Exchange Bankshares : Audited Financial Statement

EXCHANGE BANKSHARES, INC.

AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT

DECEMBER 31, 2021

EXCHANGE BANKSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL REPORT
DECEMBER 31, 2021
TABLE OF CONTENTS
	Page
INDEPENDENT AUDITOR'S REPORT ....................................................................................................................	1 and 2
FINANCIAL STATEMENTS
Consolidated balance sheets .............................................................................................................................................	3
Consolidated statements of income ..................................................................................................................................	4
Consolidated statements of comprehensive income ........................................................................................................	5
Consolidated statements of stockholders' equity ............................................................................................................	6
Consolidated statements of cash flows .............................................................................................................................	7
Notes to consolidated financial statements ...............................................................................................................	8 - 43

INDEPENDENT AUDITOR'S REPORT

Board of Directors

Exchange Bankshares, Inc.

and Subsidiary

Milledgeville, Georgia

Opinion

We have audited the accompanying consolidated financial statements of Exchange Bankshares, Inc. and its Subsidiary, which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and 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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Exchange Bankshares, Inc. and its 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. 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 Exchange Bankshares, Inc. and its 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 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 Exchange Bankshares, Inc. and its 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 judgment made by a reasonable user based on the consolidated financial statements.

2303 DAWSON ROAD • POST OFFICE BOX 71549 • ALBANY, GEORGIA 31708-1549 • 229-446-3600 • FAX [phone] • www.mjcpa.com

Members of The American Institute of Certified Public Accountants

In performing an audit in accordance with generally accepted auditing standards, 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 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 Exchange Bankshares, Inc. and its 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 consolidated financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Exchange Bankshares, Inc. and its 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.

Albany, Georgia

February 28, 2022

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EXCHANGE BANKSHARES, INC.

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2021 AND 2020

Assets			2021			2020
Cash and due from banks	$	4,901,912	$	8,783,627
Interest-bearing deposits at other financial institutions	32,524,967			11,401,719
Federal funds sold			1,500,000			1,500,000
Securities available for sale			154,265,738			115,360,000
Restricted equity securities, at cost			163,700			238,700
Loans held for sale			1,041,000			2,453,200
Loans			164,304,555			170,481,076
Less allowance for loan loss			3,097,843			3,000,000
Loans, net			161,206,712			167,481,076
Premises and equipment, net			5,890,974			6,241,623
Foreclosed assets			60,000			413,559
Accrued interest receivable			1,335,955			1,218,611
Other assets			2,511,135			1,273,764
		$	365,402,093		$	316,365,879
Liabilities and Stockholders' Equity
Liabilities:
Deposits:	$	93,420,596
Noninterest-bearing	$	72,622,770
Interest-bearing			231,255,138			202,862,879
Total deposits			324,675,734			275,485,649
Federal Home Loan Bank advance			-			113,398
Accrued interest payable			78,674			128,659
Other liabilities			381,010			361,419
Total liabilities			325,135,418			276,089,125
Commitments and contingencies (Note 12)
Stockholders' equity:
Common stock, $2.50 par value, 3,000,000 shares authorized,	1,528,843
611,537 issued					1,528,843
Surplus			12,901,077			12,901,077
Retained earnings			26,672,571			23,894,982
Accumulated other comprehensive (loss) income	(638,763)			1,995,002
			40,463,728			40,319,904
Less cost of treasury stock, 4,786 and 1,090	shares, respectively	197,053			43,150
Total stockholders' equity			40,266,675			40,276,754
	$	365,402,093	$	316,365,879

See Notes to Consolidated Financial Statements.

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