Studio Bank : 2022 First Quarter Shareholder Letter

June 2, 2022

Dear Shareholder,

Studio Bank continued to see more milestones for the first quarter of 2022, including record levels of loans and deposits. Additionally, we completed a very successful equity capital raise of $18 million. The quarter was marked by numerous other accomplishments… (1) submitted an application for loan forgiveness on our finalPPP loan, (2) received regulatory approval to open a branch in Williamson County, (3) added six new team members in the quarter, and (4) promoted a new member to our executive leadership team, Erika Small, our Director of Performance Excellence!

More details on the most recent quarter are included later in this letter. Please also see our 2021 Annual Report, included with this letter, which highlights many of the accomplishments of the Studio Bank team during the previous year. The 2021 Annual Report will also be posted on our OTCMarkets profile page at https://www.otcmarkets.com/stock/STBK/profile.

Studio Bank Shareholder Special Meeting Results

Studio Bank completed its reorganization as a wholly-owned subsidiary of Studio Financial Holdings, Inc., effective June 15, 2022. The reorganization was approved by Studio Bank's shareholders on May 31, 2022, at a Special Shareholder Meeting. We anticipate that Studio Financial Holdings, Inc. common stock will continue to trade on the OTC marketplace under the same symbol STBK and stockholders will have the same rights and ownership percentage in the new holding company as they currently have in the Bank immediately prior to the reorganization becoming effective. Pursuant to the reorganization, each existing shareholder of Studio Bank will receive an equal number of shares of Studio Financial Holdings, Inc. common stock in exchange for their Bank stock. Studio Bank shareholders holding paper stock certificates will receive correspondence from the Bank's transfer agent, Continental Transfer & Trust Company, with specific instructions on how to exchange their certificates. Shares held in book entry form only will be automatically converted with no action needed by shareholders.

This reorganization represents another milestone for Studio Bank and will provide flexibility for capital options to finance future growth. Importantly, we will obtain the ability to issue debt at the holding company level which can then be invested in the Bank as common equity, a cost-effective way to support growth in the best interest of our clients and shareholders. The Bank's current day-to-day operations will remain unaffected by the formation of the holding company and there will be no changes to the company's headquarters or management.

We will plan to host an Investor Meeting in the third quarter, in person, to update you further on the Bank's progress and outlook.

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Financial Summary of Q1 2022

Our results for the first quarter ended March 31, 2022, included Total Assets of $662 million, a new milestone, which increased 8.3% on a linked quarter basis. Loans also increased 8.3%, or $33 million, to a total of $434 million. Deposits increased to $591 million reflecting 8% growth above year-end, with non-interest checking accounts maintaining a strong 39% of total deposits. Other significant changes in the balance sheet included an increase in premises and equipment related to the capitalization of our long-term lease and tenant improvements for our new location in Williamson County.

Our average balance sheet loan to deposit ratio improved to 79% from 77% on a sequential quarterly basis, which helped to improve our net interest margin by eight (8) basis points on a linked quarter basis to 3.53%, despite loan yields remaining unchanged at 4.05% for the quarter. As interest rates continue to increase in 2022, we expect to see an increase in our loan yields, especially as we move through floors on current variable rate loans in the second quarter. We generated earnings of $733,565 for the quarter. This includes mortgage income of $147,227, which was down versus the prior quarter as rising interest rates slowed demand for refinancing activity and home inventory tightness limited purchase activity.

Equity grew to $65.1 million due to $12.5 million recognized from the capital raise (the remaining $5.5 million has been recognized in the second quarter). This was offset by a $2.8 million decrease in other comprehensive income associated with the unrealized losses in our investment portfolio. Like all banks experienced during the quarter, as interest rates increased the unrealized market value of our bond investments declined. The key here is the word "unrealized." We have no credit concerns regarding these investments and the change in market value is merely a reflection of the shifting yield curve. We do not actively trade securities; but rather, we have the intent to hold these bonds to maturity when they are expected to pay out at par value, which would fully eliminate the effect on our balance sheet of these temporary changes in market value.

More financial details can be found in the attached unaudited financial statements, and on the bank's most recent "Call Report" as of March 31, 2022, at https://cdr.ffiec.gov/public.

In summary, for the first quarter of 2022 we continued to see strong growth in our balance sheet and employee recruitment while navigating a more volatile economic and interest rate environment. We are well underway with several strategic initiatives and are focused on achieving our milestone of cumulative profitability in the next twelve months. We greatly appreciate the trust and support of our shareholders. It remains a privilege to work alongside our Studio Bank team members as we endeavor to build Nashville's next great company.

Best regards,

Aaron J. Dorn

Chairman of the Board, President, and Chief Executive Officer

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Balance Sheet

March 2022 (Unaudited)

	Mar 2022
Assets
Cash and due from banks	5,622,997
Fed funds sold & repos	100,367,094
Interest bearing deposits with banks	613,341
Investment Securities - Taxable	70,373,272
Investment Securities - Tax-exempt	22,836,106
Mortgage loans held for sale	6,510,724
Loans, net of unearned income	433,912,836
Less: Allowance for loan losses	-4,985,700
Bank Owned Life Insurance	12,192,754
Premises and equipment, net	5,517,534
Accrued interest receivable	1,366,066
Other assets	7,309,676
Total Assets	661,636,702
Liabilities
168,181,819
Non-Interest Bearing Deposits
Interest bearing demand deposits	67,141,452
ICS deposits	168,233,597
Savings and Money Market Deposits	175,862,164
Time Deposits - Retail	9,228,532
Time Deposits - Wholesale	2,004,946
Total Deposits	590,652,509
Accrued expenses and other liabilities	5,884,119
Total Liabilities	596,536,628
Equity

Common stock Capital surplus Retained earnings

Accumulated other comprehensive income (loss) Net Income

Total Equity

Total Liabilities & Equity

743

72,548,810 -5,311,190

-2,871,854 733,565

65,100,074

661,636,702

Outstanding common shares

7,134,372

YTD Statement of Operations

March 2022 (Unaudited)

	YTD
	Mar 2022
Interest Income
Interest on Loans	4,172,895
Mortgage Loans Held For Sale	9,463
Fees on Loans	605,072
Interest on federal funds sold	18,800
Interest on deposits with banks	212
Investment Securities - Taxable	310,124
Investment Securities - Tax-exempt	122,748
Total Interest Income	5,239,314
Interest Expense
Interest bearing demand deposits	30,106
ICS Deposits	174,477
Savings and Money Market Deposits	141,598
Time Deposits - Retail	10,575
Time Deposits - CDARS	1,606
Total Interest Expense on Deposits	358,363
FHLB Advances	1,697
Total Interest Expense	360,060
Net Interest Income	4,879,254
Provision for loan losses	499,952
Net In. Inc. After Prov. for Loan Losses	4,379,302
Non Interest Income
Service charges and fees	180,953
Mortgage loan and related fees	958,302
Other noninterest income	76,048
Total Non Interest Income	1,215,303
Non Interest Expense
Salaries and employee benefits	3,528,068
Occupancy	226,685
Other noninterest expense	908,409
Total Non Interest Expense	4,663,162
Income Before Taxes	931,443
Income taxes	197,878
Net Income	733,565
EPS	$0.12
BVPS	$9.12
FTE Employees at March 31, 2022	79