CBM Bancorp : Annual Report 2021

2021 ANNUAL REPORT

To the Shareholders of CBM Bancorp, Inc.:

We are pleased to provide the Annual Report to Shareholders of CBM Bancorp, Inc., and its wholly owned subsidiary Chesapeake Bank of Maryland for the fiscal year ending December 31, 2021.

We believe that 2021 was a successful fiscal year for our Company and for you, our stockholders.

Our achievements during 2021 were only possible through the hard work of our dedicated employees. We are sincerely grateful to our employees and experienced management team and greatly appreciate their many contributions during a year of continued challenges, particularly from the ongoing COVID-19 pandemic.

Our 2021 results reflect the strength of our operating model and our balance sheet. Our asset quality metrics and level of tangible capital continue to exceed industry standards. The Company ended the 2021 fiscal year with total assets of $249,500,000 representing an increase of 6% from the previous year. The Company's net loans total $148,400,000 at December 31, 2021, virtually unchanged from the previous year end total. We are pleased to report that the Company recorded consolidated net income for the fiscal year of $1,185,000, representing an increase of 26% from the previous year. In addition, we were pleased to declare and pay our stockholders two special dividends, each in the amount of $0.50, during the 2021 fiscal year.

On behalf of our entire organization, we would like to thank our customers and the communities we serve for continuing to honor us with their business. We know they have many banking options, and we appreciate them for choosing us.

Finally, as we hope that most of you are aware, on January 28, 2022, we announced the proposed merger of CBM Bancorp, Inc. and its subsidiary, Chesapeake Bank of Maryland, with Rosedale Federal Savings and Loan Association. Under the terms of the agreement, stockholders of CBM Bancorp, Inc. will be entitled to receive $17.75 in cash for each share of our Company's common stock they own. A special stockholder meeting is expected to be held in June, for the purpose of considering and approving the proposed merger agreement.

On behalf of the Board of Directors and our employees, thank you for the confidence you have demonstrated through your investment in our Company and your continued support.

Sincerely,

William J. Bocek, Jr.	Joseph M. Solomon
Chairman of the Board	President

Financial Highlights

As of and for the years ended December 31,

(dollars in thousands, except ratios and per common share data)

		2021			2020			2019			2018
Selected Financial Condition Data ($):
Total assets	$	249,469	$	234,804	$	220,402	$	215,413
Cash and cash equivalents		70,799			47,608			5,987			18,847
Time deposits in other banks		4,712			6,478			7,936			6,944
Investment securities		19,063			16,544			37,091			37,447
Loans, net of unearned fees		150,026			150,306			159,625			143,509
Allowance for loan losses		1,585			1,727			1,379			1,188
Foreclosed real estate		-			775			845			865
Deposits		193,815			174,780			156,441			153,750
Borrowings		5,000			5,000			2,500			-
Stockholders' equity		49,803			53,563			59,935			60,347
Selected Earnings Data ($):
Net interest income	$	6,635	$	7,286	$	7,635	$	6,724
Provision for (reversal of) loan losses		(150)			350			175			575
Non-interest income		1,918			1,574			592			581
Non-interest expense		7,316			7,148			6,776			5,834
Net income		1,185			943			908			673
Performance Ratios (%):
Return on average assets		0.48%			0.41%			0.42%			0.35%
Return on average equity		2.35%			1.72%			1.50%			2.10%
Net interest spread		2.58%			3.05%			3.33%			3.49%
Net interest margin		2.83%			3.33%			3.68%			3.67%
Common Share Data ($):
Basic earnings per share	$	0.36	$	0.26	$	0.23	$	0.17
Dividends paid per share		1.00			0.50			-			-
Book value per share (end of period)		14.14			14.51			14.24			14.26
Shares outstanding (end of period)		3,521,814			3,690,633			4,208,505			4,232,000
Ratios (%):
Loans to deposits		77.41%			86.00%			102.04%			93.32%
Allowance for loan losses to total loans		1.06%			1.15%			0.86%			0.83%
Non-performing loans to total loans		0.18%			0.12%			0.31%			0.86%
Non-performing assets to total assets		0.11%			0.41%			0.61%			0.98%
Total risk-based capital		35.46%			29.53%			28.68%			30.58%
Tier 1 capital to average assets		18.74%			18.66%			19.08%			18.45%
Average equity to average assets		20.34%			23.34%			27.67%			16.69%

Independent Auditors' Report

Stockholders and the Board of Directors

CBM Bancorp, Inc.

Opinion

We have audited the financial statements of CBM Bancorp, Inc. (the "Company") which comprises of the consolidated statements of financial condition as of December 31, 2021 and 2020, and the related statements of consolidated statements of operations, comprehensive income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes to the financial statements (collectively referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company 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 the Company 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 the Company's ability to continue as a going concern for within one year after the date the financial statements are issued.

Auditors' 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 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 financial statements.

DHG is registered in the U.S. Patent and Trademark Office to Dixon Hughes Goodman LLP.

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 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 the Company'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 financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the company'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.

Other Information Included in the Annual Report

Management is responsible for the other information included in the annual report. The other information comprises the Letter to Stockholders and Financial Highlights as of and for the years ended December 31, 2021, 2020, 2019 and 2018 but does not include the financial statements and our auditors' report thereon. Our opinion on the financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materiality misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Richmond, VA

March 16, 2022

DHG is registered in the U.S. Patent and Trademark Office to Dixon Hughes Goodman LLP.