UB Bancorp : 2021 Audited Financial Statements

UB Bancorp

Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

UB Bancorp

Table of Contents

Independent Auditors' Report .................................................................................................................. 1

Consolidated Financial Statements:

Consolidated Balance Sheets ............................................................................................................. 3

Consolidated Statements of Operations .............................................................................................. 4

Consolidated Statements of Comprehensive Income ......................................................................... 5

Consolidated Statements of Changes in Stockholders' Equity ........................................................... 6

Consolidated Statements of Cash Flows ............................................................................................ 7

Notes to Consolidated Financial Statements ...................................................................................... 9

Independent Auditor's Report

To the Stockholders and the Board of Directors

UB Bancorp

Greenville, NC

Opinion

We have audited the consolidated financial statements of UB Bancorp (the "Company"), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of UB Bancorp 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.

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 Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of UB Bancorp 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 UB Bancorp's ability to continue as a going concern for the year after the date that the financial statements are issued.

Auditors' 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 auditors' 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 consolidated financial statements.

In performing an audit in accordance with GAAS, we:

•  Exercise professional judgment and maintain professional skepticism throughout the audit.

•  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 financial statements.

•  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 UB Bancorp's internal control. Accordingly, no such opinion is expressed.

•  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.

•  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about UB Bancorp'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.

Greenville, North Carolina

March 24, 2022

UB Bancorp

Consolidated Balance Sheets December 31, 2021 and 2020

2021

2020

ASSETSCash and due from banks Interest-bearing deposits with banks Federal funds sold

Certificates of deposits with banks Investment securities available-for-sale

$

7,296,251

• $ 11,459,844

  12,872,603 5,376,937 155,002,137 7,383,395 3,920,000 5,145,000 275,498,334 249,971,531

  Loans

  Allowance for loan losses

  NET LOANS

  Accrued interest receivable Federal Home Loan Bank stock Bank premises and equipment, net Right-of-use operating lease asset Bank-owned life insurance

  Other real estate owned Goodwill

  Core deposit intangible Other assets

  TOTAL ASSETS

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Liabilities:

  Deposits

  Advances from the Federal Home Loan Bank, short term Advances from the Federal Home Loan Bank, long term Subordinated debt

  Other borrowings

  Right-of-use operating lease liability Accrued interest payable

  Accrued expenses and other liabilities

  TOTAL LIABILITIES

  Stockholders' Equity:

  Preferred stock, no par value, 5,000,000 shares authorized; none issued and outstanding

  Common stock, no par value, 24,000,000 shares authorized; 5,960,946 and 5,987,782 shares issued and outstanding at

  December 31, 2021 and 2020, respectively

  Retained earnings

  Accumulated other comprehensive income

  TOTAL STOCKHOLDERS' EQUITY

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

  652,159,642 660,962,633

  (7,592,785)

  (10,112,742)

  644,566,857 650,849,891

  2,720,029 2,941,479

  833,700 2,715,800

  11,969,605 12,463,547

  2,138,348 2,459,248

  20,864,113 17,350,227

  -

  12,896,999

  304,215

  6,935,932

  • $ 1,157,819,123

  • $ 1,004,016,277

    117,500

    12,896,999

    694,405

    5,545,511

• $ 987,371,314

• $ 753,448,411

  - 38,500,000

  8,000,000 8,000,000

  30,672,302 30,633,368

  10,364,444 57,522,579

  2,138,348 2,459,248

  390,727 2,590,469

  1,058,172,567

  527,108 2,287,700

  893,378,414

  -

  -69,741,963 71,087,685

  29,318,125 17,502,508

  586,468 5,402,707

  99,646,556

  • $ 1,157,819,123

  93,992,900

• $ 987,371,314

See accompanying notes.

3