Tri City Bankshares : 2021 Audited Financial Statements

Independent Auditors' Report

To the Board of Directors and Stockholders of

Tri City Bankshares Corporation

Opinion

We have audited the consolidated financial statements of Tri City Bankshares Corporation and its subsidiaries (the Corporation), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for the years then ended and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Corporation 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.

We have also audited, in accordance with auditing standards generally accepted in the United States of America (GAAS), the Corporation's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 and our report dated March 23, 2022 expressed an unmodified opinion on the effectiveness of the Corporation's internal control over financial reporting.

Basis for Opinion

We conducted our audits in accordance with 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 Corporation 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 Corporation's ability to continue as a going concern for a period of within one year after the date the financial statements are issued.

Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities.

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.

•  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 Corporation'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.

Milwaukee, Wisconsin

March 23, 2022

TRI CITY BANKSHARES CORPORATION

CONSOLIDATED BALANCE SHEETS

As of December 31, 2021 and 2020

ASSETS

Cash and due from banks Federal funds sold

Total Cash and Cash Equivalents Securities available for sale, at fair value

Loans, less allowance for loan losses of $13,572,773 and $13,106,919 as of 2021 and 2020, respectively

Premises and equipment - net Right of use lease asset Bank owned life insurance

Accrued interest receivable and other assets

TOTAL AS S ETS

LIABILITIES Deposits

Demand Interest bearing Certificates of deposit Total Deposits Lease liability

LIABILITIES AND STOCKHOLDERS' EQUITY

Accrued interest payable and other liabilities

Total Liabilities

STOCKHOLDERS' EQUITY

Cumulative preferred stock, $1 par value 200,000 shares authorized, no shares issued

Common stock, $1 par value, 15,000,000 shares authorized, 8,904,915 shares issued and outstanding in 2021 and 2020 Additional paid-in-capital

Accumulated other comprehensive (loss) income Retained earnings

Total Stockholders' Equity

2021

$

134,568,580

891,783 11,019,722

135,460,363 195,365,049

820,639,129 558,509,399

1,001,079,594 945,140,634

17,314,670 16,026,081

14,567,534 15,659,597

44,300,870 43,312,658

21,136,368 22,400,218

$

2,054,498,528

• $ 498,794,405 1,289,460,638 56,123,838 1,844,378,881

  2020

  $ 184,345,327

  $

  1,796,413,636

  $

  420,974,242 1,096,230,547 57,382,365 1,574,587,154

  14,567,534 15,659,597

  3,920,473 15,063,354

  1,862,866,888

  1,605,310,105

  -

  -8,904,915 8,904,915

  26,543,470 26,543,470

  (2,116,891) 8,083,013

  158,300,146 147,572,133

  191,631,640

  191,103,531

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

• $ 2,054,498,528

See accompanying notes to consolidated financial statements.

3

$

1,796,413,636

TRI CITY BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME For the Years Ended December 31, 2021 and 2020

INTERES T INCOME Loans

Investment securities

Taxable

Tax exempt

Federal funds sold and due from banks Other

Total Interest Income INTEREST EXPENSE Depos its

Other borrowings Total Interest Expense

Net Interest Income before Provision for Loan Losses Provision for loan losses

Net Interest Income after Provision for Loan Losses

NONINTERES T INCOME

Service charges on deposits Debit card interchange ATM

Merchant services Loan servicing income Net gain on sale of loans

Increase in bank owned life insurance Bank owned life insurance death benefits Non-accretable loan discount

Other income

Total Noninterest Income

NONINTEREST EXPENSES Salaries and employee benefits Net occupancy costs

Furniture and equipment expenses

Data processing and telecommunications expense Professional fees

Advertising and promotional

FDIC and other regulatory assessments

New Markets TaxCredits investment amortization Office supplies

Other expense

Total Noninterest Expense Total Income before Taxes Less: Income taxexpense NET INCOME

2021

2020

$

42,999,130

7,550,556 6,499,710

2,072,203 1,401,511

236,859 424,789

19,326 19,325

52,878,074

943,946 6 943,952

51,934,122 49,620,293

- 1,500,000

51,934,122

3,649,467 3,572,842

5,580,096 5,108,086

744,807 911,465

818,178 771,158

1,287,103 790,051

2,763,600 2,884,025

988,212 1,050,659

2,715 450,000

265,726 579,396

2,007,767 18,107,671

28,998,329 27,791,365

4,220,419 4,229,818

2,799,693 2,896,063

6,077,802 5,547,873

1,900,795 1,757,098

1,084,450 911,740

836,855 527,222

1,869,312 741,891 3,270,035 51,799,581

18,242,212 16,735,147

2,883,643 2,518,795

$

15,358,569

See accompanying notes to consolidated financial statements.

4

$ 42,721,792

51,067,127

1,446,826 8 1,446,834

48,120,293

2,253,568 18,371,250

1,619,796 891,900 3,583,521 49,756,396

$

14,216,352

TRI CITY BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2021 and 2020

2021

2020

NET INCOME

Other comprehensive (loss) income, net of tax: Securities available for sale:

Net unrealized holding (loss) gains arising during the period Reclassification adjustment for (gains) loss in net income Tax effect

Total Other Comprehensive (Loss) Income, net of tax: COMPREHENSIVE INCOME

$

15,358,569

(14,047,003) 9,691,323

28,248 3,818,851 (10,199,904)

$

5,158,665

See accompanying notes to consolidated financial statements.

5

$ 14,216,352

-$

(2,640,026) 7,051,297 21,267,649