Solera National Bancorp : 2021 Annual Report

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITOR'S REPORT

SOLERA NATIONAL BANCORP, INC.

AND SUBSIDIARY

December 31, 2021 and 2020

Independent Auditor's Report

To the Audit Committee and Board of Directors

Solera National Bancorp, Inc. and Subsidiary Lakewood, Colorado

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Solera National Bancorp, Inc. and Subsidiary (the Company), which comprise the consolidated balance sheets as of December 31, 2021 and 2020 the related consolidated statements of 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 financial position of the Company as of December 31, 2021 and 2020, and the results of their operations and their cash flows for 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 Consolidated 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 Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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In preparing the consolidated 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 one year after the date that the consolidated financial statements are available to be issued.

Auditor's Responsibilities for the Audit of the Consolidated 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 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 consolidated 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 consolidated 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.

Supplementary Information

Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The supplementary consolidating schedules are presented for purposes of additional analysis and are not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

Denver, Colorado

March 30, 2022

Solera National Bancorp, Inc. and Subsidiary

Consolidated Balance Sheet

December 31,

ASSETS

Cash and cash equivalents Interest-bearing deposits with banks Investment securities, available-for-sale Investment securities, held-to-maturity Loans, net

Nonmarketable equity securities, restricted Bank-owned life insurance

Premises and equipment, net Accrued interest receivable Deferred tax asset, net Other assets

Total Assets

LIABILITIES AND

STOCKHOLDERS' EQUITY

Liabilities

Deposits Noninterest-bearing demand Interest-bearing demand Savings and money market Time deposits

Total deposits

Accrued interest payable

Accounts payable and other liabilities Deferred tax liability, net

FHLB advances

Total liabilities

Commitments and contingencies (see Notes N, O) Stockholders' equity

Common stock 1 Additional paid-in capital Accumulated surplus

Accumulated other comprehensive income

Total stockholders' equity

Total Liabilities and Stockholders' Equity

2021

2020

(in thousands, except for shares outstanding)

$

16,124 $ 10,584

1,251 807

130,199 52,877

10,500 10,418

462,172 337,687

2,853 1,322

5,042 4,937

18,830 13,155

2,756 1,886

- 178

2,703 1,941

$

652,430 $ 435,792

$

464,050 $ 235,172

11,071 12,576

93,937 83,399

18,860 50,999

587,918 382,146

36 815 732

50 1,566 -4,000 4,000

593,501 387,762

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38,748 38,518

19,809 8,718

329 751

58,929 48,030

$

652,430

$

435,792

110,000,000 shares of $0.01 par value authorized; 4,299,953 and 4,276,953 shares outstanding as of December 31, 2021 and 2020, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

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