Golden State Bancorp : 2021 Audited Financial Statements

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021 and 2020

GOLDEN STATE BANCORP

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021 and 2020

CONTENTS

INDEPENDENT AUDITOR'S REPORT ................................................................................................... 1

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ........................................................ 3

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)... 4

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY .............................. 5

CONSOLIDATED STATEMENTS OF CASH FLOWS ......................................................................... 6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ................................................................ 7

Crowe LLP

Independent Member Crowe Global

INDEPENDENT AUDITOR'S REPORT

Board of Directors

Golden State Bancorp Glendale, California

Opinion

We have audited the consolidated financial statements of Golden State Bancorp, which comprise the consolidated statements of financial condition as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive income (loss), 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 Golden State Bancorp 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 Golden State Bancorp 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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 Golden State Bancorp's ability to continue as a going concern for one year from the date the consolidated financial statements are available to be issued.

(Continued)

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 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 Golden State Bancorp'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 Golden State Bancorp'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.

Crowe LLP

Costa Mesa, California

April 26, 2022

GOLDEN STATE BANCORP

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

December 31, 2021 and 2020 ____________________________________________________________________________________

ASSETS

Cash and due from banks Interest-bearing deposits in other banks Federal Funds Sold

Total cash and cash equivalents Loans

Construction and land development Real Estate

2021

2020

$

6,642,406 $ 7,259,821

97,976,054 98,551,443

-

-104,618,460 105,811,264

45,803,243 43,147,470

308,952,586 236,152,598

Commercial Other

62,159,969 46,886,099

Total loans

95,113 417,010,911

199,236 326,385,403

Deferred loan fees, net of costs Allowance for loan losses

(994,676) (5,736,672)

(915,289) (4,291,813)

Net loans

410,279,563 321,178,301

Federal Home Loan Bank stock, at cost Premises and equipment

Other real estate owned

Operating lease right-of-use assets, net Deferred tax asset

Accrued interest and other assets

1,534,400 1,137,600

1,021,351 1,110,425

1,331,857 1,331,857

1,250,081 1,421,486

4,251,905 5,011,426

2,001,221 2,069,404

Total assets

LIABILITIES AND SHAREHOLDERS' EQUITY Deposits

Noninterest-bearing demand

Savings, NOW and money market accounts Time deposits under $250,000

Time deposits $250,000 and over

Total deposits

$

526,288,838

$

439,071,763

$

76,407,218 $ 60,471,407

243,048,987 174,618,926

58,266,895 64,876,838

65,506,228 69,698,706

443,229,328 369,665,877

Federal Home Loan Bank advances Long-term debt, net

Operating lease liabilities

Accrued interest and other liabilities

25,000,000 25,000,000

14,662,605 9,920,757

1,425,856 1,631,398

4,034,176 1,912,920

Total liabilities

Shareholders' equity

Preferred stock - 500,000,000 shares authorized; issued and outstanding - 0 in 2021 and 2020 Common stock - 500,000,000 shares authorized; issued and outstanding - 2,047,146 in 2021 and 1,836,538 in 2020 Additional paid-in capital

Accumulated deficit

Total shareholders' equity

488,351,965

- 45,192,815 631,717 (7,887,659) 37,936,873

408,130,952

- 41,818,151 562,873 (11,440,213) 30,940,811

Total liabilities and shareholders' equity

$

526,288,838

$

439,071,763

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

3.