  Noncurrent Loans/ Loans | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  NPLs/ Loans | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  NPAs/ Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  NPA Excluding Restructured Loans/ Total Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  NPAs/ (Loans+OREO) | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  NPAs+90s/ (Loans+OREO) | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  NPAs + 90 Days PD/ Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  Loan Loss Reserves/ Gross Loans | 0.22 | 0.21 | 0.20 | 0.18 | 0.18 |
|  Reserves/ NPAs | 54.67 | NA | 30.15 | 8.42 | 31.06 |
|  Net Chargeoffs/ Avg Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Loan Loss Prov/ NCOs | NA | NA | NA | NA | NA |
|  **Liquidity (%)** |  |  |  |  |  |
|  Liquidity Ratio | 25.17 | 22.30 | 26.24 | 22.83 | 14.06 |
|  Earning Assets/ IBL | 122.35 | 122.45 | 659.09 | 111.04 | 117.94 |
|  Secs (FV)/ Secs (Amt Cost) | 97.72 | 101.54 | 104.38 | 102.64 | 95.98 |
|  Pledged Secs/ Securities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Brokered Deposits/ Deposits | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Jumbo Time Deposits/ Domestic Deposits | 3.22 | 3.26 | 7.66 | 6.45 | 5.21 |
|  **Yields/Cost (%)** |  |  |  |  |  |
|  Yield on Total Loans and Leases | 4.31 | 4.41 | 4.25 | 3.88 | 3.72 |
|  Yield on Loans | 4.32 | 4.41 | 4.25 | 3.88 | 3.72 |
|  Yield on RE Loans: 1-4 Family | 4.25 | 4.39 | 4.26 | 3.81 | 3.68 |
|  Yield on RE Loans: Oth RE Loans | 5.47 | 5.05 | 4.32 | 6.41 | 7.09 |
|  Yield on RE Loans | 4.32 | 4.43 | 4.26 | 3.89 | 3.76 |
|  Yield on C&I Loans | NA | NA | NA | NA | NA |
|  Yield on Consumer Loans Excluding Credit Card | 2.70 | 2.76 | 3.23 | 3.32 | 3.06 |
|  Yield on Leases | NA | NA | NA | NA | NA |
|  Yield on Bal in Dep Inst | 3.57 | 12.36 | 1.02 | 0.75 | 1.24 |
|  Yield on Debt and Equity Securities | 2.89 | 2.97 | 3.12 | 3.98 | 4.39 |
|  Yield on Earning Assets | 4.02 | 4.16 | 3.93 | 3.74 | 3.70 |
|  Yld on U.S. Treas&Govt Agcy Secs | 2.50 | 2.69 | 2.30 | 2.26 | 2.46 |
|  Yield on Mortgage Backed Secs | 2.28 | 2.30 | 2.32 | 2.32 | 2.05 |
|  Yield on All Other Secs | 4.54 | 4.58 | 4.81 | 6.35 | 7.03 |
|  Yield on Trading Accts | NA | NA | NA | NA | NA |
|  Yield on FFSold&RevRepos | NA | NA | NA | NA | NA |
|  Cost of Int-bearing Deposits | 0.45 | 0.54 | 0.80 | 0.68 | 0.74 |
|  Cost of Borrowings | 1.55 | 1.74 | 1.64 | 1.68 | 1.85 |
|  Cost of Int-bearing Trans Accts | NA | NA | NA | NA | NA |
|  Cost of Svgs Deps (Incl MMDAs) | 0.36 | 0.41 | 0.53 | 0.44 | 0.36 |
|  Cost of Time Deposits > $250K | 0.80 | 1.60 | 1.50 | 1.24 | 1.46 |
|  Cost of Other Time Deposits | 0.59 | 0.70 | 0.82 | 0.73 | 0.71 |
|  Cost of FFPuch&Repos | NA | NA | NA | NA | NA |
|  Cost of Interest-bearing Liabilities | 0.62 | 0.79 | 0.98 | 0.83 | 0.84 |
|  Cost of Funds | 0.62 | 0.80 | 0.78 | 0.68 | 0.53 |
|  Yield/ Cost Spread | 3.40 | 3.37 | 2.95 | 2.91 | 2.86 |

---

Source: S&P Global Market Intelligence

------

EXHIBIT I-4

Elberton Federal Savings & Loan Association

Summary Regulatory Financial Highlights – Balance Sheet

------

Exhibit I-4

Elberton Federal Savings & Loan Association

Summary Regulatory Financial Highlights – Balance Sheet

(Dollars in Thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| End of Period Date | **12/31/2018** | **12/31/2019** | **12/31/2020** | **12/31/2021** | **9/30/2022** |
|  **<u>Assets</u>** |  |  |  |  |  |
|  Total Cash & Bals Due Dep Inst | 488 | 416 | 2421 | 2592 | 774 |
|  Total Securities | 4243 | 3865 | 3299 | 2732 | 2276 |
|  Tot Fed Funds & Reverse Repos | 0 | 0 | 0 | 0 | 0 |
|  Loans & Leases Held for Sale | 0 | 0 | 0 | 0 | 0 |
|  Total Loans & Leases (Excl HFS) | 18453 | 19475 | 20759 | 22495 | 22892 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Reserves | 41 | 41 | 41 | 41 | 41 |
|  Net Loans & Leases (Excl HFS) | 18412 | 19434 | 20718 | 22454 | 22851 |
|  Total Trading Assets | 0 | 0 | 0 | 0 | 0 |
|  Premises & Fixed Assets | 263 | 257 | 244 | 236 | 220 |
|  Total OREO | 0 | 0 | 0 | 0 | 0 |
|  Invest in Unconsolidated Subsid | 0 | 0 | 0 | 0 | 0 |
|  Direct and Indirect Inv in Real Estate Ventures | 0 | 0 | 0 | 0 | 0 |
|  Total Intangible Assets | 0 | 0 | 0 | 0 | 0 |
|  Total Other Assets | 309 | 320 | 293 | 293 | 361 |
|  Total Assets | 23715 | 24292 | 26975 | 28307 | 26482 |
|  **<u>Liabilities</u>** |  |  |  |  |  |
|  Dep:Total Dom Deposits | 15517 | 15326 | 17932 | 21308 | 20631 |
|  Total Deposits (Incl Dom & For) | 15517 | 15326 | 17932 | 21308 | 20631 |
|  Total Fed Funds & Repos | 0 | 0 | 0 | 0 | 0 |
|  Total Trading Liabilities | 0 | 0 | 0 | 0 | 0 |
|  Total Other Borrowed Money | 3250 | 3850 | 3850 | 2000 | 1000 |
|  Subordinated Notes & Debentures | 0 | 0 | 0 | 0 | 0 |
|  Oth Liabilities (Excl Min Int) | 29 | 20 | 16 | 16 | 57 |
|  Tot Liabilities (Excl Min Int) | 18796 | 19196 | 21798 | 23324 | 21688 |
|  **<u>Equity</u>** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained Earnings | 4992 | 5052 | 5075 | 4930 | 4865 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated Oth Comp Inc | (73) | 44 | 102 | 53 | (71) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oth Equity Capital Components | 0 | 0 | 0 | 0 | 0 |
|  Total Equity Capital | 4919 | 5096 | 5177 | 4983 | 4794 |
|  Total Liab, Min Int & Equity | 23715 | 24292 | 26975 | 28307 | 26482 |

---

Source: S&P Global Market Intelligence.

------

EXHIBIT I-5

Elberton Federal Savings & Loan Association

Investment Securities AFS

------

Exhibit I-5

Elberton Federal Savings & Loan Association

Investment Securities Available for Sale

(Dollars in Thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| End of Period Date | **12/31/2018** | **12/31/2019** | **12/31/2020** | **12/31/2021** | **9/30/2022** |
|  **<u>Available For Sale Amortized Cost</u>** |  |  |  |  |  |
|  AFS(C):US Treasury Secs | 0 | 0 | 0 | 0 | 0 |
|  AFS(C):Tot U.S. Govt Agen & Spons Agen Obligations | 2404 | 1435 | 749 | 590 | 454 |
|  AFS(C):Tot State & Pol Obligations | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; AFS(C): PT RMBS: Iss or Guar by FNMA,FHLMC or GNMA | 1082 | 1478 | 1037 | 728 | 584 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; AFS(C):Other Dom Debt Secs | 856 | 848 | 1341 | 1332 | 1325 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; AFS(C):Foreign Debt Secs | 0 | 0 | 0 | 0 | 0 |
|  AFS(C):Tot Other Debt Secs | 856 | 848 | 1341 | 1332 | 1325 |
|  Total Securities AFS CB | 4342 | 3761 | 3127 | 2650 | 2363 |
|  **Memo: Structured Financial Products by Underlying Collateral** | **Memo: Structured Financial Products by Underlying Collateral** |  |  |  |  |
|  AFS(C): Str Fin Prd: TPS Finl Instn | NA | NA | NA | NA | NA |
|  AFS(C): Str Fin Prd: TPS REIT | NA | NA | NA | NA | NA |
|  AFS(C): Str Fin Prd: Corporate and Similar Loans | NA | NA | NA | NA | NA |
|  **Available For Sale Fair Value** |  |  |  |  |  |
|  AFS(F):US Treasury Secs | 0 | 0 | 0 | 0 | 0 |
|  AFS(F):Tot U.S. Govt Agen & Spons Agen Obligations | 2367 | 1465 | 780 | 600 | 413 |
|  AFS(F):Tot State & Pol Obligations | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; AFS(F): PT RMBS: Iss or Guar by FNMA,FHLMC or GNMA | 1039 | 1475 | 1070 | 743 | 541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; AFS(F): Pass-Through RMBS: Other | 0 | 0 | 0 | 0 | 0 |
|  AFS(F):Tot of All MBS | 1039 | 1475 | 1070 | 743 | 541 |
|  FV: Total Marketable Equity Secs (historical) | 0 | NA | NA | NA | NA |
|  Total Available-for-sale Debt Securities (FV) | 4243 | 3819 | 3264 | 2720 | 2268 |

---

Source: S&P Global Market Intelligence

------

EXHIBIT I-6

Elberton Federal Savings & Loan Association

Summary Regulatory Financial Highlights – Income Statement

------

Exhibit I-6

Elberton Federal Savings & Loan Association

Summary Regulatory Financial Highlights-Income Statement

(Dollars in Thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| End of Period Date | **12/31/2018** | **12/31/2019** | **12/31/2020** | **12/31/2021** | **9/30/2022** |
|  **Interest Income** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; II: RE Lns Secured by 1-4 Family Res Prop | 727 | 779 | 786 | 797 | 789 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; II: All Other Loans Secured by Real Estate | 62 | 53 | 35 | 41 | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Int Inc: Real Estate Loans | 789 | 832 | 821 | 838 | 826 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Int Inc: Commercial and Industrial Loans | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; II: Credit Card Loans | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; II: Other Consumer Loans | 3 | 6 | 8 | 7 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Int Inc: Consumer Loans | 3 | 6 | 8 | 7 | 7 |
|  II: Total Interest Income on Lns | 792 | 838 | 829 | 845 | 833 |
|  Int Inc: Lease Financing Receivables | 0 | 0 | 0 | 0 | 0 |
|  Int Inc: Balance Due from Depository Institution | 22 | 16 | 10 | 8 | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Int Inc: US Treasury & Gov Agency Obligations | 45 | 55 | 21 | 15 | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Int Inc: Mortgage-backed Securities | 27 | 28 | 30 | 20 | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Int Inc: All Other Securities | 39 | 39 | 51 | 69 | 71 |
|  Int Inc: Total Securities | 111 | 122 | 102 | 104 | 98 |
|  II: Other interest income | 0 | 0 | 0 | 0 | 0 |
|  Total Interest Income | 925 | 976 | 941 | 957 | 940 |
|  **Interest Expense** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IE: Transaction Accounts | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IE: Savings Deposits (incl MMDA's) | 35 | 37 | 50 | 50 | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IE: Time Deposits > $250K | 4 | 8 | 13 | 17 | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IE: Time Deposits <= $250K | 33 | 37 | 53 | 54 | 56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Int Exp: non-U.S. Deposits | NA | NA | NA | NA | NA |
|  Int Exp: Total Deposits | 72 | 82 | 116 | 121 | 118 |
|  Int Exp: Fed Funds Purchased & Repos | 0 | 0 | 0 | 0 | 0 |
|  IE: Other Interest Expense | 45 | 68 | 63 | 53 | 30 |
|  Total Interest Expense | 117 | 150 | 179 | 174 | 148 |
|  Net Interest Income | 808 | 826 | 762 | 783 | 792 |
|  Provision for Loan and Lease Losses | NA | 0 | 0 | 0 | 0 |
|  **Noninterest Income** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NII: Service Charges on Deposit Accounts | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NII: Insurance Commissions & Fees | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NII: Net Servicing Fees | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NII: Net Securitization Income | NA | NA | NA | NA | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NII: Net Gain on Sale of Loans and Leases | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NII: Net Gain on Sale of OREO | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NII: Net Gain on Sale of Other Assets | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Noninterest Income | 2 | 1 | 0 | 3 | 0 |
|  Total Noninterest Income | 2 | 1 | 0 | 3 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Realized Gain on HTM Securities | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Realized Gain on AFS Debt Securities | 0 | 21 | 30 | 0 | 0 |
|  Realized Gain on Securities | 0 | 21 | 30 | 0 | 0 |
|  **Noninterest Expense Components** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NIE: Salary & Benefits | 453 | 453 | 384 | 396 | 424 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NIE: Premises & Fixed Assets | 88 | 91 | 102 | 96 | 95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NIE: Other Noninterest Expense | 285 | 273 | 272 | 415 | 456 |
|  Total Noninterest Expense | 826 | 817 | 758 | 907 | 975 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Income before Unrealized Gains, IT & Disc Ops | (16) | 31 | 34 | (121) | (183) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized Holding Gains on Equity Sec not HFT | NA | 31 | (11) | (23) | (5) |
|  Net Income before Income Taxes & Discontinued Ops | (16) | 62 | 23 | (144) | (188) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income Taxes | 0 | 2 | 1 | 0 | 0 |
|  Net Income | (16) | 60 | 22 | (144) | (188) |
|  **Memoranda** |  |  |  |  |  |
|  Memo: Full-time Employees | 5 | 4 | 4 | 4 | 4 |
|  Memo: Subchapter S Election? | No | No | No | No | No |

---

Source: S&P Global Market Intelligence

------

EXHIBIT I-7

Elberton Federal Savings & Loan Association

Loans and Leases

------

Exhibit I-7

Elberton Federal Savings & Loan Association

Loans and Leases

(Dollars in Thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| End of Period Date | **12/31/2018** | **12/31/2019** | **12/31/2020** | **12/31/2021** | **9/30/2022** |
|  **<u>Domestic Offices Only</u>** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: 1-4 Construction Loans | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Oth Con, Dev, & Lnd Lns | 6 | 38 | 34 | 30 | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Constr & Land Dev | 6 | 38 | 34 | 30 | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Farm Loans | 259 | 215 | 83 | 77 | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Rev 1-4 Fam (HE Lines) | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Closed-end 1st Lien 1-4 | 17187 | 18137 | 19760 | 21751 | 22216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Cl-end Jr Lien 1-4 | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Tot Cl-end 1-4 Family | 17187 | 18137 | 19760 | 21751 | 22216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Total 1-4 Fmly | 17187 | 18137 | 19760 | 21751 | 22216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Multifamily Loans | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Lns to Owner-Occupied RE | 892 | 781 | 620 | 432 | 389 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Other Property Loans | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. RE: Comm RE(Nonfarm/NonRes) | 892 | 781 | 620 | 432 | 389 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tot Dom Real Estate Loans | 18344 | 19171 | 20497 | 22290 | 22706 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DOM: Loans to Depository Institutions | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S.: Agricultural Prod Loans | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DOM: Commercial & Industrial Loans | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DOM: Consumer Loans | 109 | 304 | 262 | 205 | 186 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DOM: State & Political Loans | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DOM: Total Lease Financing Receivables | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DOM: Loans: Less Unearned Inc | 0 | 0 | 0 | 0 | 0 |
|  Total Domestic Loans | 18453 | 19475 | 20759 | 22495 | 22892 |
|  **Memoranda** |  |  |  |  |  |
|  **Troubled Debt Restructurings** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo TDR: Constr Loans: 1-4 Family | 0 | 0 | 0 | 0 | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo Restr: Constr Lns: Other | 0 | 0 | 0 | 0 | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Restructured Loans 1-4 Family | 0 | 0 | 0 | 0 | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo TDR: Loans Sec by Multifamily | 0 | 0 | 0 | 0 | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo TDR: CRE: Owner-Occ Loans | 0 | 0 | 0 | 0 | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo TDR: CRE: Other Prop Loans | 0 | 0 | 0 | 0 | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo TDR: Comm & Ind Loans | 0 | 0 | 0 | 0 | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo TDR: All Other Loans | 0 | 0 | 0 | 0 | NA |
|  Memo Restr: Total Restructured Loans | 0 | 0 | 0 | 0 | 0 |
|  **Other** |  |  |  |  |  |
|  Memo: Loans Comm RE (Not Secured by RE) | 0 | 0 | 0 | 0 | 0 |
|  Memo: Adj Rate Closed End 1-4 | 0 | 0 | 0 | 0 | NA |
|  Memo: Purchase Impaired Lns HFI | 0 | 0 | 0 | 0 | NA |
|  Memo: 1-4 Family Loans in Process of Foreclosure | 0 | 0 | 0 | 0 | 0 |
|  Pledged Loans and Leases | 7866 | 8332 | 9221 | 9392 | 9871 |

---

Source: S&P Global Market Intelligence

------

EXHIBIT I-8

Elberton Federal Savings & Loan Association

Asset Quality

------

Exhibit I-8

Elberton Federal Savings & Loan Association

Asset Quality

(Dollars in Thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| End of Period Date | **12/31/2017** | **12/31/2018** | **12/31/2019** | **12/31/2020** | **3/31/2021** |
|  **<u>Nonperforming Assets</u>** |  |  |  |  |  |
|  NPAs/ Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  NPA Excluding Restructured Loans/ Total Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  Adjusted NPA/ Total Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  NPAs/ Loans | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  NPAs/ (Loans + OREO) | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  NPAs + 90 Days PD/ Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  NPAs + 90 PD/ Loans+Frclsd RE (Bank, BHC only) | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  NPAs/ Equity | 1.52 | 0.00 | 2.63 | 9.77 | 2.75 |
|  NPAs/ (Equity + LLRs) | 1.51 | 0.00 | 2.61 | 9.69 | 2.73 |
|  NPAs/ Tang Equity + LLRs | 1.51 | 0.00 | 2.61 | 9.69 | 2.73 |
|  Adj NPAs/ Equity+LLR | 1.51 | 0.00 | 2.61 | 9.69 | 2.73 |
|  NPAs/ (LLR + Tier1) | 1.49 | 0.00 | 2.66 | 9.80 | 2.69 |
|  LTM Loan Loss Prov/ Tier 1 Capital | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Nonperforming Assets | 75 | 0 | 136 | 487 | 132 |
|  Adjusted Nonperforming Assets | 75 | 0 | 136 | 487 | 132 |
|  NPAs & Loans 90+ Days Past Due (Bank, BHC only) | 75 | 0 | 136 | 487 | 132 |
|  Adjusted NPA + Adjusted Loans 90 PD | 75 | 0 | 136 | 487 | 132 |
|  **Texas Ratios** |  |  |  |  |  |
|  NPA+ Loans 90PD/ Tang Equity + LLR | 1.51 | 0.00 | 2.61 | 9.69 | 2.73 |
|  NPA+ Loans 90PD/ Tang Common Equity + LLR | 1.51 | 0.00 | 2.61 | 9.69 | 2.73 |
|  Adj NPA + Adj Loans 90PD/ Tang Equity + LLR | 1.51 | 0.00 | 2.61 | 9.69 | 2.73 |
|  Nonaccrual & 90PD+OREO+Reposs Assets/ Equity+LLR | 1.51 | 0.00 | 2.61 | 9.69 | 2.73 |
|  NA&90PD + OREO + Reposs Assets/ Tang Equity + LLR | 1.51 | 0.00 | 2.61 | 9.69 | 2.73 |
|  **Nonperforming Loans** |  |  |  |  |  |
|  NPLs/ Loans | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  Adjusted NPL/ Total Loans | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  NPL+Frclsd RE/ Lns+Frclsd RE | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  Nonperforming Loans | 75 | 0 | 136 | 487 | 132 |
|  Adjusted Nonperforming Loans | 75 | 0 | 136 | 487 | 132 |
|  Nonperforming Lns+Frcl RE (Net) | 75 | 0 | 136 | 487 | 132 |
|  **Noncurrent Assets** |  |  |  |  |  |
|  Tot Noncurrent Assets/ Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  Noncurrent Assets + OREO + Reposs Assets/ Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  Noncurrent Assets + OREO + Reposs Assets | 75 | 0 | 136 | 487 | 132 |
|  Noncurrent Assets | 75 | 0 | 136 | 487 | 132 |
|  Noncurrent Loans/ Loans | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  Total Noncurrent Lns/ Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  Noncurrent Loans | 75 | 0 | 136 | 487 | 132 |
|  Lns 90+ Days Past Due/ Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Adj Loans 90+ PD/ Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  90+ Days Past Due Loans/ LLR | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Adjusted 90 Day Loans | 0 | 0 | 0 | 0 | 0 |
|  Nonaccrual Loans/ Loans | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  Adj Nonaccrl Loans/ Loans | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  Nonaccrual Loans/ LLR | 182.93 | 0.00 | 331.71 | 1187.80 | 321.95 |
|  Adj Nonaccrual Lns/ LLR | 182.93 | 0.00 | 331.71 | 1187.80 | 321.95 |
|  Nonaccrual & 90PD + OREO + Reposs Assets/ Assets | 0.32 | 0.00 | 0.50 | 1.72 | 0.50 |
|  Nonaccrual & 90PD + OREO + Reposs Assets/ Loans | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  NA&90PD+OREO+Reposs Assets/ Ln+OREO+Reposs Assets | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  Nonaccrual & 90PD + OREO + Reposs Assets/ Equity | 1.52 | 0.00 | 2.63 | 9.77 | 2.75 |
|  NAccr: Total Loans | 75 | 0 | 136 | 487 | 132 |
|  Adj Nonaccrual Loans | 75 | 0 | 136 | 487 | 132 |
|  Nonaccrual & 90PD + OREO + Reposs Assets | 75 | 0 | 136 | 487 | 132 |
|  **Miscellaneous** |  |  |  |  |  |
|  Reserves/ NPAs | 54.67 | NA | 30.15 | 8.42 | 31.06 |
|  Reserves/ Adjusted NPAs | 54.67 | NA | 30.15 | 8.42 | 31.06 |
|  Reserves/ Nonperforming Loans | 54.67 | NA | 30.15 | 8.42 | 31.06 |
|  Reserves/ Adj NPLs | 54.67 | NA | 30.15 | 8.42 | 31.06 |
|  Loan Loss Reserves/ Gross Loans | 0.22 | 0.21 | 0.20 | 0.18 | 0.18 |
|  Reserves/ NPAs + Lns 90 PD (Bank, BHC only) | 54.67 | NA | 30.15 | 8.42 | 31.06 |
|  LLR/ Nonaccrual & 90PD + OREO + Reposs Assets | 54.67 | NA | 30.15 | 8.42 | 31.06 |
|  Equity + Reserves/ Assets | 20.92 | 21.15 | 19.34 | 17.75 | 18.26 |
|  OREO/ Assets | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Net Chargeoffs/ Avg Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Loan Loss Prov/ NCOs | NA | NA | NA | NA | NA |
|  PD+Naccrl+Rest+Frclsd/Lns+Frclsd | 0.41 | 0.00 | 0.66 | 2.16 | 0.58 |
|  Restructured Loans/ Loans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
|  Total Loan & Lease NCOs | 0 | 0 | 0 | 0 | 0 |
|  PD+Naccrl+Rest+Frclsd | 75 | 0 | 136 | 487 | 132 |
|  Restructured Loans & Leases | 0 | 0 | 0 | 0 | 0 |

---

Source: S&P Global Market Intelligence

------

EXHIBIT I-9

Elberton Federal Savings & Loan Association

Deposit Information

------

Exhibit I-9

Elberton Federal Savings & Loan Association

Deposit Information

(Dollars in Thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| End of Period Date | **12/31/2018** | **12/31/2019** | **12/31/2020** | **12/31/2021** | **9/30/2022** |
|  **Transaction & Nontransaction Accounts** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tr Acct: Indiv,Prtnshp, & Corps | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tr Acct: US Government | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tr Acct: State & Political Subd | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tr Acct: Cmrl Bks&Oth Dep in US | 0 | 0 | 0 | 0 | 0 |
|  Total Transaction Accts | 0 | 0 | 0 | 0 | 0 |
|  Total Demand Deposits | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NTr Acct: Indiv, Prtnshp, & Corps | 15110 | 14836 | 16456 | 19829 | 20152 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NTr Acct: US Government | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NTr Acct: State & Political Subd | 407 | 490 | 1476 | 1479 | 479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NTr Acct: Cmrl Bk&Oth Dep in US | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NTr Acct: Tot Bnks-Forgn Cntries | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NTr Acct: Foreign Governments | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NTr Acct: Tot Forgn Bnks&Govts | 0 | 0 | 0 | 0 | 0 |
|  Total Nontransaction Accts | 15517 | 15326 | 17932 | 21308 | 20631 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Tot Time&Savings Dep | 15517 | 15326 | 17932 | 21308 | 20631 |
|  Memo: Tot Dom Deposits | 15517 | 15326 | 17932 | 21308 | 20631 |
|  **Memo: Nontransaction Accounts** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Money Market Deposit Account | 8194 | 7793 | 8168 | 10183 | 10054 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Savings Deposits | 1171 | 1118 | 1256 | 1626 | 1656 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retail Time Deposits | 5652 | 5915 | 7134 | 8125 | 7847 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Total Time Dep $100k-$250K | 1947 | 2814 | 3984 | 4701 | 4553 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Total Time Dep > $250K | 500 | 500 | 1374 | 1374 | 1074 |
|  Jumbo Time Deposits | 500 | 500 | 1374 | 1374 | 1074 |
|  **Memoranda** |  |  |  |  |  |
|  **Brokered Deposits** |  |  |  |  |  |
|  Brokered Deposits | 0 | 0 | 0 | 0 | 0 |
|  Memo: Brokered Deposits > $250K, > 1 Year | 0 | 0 | 0 | 0 | 0 |
|  Memo: Brok Dep >=$100K<=1yr (historical) | NA | NA | NA | NA | NA |
|  Memo: Brokered Deposits <= $250K, <= 1 Year | 0 | 0 | 0 | 0 | 0 |
|  Memo: Brokered Deposits 1 Year | 0 | 0 | 0 | 0 | 0 |
|  **Time Deposits** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Retail CDs Mat/Reprc <=3 Mos | 1811 | 1822 | 1328 | 1406 | 1505 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Rtail CDs Mat/Repr 3-12 Months | 2152 | 1015 | 1521 | 1227 | 1967 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Rtail CDs Mat/Repr 1-3 Years | 778 | 1382 | 1059 | 3035 | 3193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Rtail CDs Mat/Repr > 3 Yrs | 911 | 1696 | 3226 | 2457 | 1182 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Retail CDs Maturity or Repricing > 1 Year | 1689 | 3078 | 4285 | 5492 | 4375 |
|  Retail Time CDs <$100K | 3705 | 3101 | 3150 | 3424 | 3294 |
|  Fixed & Floating Rate Rtail CDs Mat <=1 Yr | 3713 | 2586 | 2849 | 2633 | 3472 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Jmbo CDs Mat/Repr<=3 Mos | 0 | 0 | 0 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Jmbo CDs Mat/Repr 3-12 Months | 0 | 0 | 0 | 274 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Jmbo CDs Mat/Repr 1-3 Years | 0 | 0 | 274 | 500 | 1074 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Jmbo CDs Mat/Repr>3 Yrs | 500 | 500 | 1100 | 600 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Memo: Jumbo CDs Maturity or Repricing > 1 Year | 500 | 500 | 1374 | 1100 | 1074 |
|  All Jumbo Certificates of Deposits > $100K | 2447 | 3314 | 5358 | 6075 | 5627 |
|  Memo: Time Dep >$250K<=1yr | 0 | 0 | 0 | 274 | 0 |

---

Source: S&P Global Market Intelligence

------

EXHIBIT II-1

Elberton Federal Savings & Loan Association

Historical Interest Rates

------

Exhibit II-1

Historical Interest Rates(1)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Year/Qtr. Ended | Year/Qtr. Ended | Prime<br>Rate | 90 Day<br>T-Note | One Year<br>T-Note | 10 Year<br>T-Note |
|  2013: | Quarter 1 | 3.25% | 0.07% | 0.14% | 1.87% |
|  | Quarter 2 | 3.25% | 0.04% | 0.15% | 2.52% |
|  | Quarter 3 | 3.25% | 0.02% | 0.10% | 2.64% |
|  | Quarter 4 | 3.25% | 0.07% | 0.13% | 3.04% |
|  2014: | Quarter 1 | 3.25% | 0.05% | 0.13% | 2.73% |
|  | Quarter 2 | 3.25% | 0.04% | 0.11% | 2.53% |
|  | Quarter 3 | 3.25% | 0.02% | 0.13% | 2.52% |
|  | Quarter 4 | 3.25% | 0.04% | 0.25% | 2.17% |
|  2015: | Quarter 1 | 3.25% | 0.03% | 0.26% | 1.94% |
|  | Quarter 2 | 3.25% | 0.01% | 0.28% | 2.35% |
|  | Quarter 3 | 3.25% | 0.00% | 0.33% | 2.06% |
|  | Quarter 4 | 3.50% | 0.16% | 0.65% | 2.27% |
|  2016: | Quarter 1 | 3.50% | 0.21% | 0.59% | 1.78% |
|  | Quarter 2 | 3.50% | 0.26% | 0.45% | 1.49% |
|  | Quarter 3 | 3.50% | 0.29% | 0.59% | 1.60% |
|  | Quarter 4 | 3.75% | 0.51% | 0.85% | 2.45% |
|  2017: | Quarter 1 | 4.00% | 0.76% | 1.03% | 2.40% |
|  | Quarter 2 | 4.25% | 1.03% | 1.24% | 2.31% |
|  | Quarter 3 | 4.25% | 1.06% | 1.31% | 2.33% |
|  | Quarter 4 | 4.50% | 1.39% | 1.76% | 2.40% |
|  2018: | Quarter 1 | 4.75% | 1.73% | 2.09% | 2.74% |
|  | Quarter 2 | 5.00% | 1.93% | 2.33% | 2.85% |
|  | Quarter 3 | 5.25% | 2.19% | 2.59% | 3.05% |
|  | Quarter 4 | 5.50% | 2.45% | 2.63% | 2.69% |
|  2019: | Quarter 1 | 5.50% | 2.40% | 2.40% | 2.41% |
|  | Quarter 2 | 5.00% | 2.12% | 1.92% | 2.00% |
|  | Quarter 3 | 4.75% | 1.88% | 1.75% | 1.68% |
|  | Quarter 4 | 4.75% | 1.55% | 1.59% | 1.92% |
|  2020: | Quarter 1 | 3.25% | 0.11% | 0.17% | 0.70% |
|  | Quarter 2 | 3.25% | 0.16% | 0.16% | 0.66% |
|  | Quarter 3 | 3.25% | 0.10% | 0.12% | 0.69% |
|  | Quarter 4 | 3.25% | 0.09% | 0.10% | 0.93% |
|  2021: | Quarter 1 | 3.25% | 0.03% | 0.07% | 1.74% |
|  | Quarter 2 | 3.25% | 0.05% | 0.07% | 1.45% |
|  | Quarter 3 | 3.25% | 0.04% | 0.09% | 1.52% |
|  | Quarter 4 | 3.25% | 0.06% | 0.39% | 1.52% |
|  2022: | Quarter 1 | 3.50% | 0.52% | 1.63% | 2.32% |
|  | Quarter 2 | 4.75% | 1.72% | 2.80% | 2.98% |
|  | Quarter 3 | 6.25% | 3.33% | 4.05% | 3.83% |
|  As of October 28, 2022 | As of October 28, 2022 | 6.25% | 4.06% | 4.55% | 4.02% |

---

(1) End of period data.

Sources: S&P Global Market Intelligence.

------

EXHIBIT II-2

Elberton Federal Savings & Loan Association

Market Area Demographic/Economic Information

------

**Demographic Detail: US** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Base 2010*** | ***Current 2022*** | ***Projected 2027*** | ***% Change<br>2010-2022*** | ***% Change<br>2022-2027*** |
|  Total Population (actual) | 308745538 | 334279739 | 344999336 | 8.27 | 3.21 |
|  0-14 Age Group (%) | 19.83 | 18.15 | 17.57 | (0.89) | (0.11) |
|  15-34 Age Group (%) | 27.43 | 26.61 | 25.79 | 5.05 | (0.00) |
|  35-54 Age Group (%) | 27.88 | 25.00 | 24.91 | (2.92) | 2.84 |
|  55-69 Age Group (%) | 15.84 | 18.49 | 18.78 | 26.34 | 4.83 |
|  70+ Age Group (%) | 9.01 | 11.74 | 12.95 | 41.06 | 13.81 |
|  Median Age (actual) | 37.1 | 39.1 | 40.1 | 5.39 | 2.56 |
|  Female Population (actual) | 156964212 | 169667478 | 175071121 | 8.09 | 3.18 |
|  Male Population (actual) | 151781326 | 164612261 | 169928215 | 8.45 | 3.23 |
|  Population Density (#/ sq miles) | 87.50 | 94.74 | 97.78 | 8.27 | 3.21 |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
|  Black (%) | 12.61 | 12.94 | 13.12 | 11.12 | 4.64 |
|  Asian (%) | 4.75 | 5.99 | 6.52 | 36.45 | 12.29 |
|  White (%) | 72.41 | 69.04 | 67.60 | 3.23 | 1.06 |
|  Hispanic (%) | 16.35 | 19.26 | 20.43 | 27.52 | 9.49 |
|  Pacific Islander (%) | 0.17 | 0.20 | 0.22 | 26.15 | 9.26 |
|  American Indian/Alaska Native (%) | 0.95 | 0.99 | 1.01 | 13.31 | 4.61 |
|  Multiple races (%) | 2.92 | 3.65 | 3.95 | 35.25 | 11.84 |
|  Other (%) | 6.19 | 7.19 | 7.59 | 25.74 | 8.96 |
|  Total Households (actual) | 116716292 | 127073679 | 131388249 | 8.87 | 3.40 |
|  < $25K Households (%) | NA | 16.38 | 14.47 | NA | (8.66) |
|  $25-49K Households (%) | NA | 19.06 | 17.24 | NA | (6.47) |
|  $50-99K Households (%) | NA | 28.81 | 27.49 | NA | (1.31) |
|  $100-$199K Households (%) | NA | 24.79 | 26.66 | NA | 11.19 |
|  $200K+ Households (%) | NA | 10.97 | 14.14 | NA | 33.28 |
|  Average Household Income ($) | NA | 103625 | 116275 | NA | 12.21 |
|  Median Household Income ($) | NA | 72465 | 81230 | NA | 12.10 |
|  Per Capita Income ($) | NA | 40370 | 45347 | NA | 12.33 |
|  Total Owner Occupied Housing Units (actual) | 75986074 | 82867360 | 85688240 | 9.06 | 3.40 |
|  Renter Occupied Housing Units (actual) | 40730218 | 44206319 | 45700009 | 8.53 | 3.38 |
|  Vacant Occupied Housing Units (actual) | 14988438 | 16020218 | 16277380 | 6.88 | 1.61 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

**Demographic Detail: Georgia** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Base 2010*** | ***Current 2022*** | ***Projected 2027*** | ***% Change<br>2010-2022*** | ***% Change<br>2022-2027*** |
|  Total Population (actual) | 9687653 | 10868503 | 11348634 | 12.19 | 4.42 |
|  0-14 Age Group (%) | 21.38 | 18.95 | 18.07 | (0.59) | (0.42) |
|  15-34 Age Group (%) | 28.14 | 27.54 | 26.96 | 9.82 | 2.22 |
|  35-54 Age Group (%) | 28.79 | 25.84 | 25.28 | 0.72 | 2.13 |
|  55-69 Age Group (%) | 14.72 | 17.52 | 18.14 | 33.54 | 8.13 |
|  70+ Age Group (%) | 6.98 | 10.15 | 11.55 | 63.20 | 18.81 |
|  Median Age (actual) | 35.3 | 37.7 | 38.8 | 6.80 | 2.92 |
|  Female Population (actual) | 4958482 | 5583103 | 5827194 | 12.60 | 4.37 |
|  Male Population (actual) | 4729171 | 5285400 | 5521440 | 11.76 | 4.47 |
|  Population Density (#/ sq miles) | 168.72 | 189.29 | 197.65 | 12.19 | 4.42 |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
|  Black (%) | 30.46 | 32.22 | 33.12 | 18.68 | 7.32 |
|  Asian (%) | 3.25 | 4.49 | 5.00 | 55.08 | 16.32 |
|  White (%) | 59.74 | 55.40 | 53.44 | 4.04 | 0.73 |
|  Hispanic (%) | 8.81 | 10.34 | 10.96 | 31.67 | 10.64 |
|  Pacific Islander (%) | 0.07 | 0.08 | 0.09 | 30.87 | 10.87 |
|  American Indian/Alaska Native (%) | 0.33 | 0.36 | 0.37 | 20.96 | 7.39 |
|  Multiple races (%) | 2.14 | 2.82 | 3.11 | 47.88 | 14.97 |
|  Other (%) | 4.01 | 4.63 | 4.88 | 29.39 | 10.05 |
|  Total Households (actual) | 3585584 | 4039114 | 4225216 | 12.65 | 4.61 |
|  < $25K Households (%) | NA | 17.43 | 15.43 | NA | (7.39) |
|  $25-49K Households (%) | NA | 20.26 | 18.38 | NA | (5.10) |
|  $50-99K Households (%) | NA | 29.52 | 28.43 | NA | 0.76 |
|  $100-$199K Households (%) | NA | 23.32 | 25.48 | NA | 14.30 |
|  $200K+ Households (%) | NA | 9.48 | 12.28 | NA | 35.57 |
|  Average Household Income ($) | NA | 96983 | 108676 | NA | 12.06 |
|  Median Household Income ($) | NA | 68363 | 75593 | NA | 10.58 |
|  Per Capita Income ($) | NA | 36969 | 41460 | NA | 12.15 |
|  Total Owner Occupied Housing Units (actual) | 2354402 | 2664586 | 2789829 | 13.17 | 4.70 |
|  Renter Occupied Housing Units (actual) | 1231182 | 1374528 | 1435387 | 11.64 | 4.43 |
|  Vacant Occupied Housing Units (actual) | 503217 | 533249 | 538936 | 5.97 | 1.07 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

**Demographic Detail: Elbert, GA** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Base 2010 | Current 2022 | Projected 2027 | % Change<br>2010-2022 | % Change<br>2022-2027 |
|  Total Population (actual) | 20166 | 19384 | 19626 | (3.88) | 1.25 |
|  0-14 Age Group (%) | 19.18 | 18.02 | 17.62 | (9.67) | (0.97) |
|  15-34 Age Group (%) | 23.81 | 23.10 | 22.90 | (6.77) | 0.38 |
|  35-54 Age Group (%) | 26.83 | 22.54 | 22.11 | (19.26) | (0.69) |
|  55-69 Age Group (%) | 18.28 | 20.85 | 20.90 | 9.60 | 1.51 |
|  70+ Age Group (%) | 11.90 | 15.50 | 16.47 | 25.22 | 7.59 |
|  Median Age (actual) | 40.7 | 43.1 | 43.3 | 5.90 | 0.46 |
|  Female Population (actual) | 10510 | 10154 | 10263 | (3.39) | 1.07 |
|  Male Population (actual) | 9656 | 9230 | 9363 | (4.41) | 1.44 |
|  Population Density (#/ sq miles) | 57.45 | 55.22 | 55.91 | (3.88) | 1.25 |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
|  Black (%) | 29.51 | 28.15 | 27.58 | (8.30) | (0.81) |
|  Asian (%) | 0.60 | 0.91 | 1.04 | 45.45 | 15.91 |
|  White (%) | 65.94 | 65.27 | 64.99 | (4.85) | 0.81 |
|  Hispanic (%) | 4.80 | 6.50 | 7.21 | 30.20 | 12.47 |
|  Pacific Islander (%) | 0.02 | 0.04 | 0.04 | 40.00 | 0.00 |
|  American Indian/Alaska Native (%) | 0.24 | 0.36 | 0.40 | 40.82 | 14.49 |
|  Multiple races (%) | 1.01 | 1.69 | 1.97 | 60.29 | 18.04 |
|  Other (%) | 2.68 | 3.60 | 3.99 | 29.07 | 12.48 |
|  Total Households (actual) | 8063 | 7862 | 7999 | (2.49) | 1.74 |
|  < $25K Households (%) | NA | 29.67 | 27.44 | NA | (5.92) |
|  $25-49K Households (%) | NA | 28.44 | 26.25 | NA | (6.08) |
|  $50-99K Households (%) | NA | 24.41 | 26.20 | NA | 9.22 |
|  $100-$199K Households (%) | NA | 15.57 | 17.10 | NA | 11.76 |
|  $200K+ Households (%) | NA | 1.91 | 3.00 | NA | 60.00 |
|  Average Household Income ($) | NA | 59251 | 64668 | NA | 9.14 |
|  Median Household Income ($) | NA | 42810 | 46414 | NA | 8.42 |
|  Per Capita Income ($) | NA | 24382 | 26736 | NA | 9.65 |
|  Total Owner Occupied Housing Units (actual) | 5727 | 5606 | 5709 | (2.11) | 1.84 |
|  Renter Occupied Housing Units (actual) | 2336 | 2256 | 2290 | (3.42) | 1.51 |
|  Vacant Occupied Housing Units (actual) | 1520 | 1685 | 1687 | 10.86 | 0.12 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

EXHIBIT III-1

Elberton Federal Savings & Loan Association

General Characteristics of Publicly-Traded Savings Institutions

------

Exhibit III-1

Publicly-Traded Savings Institutions General Characteristics

As of September 30, 2022 or the Most Recent Date Available

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  | |  | |  |  | As of<br>October 28, 2022 | As of<br>October 28, 2022 |
| Ticker | Financial Institution | Exchange | Region | City | State | Total<br>Assets |  | Offices | Fiscal<br>Mth End | Conv.<br>Date | Stock<br>Price | Market<br>Value |
|  |  |  |  |  |  | ($Mil) |  |  |  |  | ($) | ($Mil) |
|  **<u>Fully-Converted Institutions</u>** | **<u>Fully-Converted Institutions</u>** | **<u>Fully-Converted Institutions</u>** | **<u>Fully-Converted Institutions</u>** | **<u>Fully-Converted Institutions</u>** |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | NASDAQCM | MW | Greenfield | WI | 536 | (1) | 6 | Dec | 1/8/19 | 10.05 | 64 |
|  AFBI | Affinity Bancshares, Inc. | NASDAQCM | SE | Covington | GA | 776 |  | 3 | Dec | 4/27/17 | 14.41 | 96 |
|  AX | Axos Financial, Inc. | NYSE | WE | Las Vegas | NV | 18407 |  | 1 | Jun | 3/14/05 | 39.20 | 2352 |
|  BLFY | Blue Foundry Bancorp | NASDAQGS | MA | Rutherford | NJ | 2012 |  | 19 | Dec | 7/15/21 | 12.18 | 316 |
|  BYFC | Broadway Financial Corporation | NASDAQCM | WE | Los Angeles | CA | 1170 |  | 3 | Dec | 1/8/96 | 1.12 | 82 |
|  CFFN | Capitol Federal Financial, Inc. | NASDAQGS | MW | Topeka | KS | 9625 |  | 54 | Sep | 3/31/99 | 8.00 | 1086 |
|  CARV | Carver Bancorp, Inc. | NASDAQCM | MA | New York | NY | 691 | (1) | 7 | Mar | 10/24/94 | 4.61 | 19 |
|  CLST | Catalyst Bancorp, Inc. | NASDAQCM | SW | Opelousas | LA | 283 |  | 6 | Dec | 10/12/21 | 13.05 | 64 |
|  CNNB | Cincinnati Bancorp, Inc. | NASDAQCM | MW | Cincinnati | OH | 282 | (1) | 5 | Dec | 10/14/15 | 14.76 | 44 |
|  CULL | Cullman Bancorp, Inc. | NASDAQCM | SE | Cullman | AL | 384 | (1) | 4 | Dec | 10/8/09 | 10.97 | 81 |
|  ECBK | ECB Bancorp, Inc. | NASDAQCM | NE | Everett | MA | 782 | (1) | 2 | Dec | 7/27/22 | 15.79 | 145 |
|  ESSA | ESSA Bancorp, Inc. | NASDAQGS | MA | Stroudsburg | PA | 1862 |  | 22 | Sep | 4/3/07 | 20.57 | 202 |
|  FFBW | FFBW, Inc. | NASDAQCM | MW | Brookfield | WI | 314 |  | 7 | Dec | 10/10/17 | 11.87 | 69 |
|  FNWB | First Northwest Bancorp | NASDAQGM | WE | Port Angeles | WA | 2091 |  | 14 | Dec | 1/29/15 | 15.35 | 139 |
|  FSBW | FS Bancorp, Inc. | NASDAQCM | WE | Mountlake Terrace | WA | 2652 |  | 23 | Dec | 7/9/12 | 28.19 | 214 |
|  GBNY | Generations Bancorp NY, Inc. | NASDAQCM | MA | Seneca Falls | NY | 370 | (1) | 10 | Dec | 7/10/06 | 10.87 | 26 |
|  HONE | HarborOne Bancorp, Inc. | NASDAQGS | NE | Brockton | MA | 4988 |  | 34 | Dec | 6/29/16 | 15.10 | 708 |
|  HIFS | Hingham Institution for Savings | NASDAQGM | NE | Hingham | MA | 4062 |  | 8 | Dec | 12/13/88 | 248.89 | 534 |
|  HMNF | HMN Financial, Inc. | NASDAQGM | MW | Rochester | MN | 1048 |  | 14 | Dec | 6/30/94 | 23.00 | 99 |
|  HFBL | Home Federal Bancorp, Inc. of Louisiana | NASDAQCM | SW | Shreveport | LA | 582 |  | 10 | Jun | 1/18/05 | 18.91 | 56 |
|  IROQ | IF Bancorp, Inc. | NASDAQCM | MW | Watseka | IL | 807 |  | 8 | Jun | 7/7/11 | 19.10 | 60 |
|  KRNY | Kearny Financial Corp. | NASDAQGS | MA | Fairfield | NJ | 7890 |  | 45 | Jun | 2/23/05 | 10.68 | 701 |
|  MGYR | Magyar Bancorp, Inc. | NASDAQGM | MA | New Brunswick | NJ | 799 |  | 7 | Sep | 1/23/06 | 12.46 | 88 |
|  MSVB | Mid-Southern Bancorp, Inc. | NASDAQCM | MW | Salem | IN | 265 |  | 3 | Dec | 4/8/98 | 12.76 | 37 |
|  NYCB | New York Community Bancorp, Inc. | NYSE | MA | Hicksville | NY | 62956 |  | 237 | Dec | 11/23/93 | 9.26 | 4316 |
|  NECB | Northeast Community Bancorp, Inc. | NASDAQCM | MA | White Plains | NY | 1285 |  | 12 | Dec | 7/5/06 | 13.05 | 195 |
|  NFBK | Northfield Bancorp, Inc. (Staten Island, NY) | NASDAQGS | MA | Woodbridge | NJ | 5670 |  | 38 | Dec | 11/7/07 | 15.89 | 761 |
|  NSTS | NSTS Bancorp, Inc. | NASDAQCM | MW | Waukegan | IL | 274 | (1) | 3 | Dec | 1/18/22 | 10.83 | 58 |
|  PBBK | PB Bankshares, Inc. | NASDAQCM | MA | Coatesville | PA | 377 |  | 4 | Dec | 7/14/21 | 12.52 | 32 |
|  PDLB | Ponce Financial Group, Inc. | NASDAQGM | MA | Bronx | NY | 2158 |  | 14 | Dec | 9/29/17 | 9.27 | 214 |
|  PVBC | Provident Bancorp, Inc. | NASDAQCM | NE | Amesbury | MA | 1788 | (1) | 7 | Dec | 7/15/15 | 12.93 | 225 |
|  PROV | Provident Financial Holdings, Inc. | NASDAQGS | WE | Riverside | CA | 1246 |  | 14 | Jun | 6/27/96 | 13.70 | 99 |
|  PFS | Provident Financial Services, Inc. | NYSE | MA | Jersey City | NJ | 13604 |  | 96 | Dec | 1/15/03 | 22.40 | 1684 |
|  RVSB | Riverview Bancorp, Inc. | NASDAQGS | WE | Vancouver | WA | 1685 |  | 18 | Mar | 10/26/93 | 6.87 | 148 |
|  SBT | Sterling Bancorp, Inc. (Southfield, MI) | NASDAQCM | MW | Southfield | MI | 2448 |  | 28 | Dec | 11/16/17 | 6.40 | 325 |
|  TCBC | TC Bancshares, Inc. | NASDAQCM | SE | Thomasville | GA | 431 | (1) | 2 | Dec | 7/20/21 | 14.97 | 68 |
|  TBNK | Territorial Bancorp Inc. | NASDAQGS | WE | Honolulu | HI | 2165 |  | 30 | Dec | 7/10/09 | 20.68 | 182 |
|  TCBS | Texas Community Bancshares, Inc. | NASDAQCM | SW | Mineola | TX | 374 | (1) | 6 | Dec | 7/14/21 | 15.36 | 46 |
|  TCBX | Third Coast Bancshares, Inc. | NASDAQGS | SW | Humble | TX | 3517 |  | 15 | Dec | 11/8/21 | 19.54 | 263 |
|  TSBK | Timberland Bancorp, Inc. | NASDAQGM | WE | Hoquiam | WA | 1861 |  | 23 | Sep | 1/12/98 | 29.30 | 241 |
|  TBK | Triumph Bancorp, Inc. | NASDAQGS | SW | Dallas | TX | 5642 |  | 64 | Dec | 11/6/14 | 51.30 | 1243 |
|  TRST | TrustCo Bank Corp NY | NASDAQGS | MA | Glenville | NY | 6079 |  | 144 | Dec | NA | 37.35 | 712 |
|  WSBF | Waterstone Financial, Inc. | NASDAQGS | MW | Wauwatosa | WI | 1975 |  | 16 | Dec | 10/4/05 | 17.20 | 384 |
|  WNEB | Western New England Bancorp, Inc. | NASDAQGS | NE | Westfield | MA | 2579 |  | 27 | Dec | 12/27/01 | 8.80 | 196 |
|  WMPN | William Penn Bancorporation | NASDAQCM | MA | Bristol | PA | 851 |  | 14 | Jun | 4/15/08 | 11.39 | 156 |
|  WSFS | WSFS Financial Corporation | NASDAQGS | MA | Wilmington | DE | 19985 |  | 98 | Dec | 11/26/86 | 46.32 | 2869 |
|  **<u>Mutual Holding Companies</u>** | **<u>Mutual Holding Companies</u>** | **<u>Mutual Holding Companies</u>** | **<u>Mutual Holding Companies</u>** | **<u>Mutual Holding Companies</u>** |  |  |  |  |  |  |  |  |
|  BSBK | Bogota Financial Corp. | NASDAQCM | MA | Teaneck | NJ | 946 |  | 8 | Dec | 1/15/20 | 11.16 | 152 |
|  CFSB | CFSB Bancorp, Inc. | NASDAQCM | NE | Quincy | MA | 361 |  | 4 | Jun | 1/12/22 | 8.87 | 56 |
|  FSEA | First Seacoast Bancorp, Inc. | NASDAQCM | NE | Dover | NH | 510 | (1) | 5 | Dec | 7/16/19 | 10.45 | 61 |
|  GCBC | Greene County Bancorp, Inc. | NASDAQCM | MA | Catskill | NY | 2584 |  | 19 | Jun | 12/30/98 | 67.96 | 579 |
|  OFED | Oconee Federal Financial Corp. | NASDAQCM | SE | Seneca | SC | 545 | (1) | 8 | Jun | 1/13/11 | 26.00 | 146 |
|  PBFS | Pioneer Bancorp, Inc. | NASDAQCM | MA | Albany | NY | 1964 | (1) | 23 | Jun | 7/17/19 | 10.20 | 257 |
|  RBKB | Rhinebeck Bancorp, Inc. | NASDAQCM | MA | Poughkeepsie | NY | 1293 |  | 19 | Dec | 1/16/19 | 10.10 | 110 |
|  KFFB | Kentucky First Federal Bancorp | NASDAQGM | MW | Hazard | KY | 328 | (1) | 7 | Jun | 3/2/05 | 7.00 | 57 |
|  LSBK | Lake Shore Bancorp, Inc. | NASDAQGM | MA | Dunkirk | NY | 696 |  | 12 | Dec | 4/3/06 | 13.30 | 74 |
|  CLBK | Columbia Financial, Inc. | NASDAQGS | MA | Fair Lawn | NJ | 10012 |  | 66 | Dec | 4/19/18 | 19.38 | 2130 |
|  TFSL | TFS Financial Corporation | NASDAQGS | MW | Cleveland | OH | 15790 |  | 37 | Sep | 4/20/07 | 14.23 | 3946 |

---

(1) Data as of June 30, 2022.

Source: S&P Global Market Intelligence.

------

Exhibit III-2

Elberton Federal Savings & Loan Association

Peer Group Market Area Comparative Analysis

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | | | | | | Per Capita<br>Income | Per Capita<br>Income | Deposit |
|  |  | Population (000s) | Population (000s) | Population (000s) | 2017-2022 | 2022-2027 | 2022 | % State | Market |
| Institution | County | 2017 | 2022 | 2027(1) | % Change | % Change | ($) | Average | Share(2) |
|  1895 Bancorp of Wisconsin, Inc. | Milwaukee, WI | 959203 | 952910 | 964911 | -0.1% | 0.3% | 33802 | 87.6% | 0.42% |
|  Catalyst Bancorp, Inc. | Saint Landry, LA | 84023 | 81060 | 80113 | -0.7% | -0.2% | 23536 | 73.8% | 10.40% |
|  Cincinnati Bancorp, Inc. | Hamilton, OH | 809968 | 827384 | 842696 | 0.4% | 0.4% | 42844 | 117.0% | 0.14% |
|  Cullman Bancorp, Inc. | Cullman, AL | 82808 | 87325 | 92047 | 1.1% | 1.1% | 28367 | 87.4% | 12.97% |
|  FFBW, Inc. | Waukesha, WI | 398446 | 413281 | 425756 | 0.7% | 0.6% | 52090 | 135.0% | 0.91% |
|  Generations Bancorp NY, Inc. | Seneca, NY | 34643 | 35424 | 36947 | 0.4% | 0.8% | 34238 | 72.9% | 19.93% |
|  Mid-Southern Bancorp, Inc. | Washington, IN | 27752 | 28465 | 28981 | 0.5% | 0.4% | 28395 | 82.4% | 27.78% |
|  PB Bankshares, Inc. | Chester, PA | 520584 | 540168 | 560198 | 0.7% | 0.7% | 59846 | 147.9% | 1.00% |
|  TC Bancshares, Inc. | Thomas, GA | 45217 | 44323 | 44903 | -0.4% | 0.3% | 31410 | 85.0% | 12.42% |
|  Texas Community Bancshares, Inc. | Wood, TX | 44220 | 46659 | 48791 | 1.1% | 0.9% | 33416 | 91.6% | 17.80% |
|  | **Averages:** | **300686** | **305700** | **312534** | **0.4%** | **0.5%** | **36794** | **98.0%** | **10.38%** |
|  | **Medians:** | **83416** | **84193** | **86080** | **0.5%** | **0.5%** | **33609** | **87.5%** | **11.41%** |
|  **Elberton FS&LA** | **Elbert, GA** | **19229** | **19384** | **19626** | **0.2%** | **0.2%** | **24382** | **66.0%** | **4.40%** |

---

(1) Projected population.

(2) Total institution deposits in headquarters county as percent of total county deposits as of June 30, 2022.
Sources: S&P Global Market Intelligence, FDIC.

------

***RP<sup>®</sup> Financial, LC.***

Exhibit IV-1A

Weekly Bank and Thrift Market Line - Part One

Prices As of October 28, 2022

---

| | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Market Capitalization | Market Capitalization | Market Capitalization | Price Change Data | Price Change Data | Price Change Data | Price Change Data | Price Change Data | Price Change Data | Current Per Share Financials | Current Per Share Financials | Current Per Share Financials | Current Per Share Financials | Current Per Share Financials |
|  |  | Price/<br>Share(1) | Shares<br>Outstanding | Market<br>Capitalization | 52 Week (1) | 52 Week (1) | | % Change From | % Change From | % Change From | LTM<br>EPS (3) | LTM Core<br>EPS (3) | BV/<br>Share | TBV/<br>Share (4) | Assets/<br>Share |
|  |  | Price/<br>Share(1) | Shares<br>Outstanding | Market<br>Capitalization | High | Low |<br>Last Wk | Last Wk | 52 Wks (2) | MRY (2) | LTM<br>EPS (3) | LTM Core<br>EPS (3) | BV/<br>Share | TBV/<br>Share (4) | Assets/<br>Share |
|  |  | ($) | (000) | ($Mil) | ($) | ($) | ($) | (%) | (%) | (%) | ($) | ($) | ($) | ($) | ($) |
|  **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** | **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** | **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Average | 21.68 | 31330 | 470.5 | 31.20 | 19.70 | 21.68 | 3.44 | -11.06 | -11.59 | 1.75 | 2.12 | 20.30 | 19.31 | 183.30 |
|  | Median | 14.06 | 9100 | 169.8 | 15.86 | 12.42 | 14.06 | 2.31 | -10.01 | -8.66 | 1.04 | 1.09 | 15.65 | 15.42 | 117.16 |
|  **Financial Institutions, Fully Converted, Not Under Acquisition (46)** | **Financial Institutions, Fully Converted, Not Under Acquisition (46)** | **Financial Institutions, Fully Converted, Not Under Acquisition (46)** |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | 10.05 | 6373 | 64 | 11.75 | 9.71 | 10.05 | -1.28 | -9.62 | -8.55 | NA | NA | 12.71 | 12.71 | 84.05 |
|  AFBI | Affinity Bancshares, Inc. | 14.41 | 6675 | 95.6 | 18.00 | 13.71 | 14.41 | 2.27 | 0.33 | -6.43 | 0.99 | 1.09 | 17.51 | 14.68 | 114.86 |
|  AX | Axos Financial, Inc. | 39.20 | 59999 | 2352 | 62.44 | 33.91 | 39.20 | 12.58 | -24.77 | -29.89 | 3.95 | 4.56 | 28.35 | 25.68 | 306.79 |
|  BLFY | Blue Foundry Bancorp | 12.18 | 25965 | 316.3 | 15.47 | 11.01 | 12.18 | 3.13 | -11.99 | -16.75 | -0.68 | -0.60 | 14.11 | 14.09 | 77.49 |
|  BYFC | Broadway Financial Corporation | 1.12 | 73437 | 53.4 | 3.50 | 0.88 | 1.12 | 3.70 | -61.90 | -51.52 | 0.02 | 0.06 | 1.83 | 1.44 | 16.67 |
|  CFFN | Capitol Federal Financial, Inc. | 8.00 | 135735 | 1085.9 | 12.79 | 7.19 | 8.00 | -3.26 | -31.91 | -29.39 | 0.62 | 0.63 | 7.90 | 7.81 | 70.91 |
|  CARV | Carver Bancorp, Inc. | 4.61 | 4225 | 19.5 | 15.73 | 3.75 | 4.61 | 19.12 | -68.49 | -46.02 | 0.09 | 0.09 | 5.89 | 5.89 | 163.54 |
|  CLST | Catalyst Bancorp, Inc. | 13.05 | 4872 | 63.6 | 14.09 | 12.03 | 13.05 | 0.31 | -4.95 | -4.54 | NA | NA | 17.47 | 17.47 | 57.67 |
|  CNNB | Cincinnati Bancorp, Inc. | 14.76 | 2965 | 43.8 | 16.26 | 13.75 | 14.76 | 1.65 | 0.48 | 0.96 | 0.23 | 0.43 | 13.45 | 13.41 | 95.14 |
|  CULL | Cullman Bancorp, Inc. | 10.97 | 7406 | 81.2 | 12.97 | 10.40 | 10.97 | 2.05 | -13.96 | -10.67 | 0.34 | 0.52 | 13.33 | 13.33 | 51.85 |
|  ECBK | ECB Bancorp, Inc. | 15.79 | 9175 | 144.9 | 15.98 | 13.82 | 15.79 | 3.20 | 12.07 | 12.07 | NA | NA | NA | NA | 85.22 |
|  ESSA | ESSA Bancorp, Inc. | 20.57 | 9800 | 201.2 | 21.61 | 15.63 | 20.57 | 10.18 | 27.61 | 18.70 | 2.06 | 2.08 | 20.47 | 19.12 | 189.97 |
|  FFBW | FFBW, Inc. | 11.87 | 5788 | 68.7 | 13.40 | 11.50 | 11.87 | 0.34 | -0.67 | 0.59 | 0.34 | 0.34 | 13.96 | NA | 57.09 |
|  FNWB | First Northwest Bancorp | 15.35 | 9025 | 137.7 | 23.77 | 14.50 | 15.35 | 4.07 | -15.89 | -24.01 | 1.59 | 1.72 | 15.94 | 15.82 | 231.75 |
|  FSBW | FS Bancorp, Inc. | 28.19 | 7583 | 213.8 | 36.75 | 26.80 | 28.19 | 1.62 | -17.86 | -16.18 | 3.75 | 3.77 | 28.63 | 27.87 | 349.76 |
|  GBNY | Generations Bancorp NY, Inc. | 10.87 | 2429 | 26.4 | 13.50 | 10.87 | 10.87 | -1.33 | -7.09 | -8.77 | 0.61 | 0.73 | 16.05 | 15.42 | 152.20 |
|  HONE | HarborOne Bancorp, Inc. | 15.10 | 46916 | 708.4 | 15.45 | 12.82 | 15.10 | 13.62 | 5.59 | 1.75 | 0.95 | 0.98 | 12.49 | 11.04 | 100.27 |
|  HIFS | Hingham Institution for Savings | 248.89 | 2145 | 534 | 432.19 | 242.99 | 248.89 | 1.17 | -29.64 | -40.72 | 19.16 | 27.29 | 175.52 | 175.52 | 1893.41 |
|  HMNF | HMN Financial, Inc. | 23.00 | 4323 | 99.4 | 25.98 | 21.87 | 23.00 | 0.88 | -1.79 | -6.77 | 1.73 | NA | 20.02 | 19.84 | 242.38 |
|  HFBL | Home Federal Bancorp, Inc. of Louisiana | 18.91 | 2983 | 56.4 | 23.55 | 17.35 | 18.91 | -1.30 | -0.94 | -7.22 | 1.54 | 1.54 | 15.16 | 15.16 | 194.97 |
|  IROQ | IF Bancorp, Inc. | 19.10 | 3164 | 60.4 | 27.02 | 17.10 | 19.10 | 3.52 | -16.81 | -26.51 | 1.84 | 1.91 | 22.00 | 22.00 | 271.00 |
|  KRNY | Kearny Financial Corp. | 10.68 | 65621 | 675.7 | 13.89 | 10.05 | 10.68 | -1.84 | -20.89 | -19.40 | 0.93 | 0.95 | 12.88 | NA | 120.23 |
|  MGYR | Magyar Bancorp, Inc. | 12.46 | 7098 | 88.4 | 13.23 | 11.30 | 12.46 | 0.00 | 8.54 | 1.51 | 1.04 | 1.04 | 14.23 | 14.23 | 111.39 |
|  MSVB | Mid-Southern Bancorp, Inc. | 12.76 | 2870 | 36.6 | 15.50 | 12.76 | 12.76 | -5.22 | -14.99 | -14.93 | 0.68 | NA | 10.74 | 10.74 | 92.19 |
|  NYCB | New York Community Bancorp, Inc. | 9.26 | 466136 | 4316.4 | 13.57 | 8.17 | 9.26 | 9.07 | -26.80 | -24.16 | 1.25 | 1.29 | 13.39 | 8.19 | 135.06 |
|  NECB | Northeast Community Bancorp, Inc. | 13.05 | 14967 | 195.3 | 13.18 | 10.52 | 13.05 | 4.32 | 19.07 | 17.25 | 0.90 | 0.97 | 15.65 | 15.61 | 81.62 |
|  NFBK | Northfield Bancorp, Inc. (Staten Island, NY) | 15.89 | 47888 | 760.9 | 18.41 | 11.87 | 15.89 | 6.64 | -9.30 | -1.67 | 1.35 | 1.34 | 14.48 | 13.61 | 118.39 |
|  NSTS | NSTS Bancorp, Inc. | 10.83 | 5398 | 58.5 | 12.90 | 10.58 | 10.83 | 0.28 | -13.98 | -13.98 | NA | NA | 15.47 | 15.47 | 50.81 |
|  PBBK | PB Bankshares, Inc. | 12.52 | 2566 | 32.1 | 14.60 | 12.07 | 12.52 | 2.16 | -7.30 | -7.91 | 0.50 | 0.54 | 16.29 | 16.29 | 146.81 |
|  PDLB | Ponce Financial Group, Inc. | 9.27 | 23095 | 214.1 | 11.29 | 9.05 | 9.27 | -0.96 | -16.56 | -10.80 | 0.44 | NA | 11.85 | 11.85 | 88.43 |
|  PVBC | Provident Bancorp, Inc. | 12.93 | 17421 | 225.3 | 20.14 | 11.98 | 12.93 | 6.95 | -26.87 | -30.48 | 1.16 | 1.19 | 13.54 | 13.54 | 102.64 |
|  PROV | Provident Financial Holdings, Inc. | 13.70 | 7224 | 99.8 | 17.37 | 13.66 | 13.70 | -0.87 | -19.17 | -17.12 | 1.16 | 1.16 | 17.85 | 17.85 | 172.48 |
|  PFS | Provident Financial Services, Inc. | 22.40 | 75162 | 1683.6 | 26.20 | 19.18 | 22.40 | 8.69 | -9.82 | -7.51 | 2.18 | 2.24 | 20.64 | 14.49 | 180.99 |
|  RVSB | Riverview Bancorp, Inc. | 6.87 | 22943 | 157.6 | 8.22 | 6.08 | 6.87 | 4.89 | -6.02 | -10.66 | 0.89 | 0.89 | 6.84 | 5.56 | 73.44 |
|  SBT | Sterling Bancorp, Inc. (Southfield, MI) | 6.40 | 50816 | 325.2 | 7.26 | 5.18 | 6.40 | 4.40 | 22.61 | 11.30 | 0.41 | 0.25 | 6.60 | 6.60 | 49.27 |
|  TCBC | TC Bancshares, Inc. | 14.97 | 4526 | 67.8 | 15.15 | 12.00 | 14.97 | 2.35 | 7.73 | 12.16 | NA | NA | 17.46 | 17.46 | 95.30 |
|  TBNK | Territorial Bancorp Inc. | 20.68 | 8796 | 181.9 | 26.81 | 17.93 | 20.68 | 6.05 | -17.94 | -18.10 | 1.88 | 1.79 | 28.17 | 28.17 | 246.13 |
|  TCBS | Texas Community Bancshares, Inc. | 15.36 | 3017 | 46.3 | 19.61 | 15.04 | 15.36 | -0.39 | -0.84 | -0.90 | 0.29 | 0.49 | 17.27 | 17.12 | 123.89 |
|  TCBX | Third Coast Bancshares, Inc. | 19.54 | 13325 | 257.7 | 30.50 | 16.35 | 19.54 | 14.94 | -21.87 | -24.79 | 0.83 | NA | 22.93 | 21.51 | 263.93 |
|  TSBK | Timberland Bancorp, Inc. | 29.30 | 8250 | 241.7 | 29.86 | 24.05 | 29.30 | -0.17 | 5.02 | 5.78 | 2.68 | 2.71 | 25.98 | 24.02 | 228.83 |
|  TBK | Triumph Bancorp, Inc. | 51.30 | 24232 | 1243.1 | 136.02 | 46.03 | 51.30 | 6.79 | -55.37 | -56.92 | 4.31 | 3.76 | 34.57 | 23.60 | 232.85 |
|  TRST | TrustCo Bank Corp NY | 37.35 | 19052 | 711.6 | 37.36 | 29.50 | 37.35 | 11.43 | 12.36 | 12.13 | 3.68 | 3.67 | 30.92 | 30.89 | 319.10 |
|  WSBF | Waterstone Financial, Inc. | 17.20 | 21879 | 376.3 | 22.74 | 15.70 | 17.20 | 2.81 | -16.18 | -21.32 | 1.37 | 1.36 | 16.86 | 16.83 | 90.27 |
|  WNEB | Western New England Bancorp, Inc. | 8.80 | 22247 | 195.8 | 9.98 | 7.13 | 8.80 | 4.89 | -10.57 | 0.46 | 1.05 | 1.05 | 9.52 | 8.85 | 115.92 |
|  WMPN | William Penn Bancorporation | 11.39 | 13732 | 156.4 | 12.88 | 11.21 | 11.39 | 0.26 | -7.17 | -5.71 | 0.30 | 0.34 | 12.50 | 12.12 | 62.01 |
|  WSFS | WSFS Financial Corporation | 46.32 | 61949 | 2869.5 | 56.30 | 37.03 | 46.32 | -5.24 | -10.20 | -7.58 | 3.34 | 4.10 | 33.96 | 17.55 | 322.61 |
|  **<u>Partial Stock Mutual Holding Companies(8)</u>** | **<u>Partial Stock Mutual Holding Companies(8)</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BSBK | Bogota Financial Corp. | 11.16 | 13693 | 152.8 | 11.29 | 9.95 | 11.16 | 0.09 | 9.41 | 9.63 | 0.43 | 0.38 | 9.89 | 9.86 | 63.90 |
|  CFSB | CFSB Bancorp, Inc. | 8.87 | 6271 | 55.6 | 11.54 | 8.62 | 8.87 | 0.91 | -12.87 | -12.87 | NA | NA | 11.49 | 11.49 | 57.56 |
|  CLBK | Columbia Financial, Inc. | 19.38 | 109908 | 2130 | 22.86 | 18.07 | 19.38 | -12.19 | 3.64 | -7.09 | 0.84 | 0.90 | 9.37 | 8.23 | 91.10 |
|  FSEA | First Seacoast Bancorp, Inc. | 10.45 | 5868 | 61.3 | 11.20 | 9.51 | 10.45 | 0.10 | 9.20 | -2.06 | 0.25 | 0.24 | 8.55 | 8.55 | 86.95 |
|  GCBC | Greene County Bancorp, Inc. | 67.96 | 8513 | 578.6 | 69.12 | 33.01 | 67.96 | 9.63 | 104.08 | 84.93 | 3.51 | NA | 18.75 | 18.75 | 303.55 |
|  KFFB | Kentucky First Federal Bancorp | 7.00 | 8155 | 57.1 | 8.69 | 6.95 | 7.00 | -1.69 | -0.43 | -6.98 | 0.19 | 0.19 | 6.38 | 6.26 | 40.23 |
|  LSBK | Lake Shore Bancorp, Inc. | 13.30 | 5596 | 74.4 | 15.25 | 12.97 | 13.30 | -0.82 | -11.92 | -10.74 | 1.08 | NA | 13.69 | 13.69 | 124.31 |
|  OFED | Oconee Federal Financial Corp. | 26.00 | 5609 | 145.8 | 27.00 | 20.24 | 26.00 | 0.97 | 6.39 | 17.01 | 0.73 | 0.75 | 13.42 | 12.94 | 97.12 |
|  PBFS | Pioneer Bancorp, Inc. | 10.20 | 25150 | 256.5 | 13.00 | 9.13 | 10.20 | 2.10 | -20.93 | -9.89 | 0.41 | 0.30 | 9.34 | 8.91 | 78.10 |
|  RBKB | Rhinebeck Bancorp, Inc. | 10.10 | 10861 | 109.7 | 11.52 | 9.06 | 10.10 | 1.56 | -6.22 | -5.25 | 0.89 | 0.91 | 10.03 | 9.80 | 119.03 |
|  TFSL | TFS Financial Corporation | 14.23 | 277333 | 3946.4 | 20.34 | 12.45 | 14.23 | 10.31 | -27.32 | -20.37 | NA | NA | NA | NA | 56.94 |
|  **<u>Merger Target</u>** | **<u>Merger Target</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  FBC | Flagstar Bancorp, Inc. | 38.41 | 53331 | 2048.4 | 53.30 | 30.82 | 38.41 | 21.28 | -21.88 | -19.88 | 5.06 | 5.43 | NA | NA | 477.08 |
|  HVBC | HV Bancorp, Inc. | 26.00 | 2239 | 58.2 | 26.80 | 18.52 | 26.00 | 1.96 | 13.29 | 19.27 | 1.31 | 1.19 | 18.39 | 18.39 | 254.88 |
|  PCSB | PCSB Financial Corporation | 19.39 | 14414 | 279.5 | 19.95 | 17.89 | 19.39 | 3.03 | 4.02 | 1.84 | 1.12 | 1.18 | 18.33 | 17.93 | 134.63 |

---

(1) Average of High/Low or Bid/Ask price per share.

(2) Or since offering price if converted of first listed in the past 52 weeks. Percent change figures are actual year-to-date and are not annualized.

(3) EPS (earnings per share) is based on actual trailing 12 month data and is not shown on a pro forma basis.

(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).

(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing 12 month common
earnings and average common equity and total assets balances.

(6) Annualized based on last regular quarterly cash dividend announcement.

(7) Indicated dividend as a percent of trailing 12 month earnings.

(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.

(9) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.

Source: S&P Market Intelligence, LC. and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information. Copyright (c) 2022 by RP<sup>®</sup> Financial, LC.

------

***RP<sup>®</sup> Financial, LC.***

Exhibit IV-1B

Weekly Bank and Thrift Market Line - Part Two

Prices As of October 28, 2022

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| | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Key Financial Ratios | Key Financial Ratios | Key Financial Ratios | Key Financial Ratios | Key Financial Ratios | Key Financial Ratios | Asset Quality Ratios | Asset Quality Ratios | Pricing Ratios | Pricing Ratios | Pricing Ratios | Pricing Ratios | Pricing Ratios | Dividend Data (6) | Dividend Data (6) | Dividend Data (6) |
|  |  | Equity/<br>Assets | Tg. Equity/<br>Assets | Reported Earnings | Reported Earnings | Core Earnings | Core Earnings | NPAs/<br>Assets | Rsvs/<br>NPLs | Price/<br>Earnings | Price/<br>Book | Price/<br>Assets | Price/<br>Tang Book | Price/Core<br>Earnings | Div/<br>Share | Dividend<br>Yield | Payout<br>Ratio (7) |
|  |  | Equity/<br>Assets | Tg. Equity/<br>Assets | ROA(5) | ROE(5) | ROA(5) | ROE(5) | NPAs/<br>Assets | Rsvs/<br>NPLs | Price/<br>Earnings | Price/<br>Book | Price/<br>Assets | Price/<br>Tang Book | Price/Core<br>Earnings | Div/<br>Share | Dividend<br>Yield | Payout<br>Ratio (7) |
|  |  | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (x) | (%) | (%) | (%) | (x) | ($) | (%) | (%) |
|  **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** | **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** | **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** | **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Average | 14.19 | 13.37 | 0.76 | 6.22 | 0.83 | 6.86 | 0.69 | 224.92 | 14.15 | 96.06 | 12.76 | 106.45 | 14.87 | 0.49 | 2.44 | 49.92 |
|  | Median | 11.74 | 11.58 | 0.76 | 6.68 | 0.90 | 7.21 | 0.35 | 130.61 | 11.98 | 91.14 | 12.39 | 97.61 | 11.86 | 0.34 | 2.09 | 27.97 |
|  **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** | **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** | **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** | **<u>Financial Institutions, Fully Converted, Not Under Acquisition (46)</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | 15.12 | 15.12 | -0.13 | -0.86 | 0.00 | 0.02 | NA | 255.26 | NA | 79.10 | 11.96 | 79.10 | NA | NA | NA | NA |
|  AFBI | Affinity Bancshares, Inc. | 15.05 | 12.93 | 0.87 | 5.60 | 0.96 | 6.16 | NA | NA | 14.56 | 82.31 | 12.39 | 98.19 | 13.26 | NA | NA | NM |
|  AX | Axos Financial, Inc. | 9.24 | 8.44 | 1.48 | 15.01 | 1.66 | 16.91 | 0.68 | 129.04 | 9.92 | 138.27 | 12.78 | 152.67 | 8.59 | NA | NA | NM |
|  BLFY | Blue Foundry Bancorp | 19.75 | 19.72 | -0.91 | -4.15 | -0.80 | -3.65 | NA | NA | NM | 86.31 | 17.05 | 86.47 | NM | NA | NA | NM |
|  BYFC | Broadway Financial Corporation | 23.26 | 21.43 | 0.15 | 1.03 | 0.41 | 2.84 | 0.21 | 117.21 | NM | 61.13 | 7.66 | 77.60 | 19.74 | 0.00 | 0.00 | NM |
|  CFFN | Capitol Federal Financial, Inc. | 11.39 | 11.28 | 0.76 | 7.11 | 0.77 | 7.21 | NA | NA | 12.90 | 101.31 | 11.54 | 102.42 | 12.74 | 0.34 | 4.25 | 132.26 |
|  CARV | Carver Bancorp, Inc. | 7.33 | 7.33 | 0.15 | 1.92 | 0.15 | 1.92 | 2.66 | 30.60 | NM | 78.26 | 2.97 | 78.26 | NM | 0.00 | 0.00 | NM |
|  CLST | Catalyst Bancorp, Inc. | 32.89 | 32.89 | 0.50 | 1.68 | NA | NA | 0.96 | 83.47 | NA | 74.70 | 24.57 | 74.70 | NA | NA | NA | NA |
|  CNNB | Cincinnati Bancorp, Inc. | 14.14 | 14.10 | 0.26 | 1.74 | 0.50 | 3.38 | 0.29 | 221.45 | NM | 109.71 | 15.51 | 110.09 | 34.00 | NA | NA | 434.78 |
|  CULL | Cullman Bancorp, Inc. | 25.70 | 25.70 | 0.67 | 2.47 | 1.01 | 3.73 | 0.78 | 88.68 | 32.26 | 82.32 | 21.16 | 82.32 | 20.98 | 0.12 | 1.09 | 35.29 |
|  ECBK | ECB Bancorp, Inc. | 10.24 | 10.24 | NA | 5.30 | NA | 6.46 | NA | 706.92 | NA | NA | NA | NA | NA | NA | NA | NA |
|  ESSA | ESSA Bancorp, Inc. | 11.40 | 10.73 | 1.08 | 9.47 | 1.09 | 9.56 | NA | NA | 9.99 | 100.47 | 11.46 | 107.60 | 9.89 | 0.60 | 2.92 | 26.21 |
|  FFBW | FFBW, Inc. | 25.38 | NA | 0.59 | 2.41 | 0.59 | 2.41 | 0.09 | 795.10 | 34.91 | 85.02 | 21.58 | NA | 34.91 | NA | NA | NM |
|  FNWB | First Northwest Bancorp | 7.49 | 7.44 | 0.65 | 6.98 | 0.76 | 8.24 | NA | NA | 9.65 | 96.31 | 7.31 | 97.03 | 8.93 | 0.28 | 1.82 | 17.61 |
|  FSBW | FS Bancorp, Inc. | 8.32 | 8.11 | 1.31 | 12.29 | 1.32 | 12.36 | NA | NA | 7.52 | 98.48 | 8.19 | 101.16 | 7.48 | 0.80 | 2.84 | 24.00 |
|  GBNY | Generations Bancorp NY, Inc. | 10.56 | 10.18 | 0.38 | 3.37 | 0.46 | 4.08 | 1.59 | 37.77 | 17.82 | 67.71 | 7.15 | 70.49 | 14.84 | NA | NA | NM |
|  HONE | HarborOne Bancorp, Inc. | 13.28 | 11.92 | 1.03 | 7.03 | 1.06 | 7.26 | 0.71 | 130.61 | 15.89 | 120.87 | 16.05 | 136.75 | 15.41 | 0.28 | 1.85 | 27.37 |
|  HIFS | Hingham Institution for Savings | 9.27 | 9.27 | 1.17 | 11.56 | 1.66 | 16.45 | NA | NA | 12.99 | 141.80 | 13.15 | 141.80 | 9.12 | 2.36 | 0.95 | 12.84 |
|  HMNF | HMN Financial, Inc. | 8.56 | 8.49 | 0.72 | 6.72 | NA | NA | NA | NA | 13.29 | 114.88 | 9.84 | 115.92 | NA | 0.24 | 1.04 | 13.87 |
|  HFBL | Home Federal Bancorp, Inc. of Louisiana | 8.10 | 8.10 | 0.90 | 9.97 | 0.90 | 9.97 | NA | NA | 12.28 | 124.72 | 10.11 | 124.72 | 12.28 | 0.48 | 2.54 | 28.57 |
|  IROQ | IF Bancorp, Inc. | 8.36 | 8.36 | 0.74 | 7.07 | 0.77 | 7.33 | 0.26 | 331.86 | 10.38 | 86.83 | 7.26 | 86.83 | 10.01 | 0.40 | 2.09 | 20.38 |
|  KRNY | Kearny Financial Corp. | 11.09 | NA | 0.87 | 6.77 | 0.89 | 6.92 | NA | NA | 11.48 | 82.93 | 9.20 | 107.86 | 11.22 | 0.44 | 4.12 | 47.31 |
|  MGYR | Magyar Bancorp, Inc. | 12.77 | 12.77 | 0.89 | 7.58 | 0.89 | 7.58 | NA | NA | 11.98 | 87.58 | 11.19 | 87.58 | 11.98 | 0.12 | 0.96 | 20.19 |
|  MSVB | Mid-Southern Bancorp, Inc. | 11.65 | 11.65 | 0.72 | 4.69 | NA | NA | NA | 104.22 | 18.76 | 118.84 | 13.84 | 118.84 | NA | 0.24 | 1.88 | 26.47 |
|  NYCB | New York Community Bancorp, Inc. | 10.72 | 7.14 | 1.03 | 9.02 | 1.06 | 9.27 | NA | NA | 7.41 | 69.14 | 6.91 | 113.08 | 7.19 | 0.68 | 7.34 | 54.40 |
|  NECB | Northeast Community Bancorp, Inc. | 20.98 | 20.94 | 1.18 | 5.69 | 1.27 | 6.13 | 0.30 | 334.58 | 14.50 | 83.39 | 17.50 | 83.60 | 13.44 | 0.24 | 1.84 | 46.67 |
|  NFBK | Northfield Bancorp, Inc. (Staten Island, NY) | 12.23 | 11.58 | 1.14 | 8.71 | 1.13 | 8.64 | 0.25 | 301.12 | 11.77 | 109.76 | 13.42 | 116.71 | 11.86 | 0.52 | 3.27 | 38.52 |
|  NSTS | NSTS Bancorp, Inc. | 30.45 | 30.45 | -0.06 | -0.26 | -0.24 | -1.05 | 0.35 | 80.10 | NA | 70.00 | 21.32 | 70.00 | NA | NA | NA | NA |
|  PBBK | PB Bankshares, Inc. | 11.84 | 11.84 | 0.35 | 2.71 | 0.38 | 2.91 | NA | NA | 25.03 | 76.84 | 9.10 | 76.84 | 23.27 | NA | NA | NM |
|  PDLB | Ponce Financial Group, Inc. | 25.37 | 25.37 | 0.66 | 4.64 | NA | NA | NA | 74.19 | 20.88 | 78.20 | 12.61 | 78.20 | NA | NA | NA | NM |
|  PVBC | Provident Bancorp, Inc. | 13.42 | 13.42 | 1.16 | 8.41 | 1.19 | 8.62 | NA | NA | 11.15 | 95.49 | 12.81 | 95.49 | 10.88 | 0.16 | 1.24 | 10.34 |
|  PROV | Provident Financial Holdings, Inc. | 10.37 | 10.37 | 0.71 | 6.64 | 0.71 | 6.64 | NA | NA | 11.81 | 76.73 | 7.96 | 76.73 | 11.81 | 0.56 | 4.09 | 36.21 |
|  PFS | Provident Financial Services, Inc. | 11.40 | 8.29 | 1.20 | 9.94 | 1.22 | 10.07 | NA | NA | 10.28 | 108.55 | 12.38 | 154.56 | 10.02 | 0.96 | 4.29 | 44.04 |
|  RVSB | Riverview Bancorp, Inc. | 8.73 | 7.22 | 1.14 | 12.22 | 1.15 | 12.28 | NA | NA | 7.72 | 100.40 | 8.77 | 123.49 | 7.68 | 0.24 | 3.49 | 25.84 |
|  SBT | Sterling Bancorp, Inc. (Southfield, MI) | 13.39 | 13.39 | 0.70 | 6.08 | 0.42 | 3.68 | 2.20 | 94.13 | 15.61 | 96.99 | 12.99 | 96.99 | 25.89 | 0.00 | 0.00 | NM |
|  TCBC | TC Bancshares, Inc. | 19.83 | 19.83 | 0.67 | 3.46 | 0.67 | 3.46 | NA | NA | NA | 85.76 | 17.00 | 85.76 | NA | 0.10 | 0.67 | NA |
|  TBNK | Territorial Bancorp Inc. | 11.86 | 11.86 | 0.79 | 6.59 | 0.75 | 6.27 | NA | NA | 11.00 | 73.41 | 8.71 | 73.41 | 11.56 | 0.92 | 4.45 | 42.02 |
|  TCBS | Texas Community Bancshares, Inc. | 15.05 | 14.94 | 0.25 | 1.83 | 0.41 | 3.02 | 0.58 | 83.79 | NM | 88.96 | 13.39 | 89.70 | 31.16 | NA | NA | NM |
|  TCBX | Third Coast Bancshares, Inc. | 10.70 | 10.21 | 0.40 | 3.93 | NA | NA | 0.29 | 284.82 | 23.54 | 85.21 | 7.66 | 90.83 | NA | NA | NA | NM |
|  TSBK | Timberland Bancorp, Inc. | 11.35 | 10.59 | 1.24 | 10.80 | 1.25 | 10.91 | 0.26 | 281.32 | 10.93 | 112.78 | 12.80 | 121.98 | 10.82 | 0.88 | 3.00 | 24.63 |
|  TBK | Triumph Bancorp, Inc. | 15.79 | 11.59 | 1.90 | 12.68 | 1.67 | 11.13 | 0.41 | 206.08 | 11.90 | 148.40 | 22.43 | 217.42 | 13.64 | NA | NA | NM |
|  TRST | TrustCo Bank Corp NY | 9.69 | 9.68 | 1.14 | 11.85 | 1.14 | 11.81 | NA | NA | 10.15 | 120.81 | 11.70 | 120.93 | 10.18 | 1.40 | 3.75 | 38.03 |
|  WSBF | Waterstone Financial, Inc. | 19.05 | 19.02 | 1.49 | 7.45 | 1.48 | 7.39 | NA | NA | 12.55 | 102.05 | 19.44 | 102.21 | 12.66 | 0.80 | 4.65 | 94.89 |
|  WNEB | Western New England Bancorp, Inc. | 8.21 | 7.68 | 0.91 | 10.50 | 0.90 | 10.48 | NA | NA | 8.38 | 92.48 | 7.59 | 99.41 | 8.39 | 0.24 | 2.73 | 22.86 |
|  WMPN | William Penn Bancorporation | 21.28 | 20.77 | 0.48 | 2.02 | 0.55 | 2.30 | NA | NA | NM | 91.14 | 19.39 | 94.01 | 33.17 | 0.12 | 1.05 | 40.00 |
|  WSFS | WSFS Financial Corporation | 10.51 | 5.72 | 1.01 | 8.30 | 1.21 | 9.97 | 0.19 | 400.81 | 13.87 | 136.41 | 14.36 | 263.94 | 11.30 | 0.60 | 1.30 | 12.28 |
|  **<u>Partial Stock Mutual Holding Companies(8)</u>** | **<u>Partial Stock Mutual Holding Companies(8)</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BSBK | Bogota Financial Corp. | 16.05 | 16.02 | 0.73 | 4.19 | 0.65 | 3.74 | NA | NA | 25.95 | 112.89 | 18.12 | 113.13 | 28.99 | NA | NA | NM |
|  CFSB | CFSB Bancorp, Inc. | 20.76 | 20.76 | 0.17 | 0.88 | 0.16 | 0.87 | NA | NA | NA | 77.22 | 16.03 | 77.22 | NA | NA | NA | NA |
|  CLBK | Columbia Financial, Inc. | 10.28 | 9.15 | 0.92 | 8.18 | 0.97 | 8.66 | NA | NA | 23.07 | 206.87 | 21.27 | 235.54 | 21.62 | NA | NA | NM |
|  FSEA | First Seacoast Bancorp, Inc. | 10.17 | 10.17 | 0.29 | 2.48 | 0.29 | 2.41 | NA | NA | NM | 122.18 | 12.42 | 122.18 | NM | NA | NA | NM |
|  GCBC | Greene County Bancorp, Inc. | 6.18 | 6.18 | 1.21 | 18.93 | NA | NA | NA | NA | 19.36 | 362.55 | 22.39 | 362.55 | NA | 0.56 | 0.82 | 15.38 |
|  KFFB | Kentucky First Federal Bancorp | 15.86 | 15.61 | 0.47 | 3.04 | 0.47 | 3.04 | 1.69 | 27.64 | NM | 109.72 | 17.40 | 111.76 | NM | 0.40 | 5.71 | 157.89 |
|  LSBK | Lake Shore Bancorp, Inc. | 11.23 | 11.23 | 0.90 | 7.54 | NA | NA | NA | NA | 12.31 | 97.12 | 10.91 | 97.12 | NA | 0.72 | 5.41 | 62.96 |
|  OFED | Oconee Federal Financial Corp. | 13.81 | 13.39 | 0.76 | 4.83 | 0.78 | 4.97 | 0.38 | 64.16 | NM | 193.74 | 26.76 | 200.86 | 34.66 | 0.40 | 1.54 | 54.79 |
|  PBFS | Pioneer Bancorp, Inc. | 12.35 | 11.85 | 0.54 | 4.30 | 0.40 | 3.15 | 0.44 | 260.94 | 24.88 | 109.21 | 13.49 | 114.54 | 33.94 | NA | NA | NM |
|  RBKB | Rhinebeck Bancorp, Inc. | 8.77 | 8.58 | 0.77 | 7.98 | 0.78 | 8.15 | 0.36 | 177.97 | 11.35 | 100.66 | 8.83 | 103.04 | 11.11 | NA | NA | NM |
|  TFSL | TFS Financial Corporation | 11.68 | 11.63 | 0.51 | 4.14 | NA | NA | NA | NA | NM | 220.24 | NA | 221.42 | NA | 1.13 | 7.94 | 434.62 |
|  **<u>Current Merger Target (9)</u>** | **<u>Current Merger Target (9)</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  FBC | Flagstar Bancorp, Inc. | 10.28 | 9.79 | 1.09 | 9.93 | 1.16 | NA | 0.56 | 92.65 | 7.59 | 76.07 | NA | 80.30 | 7.07 | 0.24 | 0.62 | 4.74 |
|  HVBC | HV Bancorp, Inc. | 7.22 | 7.22 | 0.49 | 6.55 | 0.45 | 5.94 | 0.49 | 107.75 | 19.85 | 141.42 | 10.21 | 141.42 | 21.85 | NA | NA | NM |
|  PCSB | PCSB Financial Corporation | 14.49 | 14.21 | 0.83 | 5.79 | 0.88 | 6.10 | NA | NA | 17.31 | 105.76 | 15.32 | 108.14 | 16.43 | 0.28 | 1.44 | 24.11 |

---

(1) Average of High/Low or Bid/Ask price per share.

(2) Or since offering price if converted of first listed in the past 52 weeks. Percent change figures are actual year-to-date and are not annualized.

(3) EPS (earnings per share) is based on actual trailing 12 month data and is not shown on a pro forma basis.

(4) Exludes intangibles (such as goodwill, value of core deposits, etc.).

(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing 12 month common
earnings and average common equity and total assets balances.

(6) Annualized based on last regular quarterly cash dividend announcement.

(7) Indicated dividend as a percent of trailing 12 month earnings.

(8) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.

(9) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.

Source: S&P Market Intelligence, LC. and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information. Copyright (c) 2022 by RP<sup>®</sup> Financial, LC.

------

Exhibit IV-2

Historical Stock Price Indices(1)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Year/Qtr. Ended | Year/Qtr. Ended | DJIA | S&P 500 | NASDAQ<br>Composite | BMI<br>Banks<br>Index |
|  2013: | Quarter 1 | 14578.5 | 1569.2 | 3267.5 |  |
|  | Quarter 2 | 14909.6 | 1606.3 | 3404.3 |  |
|  | Quarter 3 | 15129.7 | 1681.6 | 3771.5 |  |
|  | Quarter 4 | 16576.7 | 1848.4 | 4176.6 |  |
|  2014: | Quarter 1 | 16457.7 | 1872.3 | 4199.0 |  |
|  | Quarter 2 | 16826.6 | 1960.2 | 4408.2 |  |
|  | Quarter 3 | 17042.9 | 1972.3 | 4493.4 |  |
|  | Quarter 4 | 17823.1 | 2058.9 | 4736.1 |  |
|  2015: | Quarter 1 | 17776.1 | 2067.9 | 4900.9 |  |
|  | Quarter 2 | 17619.5 | 2063.1 | 4986.9 |  |
|  | Quarter 3 | 16284.7 | 1920.0 | 4620.2 |  |
|  | Quarter 4 | 17425.0 | 2043.9 | 5007.4 |  |
|  2016: | Quarter 1 | 17685.1 | 2059.7 | 4869.9 |  |
|  | Quarter 2 | 17930.0 | 2098.9 | 4842.7 |  |
|  | Quarter 3 | 18308.2 | 2168.3 | 5312.0 |  |
|  | Quarter 4 | 19762.6 | 2238.8 | 5383.1 |  |
|  2017: | Quarter 1 | 20663.2 | 2362.7 | 5911.7 |  |
|  | Quarter 2 | 21349.6 | 2423.4 | 6140.4 |  |
|  | Quarter 3 | 22405.1 | 2519.4 | 6496.0 |  |
|  | Quarter 4 | 24719.2 | 2673.6 | 6903.4 |  |
|  2018: | Quarter 1 | 24103.1 | 2640.9 | 7063.5 |  |
|  | Quarter 2 | 24271.4 | 2718.4 | 7510.3 |  |
|  | Quarter 3 | 26458.3 | 2914.0 | 8046.4 |  |
|  | Quarter 4 | 23327.5 | 2506.9 | 6635.3 |  |
|  2019: | Quarter 1 | 25928.7 | 2834.4 | 7729.3 | 133.9 |
|  | Quarter 2 | 26600.0 | 2941.8 | 8006.2 | 142.2 |
|  | Quarter 3 | 26916.8 | 2976.7 | 7999.3 | 145.3 |
|  | Quarter 4 | 28538.4 | 3230.8 | 8972.6 | 164.6 |
|  2020: | Quarter 1 | 21917.2 | 2584.6 | 7700.1 | 97.1 |
|  | Quarter 2 | 25812.9 | 3100.3 | 10058.8 | 106.3 |
|  | Quarter 3 | 27781.7 | 3363.0 | 11167.5 | 103.1 |
|  | Quarter 4 | 30606.5 | 3756.1 | 12888.3 | 138.6 |
|  2021: | Quarter 1 | 32981.6 | 3972.9 | 13246.8 | 171.3 |
|  | Quarter 2 | 34502.5 | 4297.5 | 14504.0 | 176.0 |
|  | Quarter 3 | 33842.9 | 4307.5 | 14448.6 | 182.7 |
|  | Quarter 4 | 36338.3 | 4766.2 | 15645.0 | 184.1 |
|  2022: | Quarter 1 | 34678.4 | 4530.4 | 14220.5 | 171.0 |
|  | Quarter 2 | 30775.4 | 3785.4 | 11028.7 | 141.2 |
|  | Quarter 3 | 28725.5 | 3585.6 | 10575.6 | 136.7 |
|  As of October 28, 2022 | As of October 28, 2022 | 32861.8 | 3901.1 | 11102.5 | 154.1 |

---

(1) End of period data.

Sources: S&P Global Market Intelligence.

------

Exhibit IV-3

Index Summary (Current Data)

Industry - Bank

Geography United States and Canada

---

| | | | | |
|:---|:---|:---|:---|:---|
| ***Index Name*** | ***Current Value*** | ***As Of*** | ***Day's Change*** | ***Day's Change<br>(%)*** |
|  **Banking Indexes** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks | 154.85 | 11/4/2022 | 3.69 | 2.44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KBW Nasdaq Bank Index | 103.91 | 11/4/2022 | 2.59 | 2.55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KBW Nasdaq Regional Bank Index | 122.95 | 11/4/2022 | 2.81 | 2.34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Bank | 339.89 | 11/4/2022 | 8.30 | 2.50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NASDAQ Bank | 4294.42 | 11/4/2022 | 101.17 | 2.41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Commercial Banks | 485.59 | 11/4/2022 | 11.86 | 2.50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Diversified Banks | 585.95 | 11/4/2022 | 14.55 | 2.55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Regional Banks | 116.42 | 11/4/2022 | 2.69 | 2.37 |
|  **Market Cap Indexes** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dow Jones U.S. MicroCap Banks | 30509.44 | 11/4/2022 | 522.33 | 1.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. SmallCap Banks | 247.60 | 11/4/2022 | 5.58 | 2.30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. MidCap Banks | 688.10 | 11/4/2022 | 15.81 | 2.35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. LargeCap Banks | 381.76 | 11/4/2022 | 9.34 | 2.51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P United States Between USD1 Billion and USD5 Billion Banks | 738.59 | 11/4/2022 | 17.56 | 2.44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P United States Over USD5 Billion Banks | 438.37 | 11/4/2022 | 10.44 | 2.44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P United States Between USD250 Million and USD1 Billion Banks | 1615.96 | 11/4/2022 | 40.67 | 2.58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P United States Under USD250 Million Banks | 1271.81 | 11/4/2022 | 8.20 | 0.65 |
|  **Geographic Indexes** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - Mid-Atlantic Region | 595.47 | 11/4/2022 | 13.79 | 2.37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - Midwest Region | 647.68 | 11/4/2022 | 17.12 | 2.71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - New England Region | 576.58 | 11/4/2022 | 14.89 | 2.65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - Southeast Region | 459.35 | 11/4/2022 | 10.73 | 2.39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - Southwest Region | 1330.91 | 11/4/2022 | 30.80 | 2.37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - Western Region | 1315.57 | 11/4/2022 | 32.35 | 2.52 |
|  **Broad Market Indexes** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DJIA | 32403.22 | 11/4/2022 | 401.97 | 1.26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 | 3770.55 | 11/4/2022 | 50.65 | 1.36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 400 Mid Cap | 2405.74 | 11/4/2022 | 38.79 | 1.64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 600 Small Cap | 1171.36 | 11/4/2022 | 17.77 | 1.54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Financials | 563.29 | 11/4/2022 | 10.32 | 1.87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MSCI US IMI Financials | 2019.30 | 11/4/2022 | 39.01 | 1.97 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NASDAQ | 10475.25 | 11/4/2022 | 132.31 | 1.28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NASDAQ Finl | 4947.18 | 11/4/2022 | 85.33 | 1.76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NYSE | 14702.77 | 11/4/2022 | 247.10 | 1.71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Russell 1000 | 2070.30 | 11/4/2022 | 25.27 | 1.24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Russell 2000 | 1799.87 | 11/4/2022 | 20.14 | 1.13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Russell 3000 | 2184.80 | 11/4/2022 | 26.53 | 1.23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P TSX Composite | 19449.81 | 11/4/2022 | 208.59 | 1.08 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MSCI AC World (USD) | 580.60 | 11/4/2022 | 9.83 | 1.72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MSCI World | 2507.22 | 11/4/2022 | 39.33 | 1.59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bermuda Royal Gazette/BSX | 2436.96 | 11/4/2022 | 0.00 | 0.00 |

---

Source: S&P Global Market Intelligence.

------

Exhibit IV-4

State of Georgia Thrift Acquisitions 2014-Present

---

| | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | |  | | Target Financials at Announcement | Target Financials at Announcement | Target Financials at Announcement | Target Financials at Announcement | Target Financials at Announcement | Target Financials at Announcement | Target Financials at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement |
|  |  |  | |  | | Total | | | | | NPAs/ | Rsrvs/ | Deal | Value/ | | | | | Prem/ |
| Announce<br>Date | Complete<br>Date | Buyer<br>Name |  | Target<br>Name | St. | Assets<br>($000) | E/A<br>(%) | TE/A<br>(%) | ROAA<br>(%) | ROAE<br>(%) | Assets<br>(%) | NPLs<br>(%) | Value<br>($M) | Share<br>($) | P/B<br>(%) | P/TB<br>(%) | P/E<br>(x) | P/A<br>(%) | Cdeps<br>(%) |
|  04/23/2021 | 10/1/2021 | CoastalSouth Bancshares Inc. | SC | Cornerstone Bancshares | GA | 210906 | 8.62 | 8.62 | -1.12 | -12.58 | 5.53 | 22.74 | NA | NA | NA | NA | NA | NA | NA |
|  4/24/2018 | 9/1/2018 | CenterState Bank Corp. | FL | Charter Financial Corporation | GA | 1643673 | 13.27 | 10.96 | 0.90 | 6.50 | 0.44 | 186.23 | 345.2 | 22.617 | 156.86 | 195.11 | 24.85 | 21.00 | 15.09 |
|  2/27/2014 | 12/1/2014 | Oconee Federal Financial Corp. | SC | Stephens Federal Bank | GA | 158267 | 4.19 | 4.19 | -0.39 | -9.32 | 12.40 | 43.88 | NA | NA | NA | NA | NA | NA | NA |
|  12/10/2014 | 7/1/2015 | Renasant Corp. | MS | Heritage Financial Group, Inc. | GA | 1755534 | 9.11 | 8.44 | 0.60 | 6.60 | 0.88 | 85.65 | 264.7 | 27.576 | 158.33 | 172.10 | 24.62 | 15.08 | 10.90 |
|  |  |  |  | Average: |  | 942095 | 8.80 | 8.05 | 0.00 | -2.20 | 4.81 | 84.62 |  |  | 157.60 | 183.61 | 24.74 | 18.04 | 13.00 |
|  |  |  |  | Median: |  | 927290 | 8.87 | 8.53 | 0.10 | -1.41 | 3.21 | 64.76 |  |  | 157.60 | 183.61 | 24.74 | 18.04 | 13.00 |

---

Source: S&P Global Market Intelligence.

------

**Exhibit IV-5** 

**PRO FORMA ANALYSIS SHEET** 

**Elberton Federal Savings & Loan Association, Elberton, GA** 

**Prices as of October 28, 2022** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | | Subject at | Peer Group | Peer Group | All Public Thrifts | All Public Thrifts |
| Valuation Pricing Multiples | Symbol | Midpoint | Mean | Median | Mean | Median |
|  Price-earnings multiple | P/E | NM x | 25.96x | 25.03x | 14.15x | 11.98x |
|  Price-core earnings multiple | P/CE | NM x | 26.53x | 27.22x | 14.87x | 11.86x |
|  Price-book ratio | P/B | 50.45% | 86.90% | 83.67% | 96.06% | 91.14% |
|  Price-tangible book ratio | P/TB | 50.45% | 87.31% | 83.77% | 106.45% | 97.61% |
|  Price-assets ratio | P/A | 12.88% | 14.97% | 14.68% | 12.49% | 12.39% |
| Valuation Parameters |  |  |  |  | % of<br>Offering | % of Offering<br>+ Foundation |
|  Pre-Conversion Earnings (Y) | 188000) | (To 9/2022) | ESOP Stock as% of Offering<br>(E) | ESOP Stock as% of Offering<br>(E) | 0.0000% | 0.0000% |
|  Pre-Conversion Core Earnings | 21000) | (To 9/2022) | Cost of ESOP<br>Borrowings (S) | Cost of ESOP<br>Borrowings (S) | 0.00% |  |
|  Pre-Conversion Book Value (B) | $4794000 | (9/2022) | ESOP<br>Amortization<br>(T) | ESOP<br>Amortization<br>(T) | 25.00 years |  |
|  Intangibles | $0 | (9/2022) | RRP Stock as% of Offering<br>(M) | RRP Stock as% of Offering<br>(M) | 3.0000% | 3.0000% |
|  Pre-Conv. Tang. Book Value (B) | $4794000 | (9/2022) | Stock Programs<br>Vesting (N) | Stock Programs<br>Vesting (N) | 5.00 years |  |
|  Pre-Conversion Assets (A) | $26482000 | (9/2022) | Fixed Expenses | Fixed Expenses | $1000000 |  |
|  Reinv Rte: (5 Yr Treas) @ 9/2022 | 4.190% |  | Subscr/Dir<br>Comm Exp<br>(Mdpnt) | Subscr/Dir<br>Comm Exp<br>(Mdpnt) | $0 | 0.00% |
|  Tax rate (TAX) | 25.75% |  | Total Expenses<br>(Midpoint) | Total Expenses<br>(Midpoint) | $1000000 |  |
|  A-T Reinvestment Rate(R) | 3.111% |  | Syndicate<br>Expenses<br>(Mdpnt) | Syndicate<br>Expenses<br>(Mdpnt) | $0 | 0.00% |
|  Est. Conversion Expenses (1)(X) | 26.67% |  | Syndicate<br>Amount | Syndicate<br>Amount | $0 |  |
|  Insider Purchases ($) | $0 |  | Percent Sold<br>(PCT) | Percent Sold<br>(PCT) | 100.00% |  |
|  Price/Share | $10.00 |  | MHC Assets | MHC Assets | $0 |  |
|  Foundation Cash Contrib. (FC) | $0 |  | Options as % of<br>Offering (O1) | Options as % of<br>Offering (O1) | 10.0000% | 10.00% |
|  Found Stk Cont (% of Off Shrs (FS) | 0.0000% |  | Estimated<br>Option Value<br>(O2) | Estimated<br>Option Value<br>(O2) | 32.00% |  |
|  Foundation Tax Benefit (Z) | $0 |  | Option Vesting<br>Period (O3) | Option Vesting<br>Period (O3) | 5.00 years |  |
|  Foundation Stock Amount (Mdpt.) | $0 |  | % of Options<br>taxable (O4) | % of Options<br>taxable (O4) | 25.00% |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  <u>Calculation of Pro Forma Value After Conversion</u> | <u>Calculation of Pro Forma Value After Conversion</u> | <u>Calculation of Pro Forma Value After Conversion</u> | <u>Calculation of Pro Forma Value After Conversion</u> |  |
| 1. | V= | P/E \* (Y) | V= | $3750000.0 |
|  |  | 1 - P/E \* PCT \* ((1-X-E-M-FC-FS)\*R - (1-TAX)\*E/T - (1-TAX)\*M/N)-(1-(TAX\*O4))\*(O1\*O2)/O3) |  |  |
| 1. | V= | P/E \* (Y) | V= | $3750000.0 |
|  |  | 1 - P/Core E \* PCT \* ((1-X-E-M-FC-FS)\*R - (1-TAX)\*E/T - (1-TAX)\*M/N)-(1-(TAX\*O4))\*(O1\*O2)/O3) |  |  |
| 2. | V= | P/B \* (B+Z) | V= | $3750000.0 |
|  |  | 1 - P/B \* PCT \* (1-X-E-M-FC-FS) |  |  |
| 2. | V= | P/TB \* (TB+Z) | V= | $3750000.0 |
|  |  | 1 - P/TB \* PCT \* (1-X-E-M-FC-FS) |  |  |
| 3. | V= | P/A \* (A+Z+PA) | V= | $3750000.0 |
|  |  | 1 - P/A \* PCT \* (1-X-E-M-FC-FS) |  |  |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Valuation Conclusion | Shares Issued<br>to MHC | Shares Sold<br>to Public | Foundation<br>Shares | Total Shares<br>Issued | Price Per<br>Share | Market Value<br>of Stock Sold<br>in Offering | Market Value<br>of Stock<br>Issued in<br>Reorganization |
|  Maximum | 0 | 431250 | 0 | 431250 | 10.00 | 4312500 | $4312500 |
|  Midpoint | 0 | 375000 | 0 | 375000 | 10.00 | 3750000 | $3750000 |
|  Minimum | 0 | 318750 | 0 | 318750 | 10.00 | 3187500 | $3187500 |
| Valuation Conclusion | Shares Issued<br>to MHC | Shares Sold<br>to Public | Foundation<br>Shares | Total Shares<br>Issued |  |  |  |
|  Maximum | 0.00% | 100.00% | 0.00% | 100.00% |  |  |  |
|  Midpoint | 0.00% | 100.00% | 0.00% | 100.00% |  |  |  |
|  Minimum | 0.00% | 100.00% | 0.00% | 100.00% |  |  |  |

---

(1) Estimated offering expenses at midpoint of the offering.

------

**Exhibit IV-6** 

**PRO FORMA EFFECT OF CONVERSION PROCEEDS** 

**Elberton Federal Savings & Loan Association, Elberton, GA** 

**At the Minimum of the Range** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **1.** | **Market Value of Shares Sold In Offering:** | **Market Value of Shares Sold In Offering:** | **Market Value of Shares Sold In Offering:** | **Market Value of Shares Sold In Offering:** | $**3187500** |
|  | **Market Value of Shares Issued to Foundation:** | **Market Value of Shares Issued to Foundation:** | **Market Value of Shares Issued to Foundation:** | **Market Value of Shares Issued to Foundation:** | **0** |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Market Value of Company:** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Market Value of Company:** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Market Value of Company:** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Market Value of Company:** | $**3187500** |
| 2. | Offering Proceeds of Shares Sold In Offering | Offering Proceeds of Shares Sold In Offering | Offering Proceeds of Shares Sold In Offering | Offering Proceeds of Shares Sold In Offering | $3187500 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | 1000000 |
|  | Net Conversion Proceeds | Net Conversion Proceeds | Net Conversion Proceeds | Net Conversion Proceeds | $2187500 |
| 3. | Estimated Additional Equity and Income from Offering Proceeds | Estimated Additional Equity and Income from Offering Proceeds | Estimated Additional Equity and Income from Offering Proceeds | Estimated Additional Equity and Income from Offering Proceeds |  |
|  | Net Conversion Proceeds | Net Conversion Proceeds | Net Conversion Proceeds | Net Conversion Proceeds | $2187500 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash ESOP Stock Purchases | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash ESOP Stock Purchases | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash ESOP Stock Purchases | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash ESOP Stock Purchases | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash MRP Stock Purchases (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash MRP Stock Purchases (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash MRP Stock Purchases (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash MRP Stock Purchases (1) | (95625) |
|  | Net Conversion Proceeds Reinvested (Net Equity Increase) | Net Conversion Proceeds Reinvested (Net Equity Increase) | Net Conversion Proceeds Reinvested (Net Equity Increase) | Net Conversion Proceeds Reinvested (Net Equity Increase) | $2091875 |
|  | Estimated After-Tax Reinvestment Rate | Estimated After-Tax Reinvestment Rate | Estimated After-Tax Reinvestment Rate | Estimated After-Tax Reinvestment Rate | 3.11% |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings from Reinvestment of Proceeds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings from Reinvestment of Proceeds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings from Reinvestment of Proceeds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings from Reinvestment of Proceeds | $65080 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (1) | (14200) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Option Plan Vesting (2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Option Plan Vesting (2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Option Plan Vesting (2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Option Plan Vesting (2) | (19087) |
|  | Net Earnings Increase | Net Earnings Increase | Net Earnings Increase | Net Earnings Increase | $31793 |
|  |  |  | Before<br>Conversion | Net<br>Earnings<br>Increase | After<br>Conversion |
| 4. | Pro Forma Earnings |  |  |  |  |
|  | 12 Mths ended September 30, 2022 (reported) | 12 Mths ended September 30, 2022 (reported) | 188000) | $31793 | 156207) |
|  | 12 Mths ended September 30, 2022 (core) | 12 Mths ended September 30, 2022 (core) | 21000) | $31793 | $10793 |
|  |  | Before<br>Conversion | Net Equity<br>Proceeds | Tax Benefit<br>of Foundation | After<br>Conversion |
| 5. | Pro Forma Net Worth |  |  |  |  |
|  | September 30, 2022 | $4794000 | $2091875 | $0 | $6885875 |
|  | September 30, 2022 (Tangible) | $4794000 | $2091875 | $0 | $6885875 |
|  |  | Before<br>Conversion | Net Cash<br>Proceeds | Tax Benefit<br>of Foundation | After<br>Conversion |
| 6. | Pro Forma Assets |  |  |  |  |
|  | September 30, 2022 | $26482000 | $2091875 | $0 | $28573875 |

---

(1) Restricted stock program (3.00% of total shares issued in conversion) amortized over 5 years, amortization
expense is tax effected at 25.75%.

(2) Option valuation based on Black-Scholes model, 5 year vesting, and assuming 25% taxable.

------

**Exhibit IV-6** 

**PRO FORMA EFFECT OF CONVERSION PROCEEDS** 

**Elberton Federal Savings & Loan Association, Elberton, GA** 

**At the Midpoint of the Range** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **1.** | **Market Value of Shares Sold In Offering:** | **Market Value of Shares Sold In Offering:** | **Market Value of Shares Sold In Offering:** | **Market Value of Shares Sold In Offering:** | $**3750000** |
|  | **Market Value of Shares Issued to Foundation:** | **Market Value of Shares Issued to Foundation:** | **Market Value of Shares Issued to Foundation:** | **Market Value of Shares Issued to Foundation:** | **0** |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Market Value of Company:** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Market Value of Company:** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Market Value of Company:** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Market Value of Company:** | $**3750000** |
| 2. | Offering Proceeds of Shares Sold In Offering | Offering Proceeds of Shares Sold In Offering | Offering Proceeds of Shares Sold In Offering | Offering Proceeds of Shares Sold In Offering | $3750000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | 1000000 |
|  | Net Conversion Proceeds | Net Conversion Proceeds | Net Conversion Proceeds | Net Conversion Proceeds | $2750000 |
| 3. | Estimated Additional Equity and Income from Offering Proceeds | Estimated Additional Equity and Income from Offering Proceeds | Estimated Additional Equity and Income from Offering Proceeds | Estimated Additional Equity and Income from Offering Proceeds |  |
|  | Net Conversion Proceeds | Net Conversion Proceeds | Net Conversion Proceeds | Net Conversion Proceeds | $2750000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash ESOP Stock Purchases | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash ESOP Stock Purchases | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash ESOP Stock Purchases | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash ESOP Stock Purchases | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash MRP Stock Purchases (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash MRP Stock Purchases (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash MRP Stock Purchases (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash MRP Stock Purchases (1) | (112500) |
|  | Net Conversion Proceeds Reinvested (Net Equity Increase) | Net Conversion Proceeds Reinvested (Net Equity Increase) | Net Conversion Proceeds Reinvested (Net Equity Increase) | Net Conversion Proceeds Reinvested (Net Equity Increase) | $2637500 |
|  | Estimated After-Tax Reinvestment Rate | Estimated After-Tax Reinvestment Rate | Estimated After-Tax Reinvestment Rate | Estimated After-Tax Reinvestment Rate | 3.11% |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings from Reinvestment of Proceeds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings from Reinvestment of Proceeds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings from Reinvestment of Proceeds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings from Reinvestment of Proceeds | $82055 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (1) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (1) | (16706) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Option Plan Vesting (2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Option Plan Vesting (2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Option Plan Vesting (2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Option Plan Vesting (2) | (22455) |
|  | Net Earnings Increase | Net Earnings Increase | Net Earnings Increase | Net Earnings Increase | $42893 |
|  |  |  | Before<br>Conversion | Net<br>Earnings<br>Increase | After<br>Conversion |
| 4. | Pro Forma Earnings |  |  |  |  |
|  | 12 Mths ended September 30, 2022 (reported) | 12 Mths ended September 30, 2022 (reported) | 188000) | $42893 | 145107) |
|  | 12 Mths ended September 30, 2022 (core) | 12 Mths ended September 30, 2022 (core) | 21000) | $42893 | $21893 |
|  |  | Before<br>Conversion | Net Capital<br>Proceeds | Tax Benefit<br>of Foundation | After<br>Conversion |
| 5. | Pro Forma Net Worth |  |  |  |  |
|  | September 30, 2022 | $4794000 | $2637500 | $0 | $7431500 |
|  | September 30, 2022 (Tangible) | $4794000 | $2637500 | $0 | $7431500 |
|  |  | Before<br>Conversion | Net Cash<br>Proceeds | Tax Benefit<br>of Foundation | After<br>Conversion |
| 6. | Pro Forma Assets |  |  |  |  |
|  | September 30, 2022 | $26482000 | $2637500 | $0 | $29119500 |

---

(1) Restricted stock program (3.00% of total shares issued in conversion) amortized over 5 years, amortization
expense is tax effected at 25.75%.

(2) Option valuation based on Black-Scholes model, 5 year vesting, and assuming 25% taxable.

------

**Exhibit IV-6** 

**PRO FORMA EFFECT OF CONVERSION PROCEEDS** 

**Elberton Federal Savings & Loan Association, Elberton, GA** 

**At the Maximum of the Range** 

---

| | |
|:---|:---|
| **1. Market Value of Shares Sold In Offering:** | $**4312500** |
| &nbsp;&nbsp;&nbsp;&nbsp; **Market Value of Shares Issued to Foundation:** | **0** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Market Value of Company:** | $**4312500** |
| 2. Offering Proceeds of Shares Sold In Offering | $4312500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | 1000000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Conversion Proceeds | $3312500 |
| 3. Estimated Additional Equity and Income from Offering Proceeds |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Conversion Proceeds | $3312500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash ESOP Stock Purchases | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-Cash MRP Stock Purchases (1) | (129375) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Conversion Proceeds Reinvested (Net Equity Increase) | $3183125 |
| &nbsp;&nbsp;&nbsp;&nbsp; Estimated After-Tax Reinvestment Rate | 3.11% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings from Reinvestment of Proceeds | $99029 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (1) | (19212) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Option Plan Vesting (2) | (25823) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Earnings Increase | $53994 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Before<br>Conversion | Before<br>Conversion | Net<br>Earnings<br>Increase | After<br>Conversion |
| 4. Pro Forma Earnings |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; 12 Mths ended September 30, 2022 (reported) | ($| 188000) | $53994 | 134006) |
| &nbsp;&nbsp;&nbsp;&nbsp; 12 Mths ended September 30, 2022 (core) | ($| 21000) | $53994 | $32994 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Before<br>Conversion | Net Capital<br>Proceeds | Tax Benefit<br>of Foundation | After<br>Conversion |
| 5. Pro Forma Net Worth |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; September 30, 2022 | $4794000 | $3183125 | $0 | $7977125 |
| &nbsp;&nbsp;&nbsp;&nbsp; September 30, 2022 (Tangible) | $4794000 | $3183125 | $0 | $7977125 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Before<br>Conversion | Net Cash<br>Proceeds | Tax Benefit<br>of Foundation | After<br>Conversion |
| 6. Pro Forma Assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; September 30, 2022 | $26482000 | $3183125 | $0 | $29665125 |

---

(1) Restricted stock program (3.00% of total shares issued in conversion) amortized over 5 years, amortization
expense is tax effected at 25.75%.

(2) Option valuation based on Black-Scholes model, 5 year vesting, and assuming 25% taxable.

------

EXHIBIT V-1

RP<sup>®</sup> Financial, LC.

Firm Qualifications Statement

------

![LOGO](g406793dsp2.jpg)

**FIRM QUALIFICATION STATEMENT** 

RP<sup>®</sup> Financial ("RP<sup>®</sup>) provides financial and management consulting, merger advisory and valuation services to the financial services industry nationwide. We offer a broad array of services, high quality and prompt service, hands-on involvement by principals and senior staff, careful structuring of strategic initiatives and sophisticated valuation and other analyses consistent with industry practices and regulatory requirements. Our staff maintains extensive background in financial and management consulting, valuation and investment banking. Our clients include commercial banks, thrifts, credit unions, mortgage companies, insurance companies and other financial services companies.

***STRATEGIC PLANNING SERVICES***

RP<sup>®</sup>'s strategic planning services are designed to provide effective feasible plans with quantifiable results. We analyze strategic options to enhance shareholder value, achieve regulatory approval or realize other objectives. Such services involve conducting situation analyses; establishing mission/vision statements, developing strategic goals and objectives; and identifying strategies to enhance franchise and/or market value, capital management, earnings enhancement, operational matters and organizational issues. Strategic recommendations typically focus on: capital formation and management, asset/liability targets, profitability, return on equity and stock pricing. Our proprietary financial simulation models provide the basis for evaluating the impact of various strategies and assessing their feasibility and compatibility with regulations.

***MERGER ADVISORY SERVICES***

RP<sup>®</sup>'s merger advisory services include targeting potential buyers and sellers, assessing acquisition merit, conducting due diligence, negotiating and structuring merger transactions, preparing merger business plans and financial simulations, rendering fairness opinions, preparing mark-to-market analyses, valuing intangible assets and supporting the implementation of post-acquisition strategies. Our merger advisory services involve transactions of financially healthy companies and failed bank deals. RP<sup>®</sup> is also expert in de novo charters and shelf charters. Through financial simulations, comprehensive data bases, valuation proficiency and regulatory familiarity, RP<sup>®</sup>'s merger advisory services center on enhancing shareholder returns.

***VALUATION SERVICES***

RP<sup>®</sup>'s extensive valuation practice includes bank and thrift mergers, thrift mutual-to-stock conversions, goodwill impairment, insurance company demutualizations, ESOPs, subsidiary companies, merger accounting and other purposes. We are highly experienced in performing appraisals which conform to regulatory guidelines and appraisal standards. RP<sup>®</sup> is the nation's leading valuation firm for thrift mutual-to-stock conversions, with appraised values ranging up to $4 billion.

***OTHER CONSULTING SERVICES***

RP<sup>®</sup> offers other consulting services including evaluating the impact of regulatory changes, branching and diversification strategies, feasibility studies and special research. We assist banks/thrifts in preparing CRA plans and evaluating wealth management activities on a de novo or merger basis. Our other consulting services are facilitated by proprietary valuation and financial simulation models.

***KEY PERSONNEL (Years of Relevant Experience & Contact Information)***

---

| | | |
|:---|:---|:---|
| Ronald S. Riggins, Managing Director (42) | (703) 647-6543 | rriggins@rpfinancial.com |
| William E. Pommerening, Managing Director (38) | (703) 647-6546 | wpommerening@rpfinancial.com |
| James J. Oren, Director (35) | (703) 647-6549 | joren@rpfinancial.com |
| James P. Hennessey, Director (36) | (703) 647-6544 | jhennessey@rpfinancial.com |
| Gregory E. Dunn, Director (38) | (703) 647-6548 | gdunn@rpfinancial.com |

---

------

---

| | |
|:---|:---|
| 1311-A Dolley Madison Boulevard | Telephone: (703) 528-1700 |
| Suite 2A | Fax No.: (703) 528-1788 |
| McLean, VA 22101 | Toll-Free No.: (866) 723-0594 |
| www.rpfinancial.com | E-Mail: mail@rpfinancial.com |

---

### UNITED STATES SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

## FORM 1-A

### REGULATION A OFFERING STATEMENT
### UNDER THE SECURITIES ACT OF 1933

### Item 1. Issuer Information

**Exact name of issuer:** Oconee Financial Corporation

**Jurisdiction of Incorporation/Organization:** GA

**Year of Incorporation:** 1999

**CIK:** 0001076691

**I.R.S. Employer Identification Number:** 58-2442250

**Primary Standard Industrial Classification Code:** 6022

**Total number of full-time employees:** 83

**Total number of part-time employees:** 2

**Address of Principal Executive Offices:** 41 N. Main Street, —, Watkinsville, GA 30677

**Company Phone:** 706-769-6611

**Person to contact:** James R. McLemore

### Financial Statements

**Balance Sheet Information**

| Metric                                   | Amount        |
|:---|:---|
| Cash and Cash Equivalents                | $50506172.00  |
| Investment Securities                    | $161922262.00 |
| Accounts and Notes Receivable            |  |
| Property, Plant and Equipment (PP&E)     |  |
| Total Assets                             | $532964932.00 |
| Accounts Payable and Accrued Liabilities | $7349084.00   |
| Long-Term Debt                           | $9812406.00   |
| Total Liabilities                        | $505602276.00 |
| Total Stockholders' Equity               | $27362656.00  |
| Total Liabilities and Equity             | $532964932.00 |

**Statement of Comprehensive Income Information**

| Metric                                    | Amount      |
|:---|:---|
| Total Revenues                            |  |
| Costs and Expenses Applicable to Revenues |  |
| Depreciation and Amortization             | $1185991.00 |
| Net Income                                | $2852083.00 |
| Earnings Per Share - Basic                | 3.18        |
| Earnings Per Share - Diluted              | 3.18        |

**Auditor Information**

| Metric          | Amount            |
|:---|:---|
| Name of Auditor | Mauldin & Jenkins |

### Outstanding Securities

| Class                   |   Outstanding | CUSIP     | Publicly Traded   |
|:---|---:|:---|:---|
| Common Stock            |        896497 | 675608103 | OTCQX             |
| N/A                     |             0 | 0         | N/A               |
| Subordinated Debentures |      10000000 | QIB-67560 | N/A               |

### Item 2. Issuer Eligibility
- [x] The issuer certifies that all of the statements in this part are true.

### Item 3. Application of Rule 262
- [x] The issuer certifies that it is not disqualified and has not been involved in any disqualifying event.

### Item 4. Summary Information Regarding the Offering

**Tier:** Tier1

**Financial Statement Status:** Audited

**Type of Securities Offered:** Equity (common or preferred stock)

**Is this a delayed or continuous offering?** No

**Was or is the offering to take place within one year after qualification?** No

**Was or is the offering to commence within two days after qualification?** No

**Is this a best efforts offering?** Yes

**Was there any solicitation of interest?** No

**Are there any resale securities by affiliates of the issuer?** No

**Offering Amounts**

| Description                                                     | Amount   |
|:---|:---|
| Number of securities offered                                    | 125912   |
| Number of securities outstanding                                | 896497   |
| Price per security                                              | $31.51   |
| Issuer's aggregate offering price                               | $31.51   |
| Aggregate offering price of securities held by security holders | $0.00    |
| Aggregate price of securities offered concurrently              | $0.00    |
| Total aggregate offering price                                  | $31.51   |

**Anticipated Fees**

| Service Provider   | Name              | Fees       |
|:---|:---|:---|
| Auditor            | Mauldin & Jenkins | $75000.00  |
| Legal              | Alston & Bird     | $185000.00 |
| Promoters          | N/A               | $0.00      |

**Estimated Net Proceeds to the Issuer:** $3635625.00

### Item 5. Jurisdictions in Which Securities are to be Offered

GA, NH, NC, OR, SC