U & I Financial : &I Financial Corp. Financial Statements 2021

REPORT OF INDEPENDENT AUDITORS AND CONSOLIDATED FINANCIAL STATEMENTS

U & I FINANCIAL CORP. AND SUBSIDIARY

December 31, 2021 and 2020

Table of Contents
PAGE
Report of Independent Auditors	1-2
Consolidated Financial Statements
Consolidated statements of financial condition	3
Consolidated statements of income	4
Consolidated statements of comprehensive income	5
Consolidated statements of changes in shareholders' equity	6
Consolidated statements of cash flows	7
Notes to consolidated financial statements	8-36

Report of Independent Auditors

The Board of Directors and Shareholders of

U & I Financial Corp. and Subsidiary

Report on the Audit of the Financial Statements

Opinion

We have audited the consolidated financial statements of U & I Financial Corp. and Subsidiary, which comprise the consolidated statements of financial condition as of December 31, 2021 and 2020, and the related consolidated statements of income, comprehensive income, changes in shareholders' 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 U & I Financial Corp. and 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 U & I Financial Corp. and 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 U & I Financial Corp. and 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 U & I Financial Corp. and 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 U & I Financial Corp. and 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.

Everett, Washington

March 25, 2022

U & I Financial Corp. and Subsidiary

Consolidated Statements of Financial Condition (dollars in thousands)

ASSETS

December 31,

2021	2020
31,096	$	22,189
-	2,747
55,024	57,956
321,765	290,048
20,783	6,690
1,800	617
5,466	5,590
1,724	301
13,679	13,363
1,123	1,716
2,400	1,986
287	-
536	695
455,683	$	403,898
LIABILITIES
Deposits
Noninterest-bearing	98,487	$	79,648
Interest-bearing
Savings	16,348	11,015
Money market accounts and NOW	182,612	161,557
Time deposits	76,933	85,349
Total deposits	374,380	337,569
Borrowings	10,000	5,000
Lease liability	1,724	301
Deferred income tax liability	-	367
Accrued interest payable	24	34
Other liabilities	2,438	1,542
Total liabilities	388,566	344,813
SHAREHOLDERS' EQUITY
Preferred stock, $1,000 par value; 5,500 shares authorized;
no shares issued and outstanding at December 31, 2021
and 2020	-	-
Common stock - no par value; 10,000,000 shares authorized;
5,562,025 and 5,578,990 shares issued and outstanding
at December 31, 2021 and 2020, respectively	30,016	29,464
Retained earnings	35,331	27,192
Accumulated other comprehensive income, net of tax	1,770	2,429
Total shareholders' equity	67,117	59,085
Total liabilities and shareholders' equity	455,683	$	403,898
See accompanying notes.

ASSETS

Cash and due from banks

Interest-bearing deposits in other financial institutions Securities available-for-sale, at fair value

Loans receivable, net of allowance for loan losses of $4,575 and $4,568 at December 31, 2021 and 2020, respectively Loans held for sale

Federal Home Loan Bank and Federal Reserve Bank stock, at cost Premises and equipment, net

Right-of-use asset Bank-owned life insurance Accrued interest receivable Servicing asset, net Deferred tax asset Other assets

$

Total assets

$

LIABILITIES AND SHAREHOLDERS' EQUITY

$

$

3