Redwood Capital Bancorp : 2021 Audited Financial Statements

Audited Financial Statements

December 31, 2021

(This page intentionally left blank.)

On behalf of our Board of Directors, senior management and staff, thank you r the trust you have placed in us. We are sincerely gratel r the relationships we have developed over the past 18 years. Taking care of our shareholders and customers is paramount to how we do business every day. Here's wishing you good health, prosperi and resiliency. We are proud to be Humboldt County's local, community bank of choice.

Sincerely,

DWOOD CAPITAL BANCORP

John J. Gierek, Jr.

Chairman of the Board

550 Howe Avenue, Suite 210

Sacramento, California 95825

Telephone: [phone]

FAX: [phone]

INDEPENDENT AUDITOR'S REPORT

The Shareholders and

Board of Directors

Redwood Capital Bancorp and Subsidiary Eureka, California

Opinion

We have audited the accompanying consolidated financial statements of Redwood Capital Bancorp and Subsidiary, which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income, changes in shareholders' equity and cash flows for the years then ended, and the related notes to the financial statements.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Redwood Capital Bancorp and Subsidiary, as of December 31, 2021 and 2020, and the results of their operations, comprehensive income 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. 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 Redwood Capital Bancorp 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 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 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 Redwood Capital Bancorp and Subsidiary's ability to continue as a going concern within one year after the date that the consolidated financial statements are available to be 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 generally accepted auditing standards 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, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgement made by a reasonable user based on the financial statements.

1