University Bancorp : 2021 Audited Financials University Bancorp, Inc.

UNIVERSITY BANCORP, INC.

AND SUBSIDIARIES

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2021 and 2020

UNIVERSITY BANCORP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Independent Auditor's Report	1
Consolidated Financial Statements
Consolidated Balance Sheets	3
Consolidated Statements of Operations and Comprehensive
Income	5
Consolidated Statements of Equity	8
Consolidated Statements of Cash Flows	9
Notes to Consolidated Financial Statements	11

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders of

University Bancorp, Inc. and Subsidiaries

Opinion

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

In our opinion, the financial statements referred to above 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 Auditor's 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 within one year after the date that the financial statements are available to be issued.

A member of UHY International, a network of independent accounting and consulting firms

To the Board of Directors and Stockholders of University Bancorp, Inc. and Subsidiaries Page Two

Auditor's 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 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 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 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.

Farmington Hills, Michigan

March 30, 2022

UNIVERSITY BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31,

2021	2020
ASSETS
Cash and cash equivalents	$	96,916,528	$ 199,851,084
Restricted cash	617,061	509,453
Total cash, cash equivalents and restricted cash	97,533,589	200,360,537
Investment securities, at amortized cost	6,089,037	4,287,776
Investment securities, at fair value	4,156,218	464,185
Federal Home Loan Bank stock	1,113,400	1,113,400
Loans and financings held for sale or
assignment, at fair value	137,214,609	185,856,685
Loans held for sale at lower of cost or fair value	673,713	1,324,924
Loans and financings, net	190,462,362	114,820,171
Premises and equipment, net	10,017,089	8,932,793
Mortgage and financing servicing rights	35,941,257	16,905,676
Accounts receivable and advances to fund loans	5,067,164	5,848,933
Accrued interest and financing income receivable	598,264	402,986
Prepaid expenses	2,295,936	1,998,948
Prepaid income taxes	1,107,694	78,896
Derivatives	2,983,702	8,075,434
Goodwill	422,981	422,981
Customer relationships, net	506,898	568,967
Servicing remittances receivable	-	1,534,406
Operating lease right of use assets	4,184,931	4,555,092
Other assets	14,854	124,046
Total assets	$ 557,676,836
See notes to consolidated financial statements.	Page 3

$ 500,383,698