RBAZ Bancorp : 2021 Audited Consolidated Financial Statements

REPORT OF INDEPENDENT AUDITORS AND CONSOLIDATED FINANCIAL STATEMENTS

RBAZ BANCORP, INC.

December 31, 2021 and 2020

Table of Contents
PAGE
Report of Independent Auditors	1-2
Consolidated Financial Statements
Consolidated balance sheets	3
Consolidated statements of income	4
Consolidated statements of comprehensive income	5
Consolidated statements of stockholders' equity	6
Consolidated statements of cash flows	7-8
Notes to consolidated financial statements	9-41

Report of Independent Auditors

The Board of Directors and Stockholders

RBAZ Bancorp, Inc.

Report on the Audit of the Financial Statements

Opinion

We have audited the consolidated financial statements of RBAZ Bancorp, Inc. and its subsidiary, which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the related consolidated statements of income, comprehensive income, 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 financial position of RBAZ Bancorp, Inc. and its subsidiary as of December 31, 2021 and 2020, and the results of their operations and their 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 Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of RBAZ Bancorp, Inc. and its subsidiary 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 consolidated 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 RBAZ Bancorp, Inc. and its subsidiary's ability to continue as a going concern within one year after the date that the financial statements are issued.

Auditor's 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 auditor's 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 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 RBAZ Bancorp, Inc. and its subsidiary'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 RBAZ Bancorp, Inc. and its subsidiary'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.

Phoenix, Arizona

March 31, 2022

RBAZ Bancorp, Inc.

Consolidated Balance Sheets

ASSETS

December 31,

2021	2020
ASSETS
Cash and due from financial institutions	35,676,814	$	12,330,974
Federal funds sold	9,505,000	22,720,000
Total cash and cash equivalents	45,181,814	35,050,974
Restricted stock, at cost	651,700	470,500
Available-for-sale securities	38,041,134	32,935,431
Held-to-maturity securities	8,509,509	6,428,891
Other investments	2,341,000	3,835,000
Loans, net of allowance for loan losses of $1,468,001
and $1,224,000 in 2021 and 2020, respectively	133,928,434	108,696,860
Other real estate owned	-	75,706
Premises and equipment, net	357,034	457,375
Operating right-of-use assets	947,007	1,211,412
Accrued interest receivable	565,529	650,891
Loan servicing rights	41,992	87,729
Deferred tax asset	201,005	110,896
Prepaid and other assets	653,359	298,912
Total assets

$

LIABILITIES

Deposits

Noninterest-bearing Interest-bearing

Total deposits

LIABILITIES AND STOCKHOLDERS' EQUITY

Borrowings

Subordinated debt, net of issuance costs Operating lease liabilities

Accrued interest payable and other liabilities

Total liabilities

STOCKHOLDERS' EQUITY

Common stock - $1 par value; 10,000,000 shares authorized 1,833,998 shares issued and outstanding as of

December 31, 2021 and 2020

Additional paid-in capital Accumulated earnings

Accumulated other comprehensive income

Treasury stock, 29,140 and 26,540 shares at cost, respectively

Total stockholders' equity

Total liabilities and stockholders' equity

$ 231,419,517

$ 48,215,251 157,188,244

$ 190,310,577

$ 43,637,720 122,948,958

205,403,495 166,586,678

- 5,000,000

5,870,344 1,081,009 393,031 212,747,879

- 1,370,501 504,608 173,461,787

1,833,998 1,833,998

12,504,461 12,447,130

4,534,981 2,617,437

49,521 (251,323)

18,671,638 $ 231,419,517

176,458 (226,233)

16,848,790 $ 190,310,577

See accompanying notes.

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