Evergreen Bank Group 2023 Annual Report

LETTER FROM THE CHAIRMAN

DEAR FELLOW STOCKHOLDERS,

2023 was a year filled with rapid changes and unique challenges. The macroeconomic landscape was marked by a series of complex issues, notably high inflation, interest rate hikes and slowing economic growth. The banking industry faced its own set of challenges – navigating an elevated rate environment created both intense competition for deposits and substantial unrealized losses in fixed income securities portfolios. As a result, questions quickly arose related to liquidity and solvency in the banking industry, precipitating the failure of four large institutions and two smaller institutions. There are, however, some grounds for optimism – unemployment remains low, and, by the end of 2023, inflation started to come down closer to the Federal Reserve target rate of 2%. The annual rate of inflation is down considerably from December 2022’s rate of 6.5%, ending December 2023 at a rate of 3.4%.

The industry continues to face headwinds in the form of higher funding costs, compressed margins, lower net income, suppressed lending capacity, tough regulations, higher risk metrics in consumer portfolios and substantial concerns in commercial portfolios related to declining values in commercial real estate. The banking sector is also facing a pressing challenge in providing seamless, customercentric digital banking solutions. Traditional community banks struggle to meet the

evolving needs of tech-savvy consumers who demand convenient, secure and efficient online and mobile solutions. This underscores the critical necessity for a modern banking institution that prioritizes user-friendly digital platforms to enhance customer experience and satisfaction.

According to several recent surveys, the tide has shifted. The latest data indicates that over 75% of adults prefer to bank via a mobile device or online. Financial services have become very fragmented. Money movement continues to evolve as large banks continue to get bigger and as smaller banks continue to disappear. As the mobile economy continues to accelerate, big tech, big fintech and challenger banks will only grow as a “significant threat” in the coming decade.

There are only two kinds of community banks – the innovative and the doomed. Customers have come to expect high-quality, seamless, multiplatform access for every service they use – from entertainment to grocery shopping to utility payments – and banking is no different.”

– Steve Cocheo, Senior Executive Editor at The Financial Brand

Despite these industry challenges in 2023, our capital levels remained strong, and liquidity has proven to be extremely durable. Net income is down substantially this year, and continued income compression is projected for much of 2024 – due to higher funding cost and provision expenses – before trending upwards in the latter part of the year. Although net income is projected to be down in 2024, our balance sheet position is solid, as we have limited exposure to large commercial real estate loan losses

STRONG LIQUIDITY AND CAPITAL

$145.06 million total Stockholders’ Equity.

No overnight borrowings from FHLB, borrowings from discount window.

85% of total deposits were insured at year-end.

$126.2 million Available-for-sale securities; 8.36% of Total Assets. Limited exposure and less than peer group.

$8.3 million other comprehensive loss on securities portfolio; 5.7% of Stockholders’ Equity. Limited exposure and less than peer group.

and limited liquidity concerns related to high, unrealized losses in our securities portfolio. In addition, our ability to originate high volumes of specialty consumer loans nationally at higher rates will drive higher margins and net income in the future.

I want to thank our employees, as well as the board of directors, key partners, customers and stockholders. I am proud of our results and innovative strategic direction over the years, and I’m confident in our ability to execute going forward. At Evergreen, unlike many community banks, we have made substantial investments in technology and talent to create sustainable, long-term value for our stockholders. Our approach is a long-term perspective, building a business model that is wellpositioned to withstand a variety of operating environments. We remain focused on maximizing our brand as a tech-savvy specialty bank with a national footprint that can compete and thrive long term in the rapidly changing financial services landscape.

Darin Campbell Chairman, President & Chief Executive Officer

This document contains certain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which are made pursuant to the “safe harbor” provisions of such Act. These forward-looking statements describe future plans or strategies and may include the Company’s and the Bank’s expectations of future results. The words “believe,” “expect,” “anticipate,” “estimate,” “project” and similar expressions identify forward-looking statements. The Company’s and the Bank’s ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes is inherently uncertain. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to: changes in general market interest rates, changes in general economic conditions and those specific to the Company’s and the Bank’s market area, legislative/regulatory changes, monetary and fiscal policies of the U.S. Treasury and the Federal Reserve, changes in the quality or composition of the Bank’s loan portfolio, demand for loan products, changes in deposit flows, real estate values, and competition and other economic, competitive, governmental, regulatory and technological factors affecting the Bank’s operations, pricing, products and services. The Company and the Bank disclaim any obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained in this release to reflect future events or developments. The Company and the Bank make certain periodic filings to certain regulators containing various financial information, copies of which are available from the Bank without charge.

STRATEGIC PRIORITIES

1. EXPAND NATIONAL FOOTPRINT

Evergreen is headquartered in a large metropolitan market to be full-service and support local loans, deposits and community engagement, but we will continue to expand our footprint nationally with technology and key partnerships to help drive growth, profitability and long-term value.

Online Banking and Mobile App Enrollments

8,110 Evergreen Bank Group

62,420 FreedomRoad Financial

27,690 Performance Finance Online Savings

2,903 accounts for a total of

$128,400,801

Accounts Opened Online

Certificates of Deposit

784 accounts for a total of $47,691,080

Checking 231 accounts for a total of $399,351

2. EXPAND NATIONAL SPECIALTY LENDING NICHE

Drive growth and profitability with higher yielding niche assets – owning our niche positions us as a specialist rather than a generalist. As a result, we’re offered tremendous credibility, efficiency, growth and expansion opportunities. We are considered experts nationally in powersport and collector car lending, which places us in a great position to expand in 2024 via national brand awareness, new technologies, strong OEM relationships and other strategic partnerships.

3. E XPAND AGRICULTURAL NICHE

Drive additional fee income via AgTech partnerships with Compeer Financial. Expand marketing and networking coverage to drive other banking opportunities within Compeer and the Farm Credit System.

4. L EVERAGE KEY PARTNERSHIPS

Partnerships within our niche business lines afford us competitive advantages, greater brand awareness and opportunities to expand our footprint via our strategic partners’ customer base and target markets. Finalize marketing and technology plans to offer our digital solutions in 2024.

5. E XECUTE NEXT PHASE OF TECHNOLOGY-DRIVEN STRATEGY & DIGITAL TRANSFORMATION

In addition to a new Loan Origination System (LOS), we have several enhancements to our digital stack related to Salesforce and Mobile Banking Solutions. Garner additional national recognition and awards via top resource websites that cover top digital banking solutions and deposit account comparisons.

RETAIL DIGITAL BANKING

Evergreen retail banking digital solutions and integrations are among the best in the country

Best-in-Class:

• O nline Account Opening –open new deposit accounts in less than 5 minutes

• Mobile Banking

• Online Banking

Integrated:

• AppXchange functionality

• K YC identity-based decisioning

• Account verification

• Core banking

• S alesforce CRM (Financial Services and Marketing Cloud) with integrations into core banking system, phone system, digital solutions, fraud solutions, Office 365 and specialty lending loan origination system

6. D IVERSIFY DEPOSIT BASE

Evergreen products compared to top online retail banks nationwide

• O nline Rewards Checking

• Online Savings

• O nline High-Yield CDs

• Online CD Management

• Online Beneficiary Management

• M obile Apple Pay ®

• M obile Google Pay™

• M obile and Online Zelle

Drive additional core deposits via online checking and savings, powered by digital solutions and personalized customer journeys. Launch several different customized customer journeys focused on lifestyle, savings, reducing expenses and credit health for the first time in 2024. We are positioned to drive ongoing customer growth and relationships, relying less on Certificate of Deposit (CD) funding going forward.

7. O PERATIONAL EFFICIENCY

Continued focus on running clean operations in the current down-banking cycle with strong regulatory and compliance adherence. Disciplined risk management, expanded expense control and smart capital allocation will be focal points in 2024.

Launching industry-leading consumer loan origination system (LOS) in 2024

• Integrated and interactive dealer hub

• Integrated identity fraud solution

• Integrated application pre-fill solution

• Integrated pre-qualification solution

• Integrated QR code solution

• D ealership and Original Equipment Manufacturer (OEM) website link functionality

• Integrated direct lending solutions and direct website link functionality

8. BUILDING ON OUR TEAM AND CULTURE

Maintaining a strong company culture is essential to our success as it shapes our identity, guides our actions and fosters a sense of belonging among our employees. We are committed to upholding our core values, promoting open communication and nurturing a supportive and inclusive environment where every individual feels valued and empowered. We will ensure that our culture remains aligned with a relentless focus on customers, communities, employees and stockholders.

7 Years in a Row

2023 VS. 2022 FINANCIALS

BALANCE SHEETS

BOARD OF DIRECTORS

Darin Campbell

Chairman of the Board, President & CEO

Bancorp Financial, Inc., Evergreen Bank Group

Fred B. Barbara

President & Owner, Barbara Holdings, LLC

Norman J. Beles

President & Owner, Belcorp Financial Services, Inc.

Thomas P. FitzGibbon, Jr.* Independent Bank Consultant

Philip M. Kayman*

Attorney in Private Practice

William Pacella

President & Owner, Pacella Trucking Express, Inc.

Dan Phelps*

Consultant, Retired Executive of Northern Trust Corporation

Joe Rizza

President & Owner, Joe Rizza Auto and Finance Groups

Michael F. Spaniak*

General Counsel, Bancorp Financial, Inc., Evergreen Bank Group

Jeffrey Voss* Independent Bank Consultant, Artisan Advisors, LLC

Jill D. Voss*

Chief Financial Officer, Bancorp Financial, Inc., Evergreen Bank Group

*Evergreen Bank Group director only

EVERGREEN BANK GROUP EXECUTIVE OFFICERS

Darin Campbell

President & CEO

Tom Collins

Executive Vice President, FreedomRoad Financial & Performance

Finance

Bruno Costa

Executive Vice President, IT & Operations

Dan Inendino

Executive Vice President, Digital Banking & Marketing

Paul Leake

Executive Vice President, Consumer Lending & Retail Banking

Jim McGrath

Executive Vice President, Commercial Banking

Michael F. Spaniak

General Counsel

Jill D. Voss

Chief Financial Officer

EVERGREEN BANK GROUP BRANCH LOCATIONS

OAK BROOK BRANCH / EXECUTIVE OFFICES

1515 W. 22nd Street, Suite 100W

Oak Brook, IL 60523 (630) 413-9580

EVERGREEN PARK BRANCH

3842 W. 95th Street

Evergreen Park, IL 60805 (708) 229-1010

HINSDALE BRANCH

1 Grant Square, Suite 100 Hinsdale, IL 60521 (630) 590-4800

www.evergreenbankgroup.com

FREEDOMROAD FINANCIAL & PERFORMANCE FINANCE

Reno Loan Production Office 10509 Professional Circle, Suite 100

Reno, NV 89521

www.freedomroadfinancial.com

www.goperformancefinance.com