Accord Financial : 2021 3rd Quarter Report

Forward Together

202 1 THIRD QUARTER REPORT

ACCORD FINANCIAL CORP.

MESSAGE FROM THE PRESIDENT AND CEO

Enclosed are the financial statements, as well as Management's Discussion and Analysis, for the quarter and nine months ended September 30, 2021 together with comparative figures for the same period of 2020. These financial statements have not been reviewed by the Company's auditors, but have been reviewed and approved by its Audit Committee and Board of Directors.

Revenue increased by 31% to a quarterly record $16,119,000 in the third quarter of 2021 compared to $12,312,000 last year mainly as a result of higher funds employed and increased other income.

Net earnings attributable to the Company's shareholders ("shareholders' net earnings") were substantially higher at $2,643,000 in the third quarter of 2021 compared to $566,000 in last year's third quarter. Earnings Per Share ("EPS") this quarter were 31 cents compared to 7 cents in the third quarter of 2020.

Adjusted net earnings, which comprises net earnings attributable to shareholders before non-operatingstock-based compensation, restructuring expenses and business acquisition expenses (namely business transaction costs and amortization of intangibles), totalled $2,801,000 in the third quarter of 2021 compared to $621,000 in the third quarter of 2020. Adjusted EPS, based on adjusted net earnings, were 33 cents in the current quarter compared to 7 cents last year.

Accord's strong performance in the third quarter puts the Company squarely back on its pre-pandemic growth trajectory. Emerging from the economic crisis, Accord has put together four strong quarters in a row, with trailing adjusted twelve-month earnings per share of $1.26. With the economy rebounding, we continue to capitalize on innovative product development, deep market presence and financial strength, and look forward to accelerating growth through year-end and beyond.

Table of Contents

1. Message From the President and CEO

1. Management's Discussion and Analysis

1. Consolidated Statements of Financial Position (Unaudited)
2. Consolidated Statement of Earnings (Unaudited)

1. Consolidated Statement of Comprehensive Income (Unaudited)
2. Consolidated Statements of Changes in Equity (Unaudited)
3. Consolidated Statements of Cash Flows (Unaudited)
4. Notes to the Consolidated Financial Statements

67Corporate Information

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ACCORD FINANCIAL CORP.

MESSAGE FROM THE PRESIDENT AND CEO

Strong net earnings were driven by continued growth of Accord's overall loan portfolio. Total funds employed (finance receivables and loans) at September 30, 2021 reached an all time high of $437 million, up 26% from $348 million at the end of the third quarter 2020. Average funds employed in the first nine months of 2021 were $383 million compared with $343 million last year. Shareholders' equity reached $97 million at September 30, 2021 compared to $90 million at September 30, 2020. Book value per share continues to climb, reaching $11.31 at September 30, 2021 versus $10.56 a year ago.

Portfolio growth this year has been led by the outstanding performance of two of Accord's divisions: Accord Small Business Finance in Canada and BondIt Media Capital in the US. Accord's diversification across five core lending divisions means that we're positioned to steer financing to wherever in the economy it's needed most. In the past year we've boosted support to the small business sector, and successfully financed content serving the tidal wave of demand for streaming video entertainment. While these divisions are seeing unprecedented success, the new business pipelines across our asset-based and equipment finance divisions are starting to build. As the economy continues to strengthen in select sectors, we're ready to shift gears as necessary to maintain the momentum.

Driven by loan portfolio growth, improving yields and non-interest income, revenue in the nine months to September 30, 2021 hit $45.0 million, up 26% over the same period last year - a record first nine months for Accord. Net earnings, which were negative in the first nine months of 2020, came in at $8.3 million for the same period this year, translating into EPS of 97 cents, while adjusted EPS was $1.01, both first nine-month records.

Portfolio growth and earnings are benefiting from a shift in Accord's portfolio mix, which over the past year has favored higher yielding segments, including small business and media finance. In Canada, Accord's unique EDC-supported loan program continues to shine, supporting small businesses as they invest in reopening and a return to growth. In the US, BondIt Media Capital continues to see unprecedented opportunity, as we are perfectly positioned to profit from the long-term secular growth of video on demand, supplied to blue chip buyers like Lion's Gate and Netflix.

Accord's "headline" metrics - portfolio growth, revenue, earnings - are easy to track, and clearly headed in the right direction. Just below the surface, several other key metrics are forming an inflection point.

First is operating efficiency. Accord's general and administrative expenses, as a percentage of total revenues, provides a measure of how efficient we are at managing a growing business. Better operating efficiency means we convert a greater percentage of revenue to shareholder earnings as the portfolio grows. Five years ago, in 2016, we spent 62% of revenue on overhead. In the first nine months of 2021 that number declined

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ACCORD FINANCIAL CORP.

MESSAGE FROM THE PRESIDENT AND CEO

to 50%. With a robust platform in place, the next phase of growth will become increasingly profitable.

Second is portfolio diversification. At the end of the third quarter, Accord's portfolio represented hundreds of small and medium-sized companies, well diversified by:

• geography: 51% Canada, 49% US
• industry: every sector represented, with manufacturing the highest allocation at 23%
• product: 64% ABL (incl. factoring), 20% equipment finance, 16% media finance

Third is portfolio quality. With the worst of the economic crisis behind us, Accord's allowance for expected losses (an estimate of potential future loan losses), has slowly returned to more normal levels. The allowance at September 30, 2021 was $5.9 million, compared to $8.5 million at the same time last year (even with a larger portfolio). In percentage terms this stands at 1.3 % of the portfolio compared to 2.3% at this time last year. This reduction in the allowance reflects the improvement in credit standing across the loan portfolio, as well as the more stable business environment in which we're now operating.

Accord's record funds employed, revenue and earnings set us up for a strong finish to the year. And steady improvement of operating efficiency, diversification and credit quality underpin the foundation, adding an element of strength and stability as we look forward to continued success in 2022.

On October 27th, the Board of Directors declared a quarterly dividend of 5 cents per common share, payable December 1, 2021 to shareholders of record November 15, 2021.

Simon Hitzig

President and Chief Executive Officer

November 3, 2021

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ACCORD FINANCIAL CORP.

Management's Discussion & Analysis of Results of Operations and Financial Condition ("MD&A")

Quarter and nine months ended September 30, 2021 compared with the quarter and nine months ended September 30, 2020

FINANCIAL HIGHLIGHTS

(unaudited, in thousands except average funds employed, earnings	Three months	Nine months
per common share and book value per common share)
	ended Sept. 30	ended Sept. 30
	2021		2020	2021	2020
Average funds employed (millions)	$ 414	$	327	$ 383	$ 343
Revenue	16,119		12,312	45,015	35,598
Earnings (loss) before income tax	3,132		(120)	10,083	(5,209)
Net earnings (loss) attributable to shareholders	2,643		566	8,313	(968)
Adjusted net earnings (loss)	2,801		621	8,645	(63)
Earnings (loss) per common share (basic and diluted)	0.31		0.07	0.97	(0.11)
Adjusted earnings (loss) per common share (basic and diluted)	0.33		0.07	1.01	(0.11)
Book value per common share (September 30)				11.31	10.56

OVERVIEW

The following discussion and analysis explains trends in Accord Financial Corp.'s ("Accord" or the "Company") results of operations and financial condition for the quarter and nine months ended September 30, 2021 compared with the quarter and nine months ended September 30, 2020 and, where presented, the quarter and nine months ended September 30, 2019. It is intended to help shareholders and other readers understand the dynamics of the Company's business and the factors underlying its financial results. Where possible, issues have been identified that may impact future results.

This MD&A, which has been prepared as at November 3, 2021, should be read in conjunction with the Company's condensed interim unaudited consolidated financial statements (the "Statements") and notes thereto for the quarter and nine months ended September 30, 2021 and 2020, which are included as part of this 2021 Third Quarter Report, and as an update in conjunction with the discussion and analysis and fiscal 2020 audited consolidated financial statements and notes thereto included in the Company's 2020 Annual Report.

All amounts discussed in this MD&A are expressed in Canadian dollars unless otherwise stated and have been prepared in accordance with International Financial Reporting Standards ("IFRS"). Please refer to the Critical Accounting Policies and Estimates section below and note 2 and 3 to the Statements regarding the Company's use of accounting estimates in the preparation of its financial statements in accordance with IFRS. Additional information pertaining to the Company, including its Annual Information Form, is filed under the Company's profile with SEDAR at www.sedar.com.

The following discussion contains certain forward-looking statements that are subject to significant risks and uncertainties that could cause actual results to differ materially from

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