证券和交易委员会

华盛顿特区20549

表格10-Q

☒	根据1934年证券交易法第13或第15(d)款的季度报告

截至季度结束日期的财务报告2024年9月30日

或者

☐	根据1934年证券交易所法第13或15(d)款的过渡报告

过渡期从到

委员会文件号 001-40368001-42198

第五区银行集团，公司

（按其章程规定的确切注册人名称）

马里兰		99-1897673
（注册地或其他组织机构的州或其他辖区）		（联邦纳税人识别号）

4000 General DeGaulle Drive, 新奥尔良, 路易斯安那州		70114
(主要领导机构的地址)		(邮政编码)

(504) 362-7544

(注册人电话号码，包括区号)

不适用

（曾用名称、曾用地址以及如果自上次报告以来发生变更的财政年度）

根据证券法第12(b)条注册的证券：


每一类的名称	交易标的	名称为每个注册的交易所:
普通股，面值每股0.01美元	FDSB	纳斯达克股票市场有限公司

请通过勾选标注来表明公司（1）是否已在过去12个月内根据1934年证券交易所法第13或15（d）条的规定提交了所有要求提交的报告（或对于要求提交此类报告的缩短期间），和（2）过去90天是否受到了这些要求的约束。是的 ☒ 否 ☐

请通过勾选标注来表明公司是否已在过去12个月内按照Regulation S-t第405条的规定递交了每份交互式数据文件（或对于要求提交此类文件的缩短期间）。是 ☒ 不是 ☐

用核对标记指示公司是否为大型加速报告者、加速报告者、非加速报告者、较小的报告公司或新兴成长公司。请参阅交易所法案规则120亿.2中对“大型加速报告者”、“加速报告者”、“较小的报告公司”和“新兴成长公司”的定义。


大型加速报告人☐	加速文件提交者 ☐
非加速文件提交人 ☒	小型报告公司☒
	新兴增长型企业 ☒

如果是新兴成长型企业，请勾选是否选择不使用按照《证券交易法》第13(a)条规定的新或修订财务会计准则的过渡期。 ☐

请勾选此项，表示注册人是外壳公司（根据Act规则12b-2的定义）。是的☐ 没有 ☒

5,559,473 截至2024年11月14日，注册人普通股总额为0.01美元，发行并持有。

第五区银行集团，公司

表格10-Q

指数


		页面
第一部分 - 基本报表

事项1.	基本报表	2

	2024年9月30日的合并资产负债表（未经审计）和2023年12月31日	2

	2024年9月30日和2023年(未经审计)三个月和九个月的综合收支表	3

	2024年9月30日和2023年(未经审计)三个月和九个月的综合收益（损失）表	4

	2024年9月30日和2023年股东权益变动表（未经审计）	5

	2024年9月30日和2023年(未经审计)九个月的现金流量表	6

	合并财务报表注释（未经审计）	8

项目2。	分销计划	33

项目3。	市场风险的定量和定性披露	45

项目4。	控制和程序	45

第二部分 - 其他信息

项目1.	法律诉讼	47

项目1A。	风险因素	47

项目2。	未注册的股权销售、使用收益和发行人购买股权	47

项目3。	对优先证券的违约	47

第4项。	矿山安全披露	47

项目5。	其他信息	47

项目6。	展示资料	48

	签署页	49

说明：

第五区银行控股公司（以下简称“公司”、“我们”或“我们的”）于2月注册。2024年2月15日，公司成立为第五区储蓄银行（“第五区”或“银行”）的储蓄和贷款控股公司，作为银行从互助组织形式转换为股份制组织形式时的枢纽。此项转换于2024年7月31日正式完成。在2024年7月31日之前的所有财务信息仅涉及银行。

本报告中包含的未经审计的基本报表和其他财务信息应与截至2023年和2022年12月31日的银行审计财务报表及相关附注一起阅读，这些信息包含在公司于2024年5月10日提交给证券交易委员会的最终招股说明书中，该说明书于2024年5月20日提交。

第I部分 - 财务信息

项目1。基本报表

第五区银行股份有限公司

合并资产负债表

（以千美元计的金额，每股金额）


	September 30,		十二月31日，
	2024		2023
	(未经审计)		(已经审计)
资产
库存现金和存款银行	$	5,565	$	4,587
其他金融机构的利息存款		28,523		14,719
现金及现金等价物总额		34,088		19,306

可供出售的投资证券，按公允价值计量		93,802		67,901
受限股		902		881
减未赚取收入的应收贷款净额		369,398		367,840
信用损失准备		(1,699)		(2,802)
净应收贷款		367,699		365,038
银行持有人寿保险		10,603		10,332
房地产业和设备-净资产		12,069		12,475
250,000		2,150		1,757
房地产所有权		42		42
推迟税项资产，净额		1,407		2,063
其他资产		1,059		1,002

总资产	$	523,821	$	480,797

负债和股东权益
负债
存款
人形机器人-轴承	$	383,161		389,207
非息凭证		962		796
借款人用于税款、保险和维修的预付款		6,335		4,352
短期联邦住房贷款银行预支		—		4,000
其他负债		5,474		4,644

总负债		395,932		402,999

股东权益
Preferred Stock - $0.01 面值; 1,000,000 授权股数		—		—
普通股 - $0.01 面值; 20,000,000 授权股数: 5,559,473和 -0- 已发行股份杰出于2024年9月30日及2023年12月31日分别		56		—
资本公积金		53,143		—
未获得的ESOP股票		(4,337)		—
留存收益		83,534		84,771
累计其他全面收益亏损		(4,507)		(6,973)

股东权益总计		127,889		77,798

负债和股东权益总计	$	523,821	$	480,797

附注是这些合并财务报表的一部分。

第五区银行股份有限公司。

合并报表 业务（未经审计）

（以千计）


	三个月截至				截至九个月
	September 30,				九月三十日
	2024		2023		2024		2023
利息和股息收入
贷款，包括费用	$	3,863	$	3,611	$	11,375	$	10,444
投资证券		772		419		1,675		1,273
其他产生利息的资产		558		125		1,085		461

总利息和股息收入		5,193		4,155		14,135		12,178

利息费用
存款		2,310		1,759		6,924		4,326
短期联邦住房贷款银行预付款项		—		43		4		43

利息支出合计		2,310		1,802		6,928		4,369

净利息收入		2,883		2,353		7,207		7,809

贷款信用损失的回收		—		(100)		(1,100)		(100)
未拨备承诺的信贷损失恢复		(110)		—		(110)		—

信用损失的总恢复		(110)		(100)		(1,210)		(100)

信贷损失回收后的净利息收入		2,993		2,453		8,417		7,909

非利息收入
存入资金服务费和费用		59		53		164		151
ATM和支票卡费用		100		101		298		308
银行持有人寿保险		91		89		271		237
投资证券的损失		—		—		(1,144)		—
资产出售收益		—		—		141		—
其他		2		6		39		29

非利息收入（损失）总额		252		249		(231)		725

非利息支出
工资和员工福利		1,774		1,531		4,945		4,563
占用和设备		460		432		1,355		1,246
联邦存款保险		52		57		153		117
董事		73		91		218		274
专业和法律		55		39		131		117
审计和检查		103		35		230		112
数据处理		284		275		891		798
广告		30		55		107		197
慈善捐赠		1,263		13		1,288		38
其他		149		125		434		389

总非利息支出		4,243		2,653		9,752		7,851

税前收益（亏损）		(998)		49		(1,566)		783

所得税费用（收益）		(210)		10		(329)		164

Net Income (Loss)	$	(788)	$	39	$	(1,237)	$	619

每股收益（亏损）-基本和摊薄	$	(0.15)		不适用	$	(0.24)		N/A

附注是这些合并财务报表的一部分。

第五区银行控股公司

综合收益（损失）合并报表 （未经审计）

（以千计）


	三个月截至				截至九个月
	September 30,				2023年9月30日，
	2024		2023		2024		2023
Net Income (Loss)	$	(788)	$	39	$	(1,237)	$	619

其他综合收益（损失）
在报告期内，出售可供出售投资证券产生的未实现收益（损失）		2,302		(2,578)		4,308		(2,320)

重新分类调整，用于在净利润（损失）中实现的净亏损		—		—		(1,144)		—

确定福利养老金计划的损失		(42)		(2)		(42)		(2)

税收影响		(475)		541		(656)		487

其他综合收益（税后净额）总额		1,785		(2,039)		2,466		(1,835)

综合收益（损失）	$	997	$	(2,000)	$	1,229	$	(1,216)

附注是这些合并财务报表的一部分。

第五区银行公司，Inc.

股东的合并报表 权益（未经审计）

（以千计）

截至2024年9月30日和2023年9月30日的三个月。


									累积
			Additional		这些单位				其他		合计
	Common		实收资本		ESOP		留存		综合		股东的
	股票		资本		股票		收益		收入（损失）		股权
2023年6月30日的余额	$	—	$	—	$	—	$	84,554	$	(7,701)	$	76,853

净利润		—		—		—		39		—		39

其他全面损失		—		—		—		—		(2,039)		(2,039)

2023年9月30日余额	$	—	$	—	$	—	$	84,593	$	(9,740)	$	74,853

2024年6月30日余额	$	—	$	—	$	—	$	84,322	$	(6,292)	$	78,030

净损失		—		—		—		(788)		—		(788)

其他综合收益		—		—		—		—		1,785		1,785

普通股发行，减去发行费用		56		53,139		(4,448)		—		—		48,747

ESOP股票已释放以供分配		—		4		111		—		—		115

截至2024年9月30日的余额	$	56	$	53,143	$	(4,337)	$	83,534	$	(4,507)	$	127,889

截至2024年9月30日和2023年9月30日的九个月


									累积
			Additional		这些单位				其他		合计
	Common		实收资本		ESOP		留存		综合		股东的
	股票		资本		股票		收益		收入（损失）		股权
2022年12月31日余额	$	—	$	—	$	—	$	83,974	$	(7,905)	$	76,069

净利润		—		—		—		619		—		619

其他全面损失		—		—		—		—		(1,835)		(1,835)

2023年9月30日余额	$	—	$	—	$	—	$	84,593	$	(9,740)	$	74,853

2023年12月31日的余额	$	—	$	—	$	—	$	84,771	$	(6,973)	$	77,798

净损失		—		—		—		(1,237)		—		(1,237)

其他综合收益		—		—		—		—		2,466		2,466

普通股的发行，扣除发行费用		56		53,139		(4,448)		—		—		48,747

ESOP 股票已释放以供分配		—		4		111		—		—		115

截至2024年9月30日的余额	$	56	$	53,143	$	(4,337)	$	83,534	$	(4,507)	$	127,889

附注是这些合并财务报表的一部分。

第五区银行控股公司

合并现金流量表 （未经审计）

（以千计）


	截至九个月
	September 30,
	2024		2023
经营活动产生的现金流量
Net Income (Loss)	$	(1,237)	$	619
调整以使净利润（亏损）与净值对账
经营活动产生的现金流量（净额）
信用损失的回收		(1,210)		(100)
资产出售收益		(141)		—
折旧		523		409
递延贷款成本的净摊销		1		30
投资证券的净摊销		228		214
投资证券出售损失		1,144		—
联邦住房贷款银行股票分红		(21)		(16)
银行拥有的人寿保险的现金价值增加		(271)		(237)
员工持股计划薪酬费用		115		—
营运资产和负债的变动
250,000		(393)		30
其他资产		(57)		(450)
其他负债		898		834

经营活动现金流量净额		(421)		1,333

投资活动产生的现金流量
投资证券销售或到期收益
可供出售证券		24,043		8,408
可供出售的投资证券购买		(48,154)		(1,000)
存入资金到期的收益来自于
其他金融机构		—		249
购买联邦住房贷款银行股票		—		(19)
贷款应收款净增加		(1,562)		(12,982)
处置房屋及设备的收益		510		—
购买房屋及设备		(484)		(1,208)

投资活动中使用的净现金流量		(25,647)		(6,552)

附注是这些合并财务报表的一部分。

第五区银行控股公司

持续经营的现金流量表（续）（未经审计）

（以千计）


	截至九个月
	九月三十日
	2024		2023
筹资活动产生的现金流量
存款减少，净额		(5,880)		(3,570)
联邦住房抵押贷款银行贷款		(4,000)		4,000
Advances by Borrowers for Taxes,
保险和维修		1,983		885
发行普通股的净收入		48,747		—

融资活动提供的净现金		40,850		1,315

现金及现金等价物净增(减)		14,782		(3,904)

期初现金及现金等价物余额		19,306		20,036

期末现金及现金等价物余额	$	34,088	$	16,132

现金流量补充披露
余额期间内支付的利息现金	$	6,725		3,902
税款支付期间的现金	$	—		125
定义利益养老金计划的市场价值调整	$	(42)		(2)

未实现损失的市场价值调整
可供出售证券投资	$	3,164		(2,320)

非现金投资和融资活动
通过强制扣押取得的房地产业	$	—	$	42

附注是这些合并财务报表的一部分。

第五区银行控股公司

合并财务报表附注

注1。

重要会计政策摘要 （未经审计）

业务描述

第五区银行股份有限公司（“第五区银行股份有限公司”或“公司”）成立于2024年2月15日，是一家马里兰公司，旨在充当第五区储蓄银行（“第五区”或“银行”）的银行控股公司，与银行从相互转变为股份组织形式（“转变”）有关。转变工作于2024年7月31日完成。与转变相关，第五区银行股份有限公司收购 100第五区和公司出售了的所有权份额 5,459,473 向服务提供者发放了购买10.00 每股售价，总发行价为$54,594,730。转换和发行普通股的成本约为$2,400,000，这笔费用已从总发行收益中扣除。此外，公司向一家新设立的慈善基金捐赠了 100,000 股。银行的员工持股计划（“ESOP”）购买了公司出售的 444,758 股普通股，与 8占中国卫生集团总股本的62,234,737股普通股。2009年4月7日，孙先生将28,200,000股普通股转让给其他个人，剩余33,003,088股普通股，约占中国卫生集团总股本的53.03％。5,559,473 公司发行的普通股股份。ESOP使用贷款从公司购买了这些股份。公司大约贡献了 $26,097,000 募集款项净额的一部分交给了银行，向ESOP借出了4,447,580 募集款项的一部分，留下了大约21,400,000 的净收益。

银行是一家联邦特许股票储蓄银行，吸收来自普通公众的存款，主要用这些存款发放以居民自住家庭为抵押的贷款。银行的主要监管机构是美国国家货币监理局（OCC）。银行的活动由位于新奥尔良大区的分支机构向银行客户提供；但是，贷款和存款客户分散在更广泛的地理区域，覆盖路易斯安那州东南部。该银行作为一个报告细分板块营运。

呈现基础

公司的会计和报告政策与美国通用会计准则（U.S. GAAP）以及银行业内主流做法一致。

管理层认为，附带的未经审计的基本财务报表已经进行了必要的调整，以公平地展示截至2024年9月30日和2023年12月31日的公司财务状况，截至2024年9月30日和2023年的三个月和九个月的经营业绩，以及截至2024年9月30日和2023年的现金流量。所有调整均为正常和经常性质，并且是附带的未经审计的合并财务报表中唯一包括的调整。中期结果未必能够反映全年的结果。

合并原则

截至2024年9月30日的合并基本报表包括第五区域银行公司及其全资子公司第五区域的金额。所有公司内部交易和余额已被消除。

截至2023年9月30日的基本报表代表仅银行，因为转换为股份制形式，包括第五区域银行公司的形成，已于2024年7月31日完成。在此提及的有关“公司”的内容，应该是指在股份转换完成之前的“银行”。

第五区银行股份有限公司

合并财务报表附注

估算值的使用

根据美国公认会计原则编制财务报表要求管理层做出估算和假设，这些估计和假设会影响财务报表日报告的资产负债金额和或有资产负债的披露以及报告期内报告的收入和支出金额。实际结果可能与这些估计值有所不同。

在短期内特别容易受到重大变化的实质性估计与信用损失备抵额、递延税收和金融工具公允价值的估值有关。

信贷损失备抵是否充足的确定所依据的估算值特别容易受到经济环境和市场条件重大变化的影响。在确定贷款和无准备金承付款的估计损失方面，管理层需要对大量抵押品进行独立评估。尽管管理层利用现有信息确认贷款损失，但根据当地经济条件的变化，可能需要进一步减少贷款的账面金额。此外，作为审查程序不可分割的一部分，监管机构定期审查贷款的估计损失。根据此类审查，公司可能会根据对审查时所获得信息的判断，决定确认额外损失。由于这些因素，估计的贷款损失有可能在短期内发生重大变化。但是，无法估计合理可能的变更金额。

现金和现金等价物

就合并现金流量表而言，现金和现金等价物包括手头现金、现金项目、银行应付金额、原始到期日为90天或更短的其他金融机构的计息存款以及出售的联邦基金。通常，联邦基金的销售期限为一天。

来自银行的现金和应付账款包括总额约为 $ 的银行存款账户23,595,000 和 $8,934,000 超过联邦存款保险公司的限额 $250,000 分别在 2024 年 9 月 30 日和 2023 年 12 月 31 日为每个被保险账户。该公司没有遭受任何损失，也不认为这种做法存在重大的信用风险。

公司可能需要在联邦储备银行维持现金储备。该要求取决于公司的手头现金或非计息余额。有不截至 2024 年 9 月 30 日和 2023 年 12 月 31 日的存款准备金要求。

投资证券

归类为持有至到期的债务证券是指无论市场状况、流动性需求或总体经济状况的变化如何，公司都有意和能力持有至到期的债务证券。这些证券按成本记账，并根据溢价的摊销和折扣的增加进行调整。购买溢价和折扣使用证券条款的实际利息法在利息收入中确认，证券条款确定为保费的追加日和折扣的到期日。该公司持有不截至2024年9月30日或2023年12月31日持有至到期的证券。

归类为可供出售的债务证券是公司打算无限期持有但不一定到期的债务证券。出售归类为可供出售的证券的任何决定都将基于各种因素，包括利率的重大变动、公司资产和负债到期组合的变化、流动性需求、监管资本考虑和其他类似因素。这些证券由第三方定价服务机构按估计的公允价值进行记账

第五区银行股份有限公司

合并财务报表附注

未实现收益或亏损不计入净收益，以累计其他综合收益（亏损）形式列报，扣除相关的递延所得税影响后，该收益作为股东权益的单独组成部分列报。

被归类为交易的债务证券被收购和持有的主要目的是短期内出售。这些证券由第三方定价服务机构按估计的公允价值记账，任何未实现的收益或亏损都包含在净收益中，并在合并运营报表中以非利息收入形式列报。该公司持有不截至 2024 年 9 月 30 日或 2023 年 12 月 31 日交易证券。

根据所售特定证券的调整后成本基础确定的债务证券销售所实现的收益和亏损包含在经营报表的非利息收入中。所有类别投资证券的股息和利息收入，包括摊销溢价和收购时产生的折扣的增加，均包含在合并运营报表的利息收入中。

限制性股票

限制性股票是联邦住房贷款银行（FHLB）和第一国民银行家银行（FNBB）的股票，其适销性受到限制。由于这些投资没有现成市场，也没有报价市值，因此公司对这些股票的投资按成本计提。限制性股票投资是否存在减值的确定每年进行一次，包括对发行人当前财务状况的审查。

信贷损失备抵金——可供出售的投资证券

对于可供出售的证券，管理层每季度评估所有处于未实现亏损状况的投资，当经济或市场条件需要进行此类评估时，更频繁地进行评估。如果公司打算出售证券，则该证券将减记为公允价值，并将全部亏损记入收益。

如果不满足上述任一标准，公司将评估公允价值的下降是信贷损失还是其他因素造成的。在进行评估时，公司可以考虑各种因素，包括公允价值在多大程度上低于摊销成本、标的抵押品的表现、评级机构下调证券评级、发行人未能按期支付利息或本金以及与证券特别相关的不利条件。如果评估表明存在信贷损失，则将预期收取的现金流的现值与证券的摊销成本基础进行比较，任何超出部分都记作信用损失备抵金，仅限于公允价值低于摊销成本基础的金额，在运营报表中确认为信用损失准备金。任何未通过信用损失备抵记录的与信贷无关的未实现亏损均计入其他综合收益。

信用损失备抵额的变动记作信贷损失费用的准备金（或追回）。当管理层认为可供出售的证券已确认无法收回时，或者当有关出售意向或要求的任一标准得到满足时，损失将从信用损失备抵中扣除。在 2024 年 9 月 30 日和 2023 年 12 月 31 日，有不与可供出售投资组合相关的信用损失备抵金。

可供出售证券的应计应收利息总额约为 $337,000 和 $168,000 分别为2024年9月30日和2023年12月31日，未包括在信贷损失估计中。

第五区银行控股公司

合并财务报表附注

贷款应收账款

管理层有意愿和能力持有的贷款，直到可预见的未来、到期或还款时，按照摊销成本报告。摊销成本是指未偿还的本金余额，扣除购买溢价和折扣以及递延费用和成本。

与贷款相关的应计利息应收款总额约为 $1,813,000 和$1,589,000 截至2024年9月30日和2023年12月31日，分别在资产负债表的应计利息应收款中报告。利息收入根据未支付的本金余额按利息法在贷款的整个生命周期内计入。贷款发放和承诺费用以及某些直接贷款发放成本被递延，并根据贷款的合同期限使用有效利息法作为相关贷款收益的调整进行摊销。

当贷款逾期90天且缺乏足够的担保，并且正在收款过程中，或者当管理层在考虑经济和业务状况以及收款努力后认为，主本金或利息在正常业务过程中无法收回时，利息的累积通常会被停止。逾期状态基于贷款的合同条款。当预定付款在合同到期日后30天内未收到时，贷款被认为已逾期。

当贷款被置于非累积状态时，所有应计利息将会冲抵利息收入。在这些贷款上收到的利息将采用成本回收法进行会计处理，直到符合恢复到累积的条件。在成本回收法下，利息收入在贷款余额减少到零之前不会被确认。当所有按合同到期的本金和利息金额被结清，且有持续的偿还表现，以及未来的付款 reasonably assured，贷款将恢复到累积状态。

信贷损失准备金 - 应收贷款

信贷损失准备金是一个评估账户，从贷款的摊余成本基础中扣除，以呈现预期可收回的净额。当管理层认为贷款余额的不可收回性已确认时，贷款将从准备金中核销。预期的回收不超过先前已核销和预计将被核销的总金额。应计利息应收款不包含在信贷损失的估算中。

信贷损失准备金代表管理层截至资产负债表日期对贷款的生命周期信贷损失的估计。信贷损失准备金是由管理层使用相关的可用信息进行估算的，这些信息来自内部和外部来源，涉及过去事件、当前状况和合理且可支持的预测。

当存在相似风险特征时，预期信贷损失在池基础上进行测量，采用加权平均剩余寿命法。加权平均剩余寿命法对给定贷款池的损失率进行应用，这基于历史数据。贷款损失由于贷款组合的性质和相对简单性，采用加权平均剩余寿命法进行计算。

第五区银行控股公司

合并财务报表附注

公司已经识别并对以下每个投资组合细分计算信用损失准备金：

贷款组合		风险特征
一至四家庭抵押贷款		这一类别包括以住宅房地产为抵押的贷款。这些贷款的表现可能会受到当地住宅房地产市场状况、利率环境和通货膨胀等多种因素的负面影响。

施工贷款		这一类别包括用于资助住宅和空地贷款的从零开始的施工和/或改善的贷款。施工贷款的表现通常依赖于对最终用户的改善和/或土地开发的成功完成。计划中的改善和开发的成功完成可能会受到施工完成后估计的物业价值变化、预期成本以及导致项目延误的其他条件的负面影响。

房屋净值贷款/信用额度		该类别包含以住宅房地产业的第一和次级留置权作为担保的贷款。这些贷款的表现可能会受到多个因素的不利影响，包括当地住宅房地产市场情况、利率环境和通货膨胀。

商业贷款		该类别包括向各类从业者和其他专业人士发放的商业贷款。这些贷款通常最初由综合UCC-1提交进行担保。当贷款被购买时，银行购买 100% 的贷款并向卖方支付 97% 的贷款余额，卖方在银行开设一个存入资金账户，金额等于 3% 的贷款余额。如果贷款逾期，银行将从存入资金账户中提取付款。如果贷款变为 90天如果贷款违约，卖方通常会用一个平衡相等或更高的 performing 贷款替换违约贷款（尽管这不是卖方的合同义务）。这些贷款的表现可能会受到多种因素的负面影响，包括地方和国家市场条件、利率环境和通货膨胀。

消费贷款		这一类别包括向个人提供的家庭、家庭和其他个人使用的贷款。这些贷款的表现可能会受到国家和地方经济条件、通货膨胀及其他影响借款人可用于偿还债务的收入的因素的负面影响。

此外，信用损失准备金的计算包括针对可能导致预估信用损失与历史经验差异的定性风险因素的主观调整。这些定性调整可能会增加或减少准备金水平，包括对贷款管理经验和风险承受能力、贷款审查和审计结果、资产质量和投资组合趋势、贷款组合增长、行业集中度、基础担保的趋势、外部因素以及尚未反映的经济条件的调整。公司估计合理且可支持的预期信用损失预测，并在贷款池的剩余生命周期内，对于预测期之外的期间回归到历史损失信息。

不具有相似风险特征的贷款将单独评估。当借款人面临财务困难，并且预计通过担保的操作或销售来提供还款时，预期信用损失基于报告日担保的公允价值，适当时调整估计的销售成本。

第五区银行控股公司

合并财务报表附注

信用损失准备金 - 未融资承诺

金融工具包括诸如为了满足客户融资需求而发放的贷款承诺等表外信用工具。公司在金融工具的表外贷款承诺中，如果另一方未能履约，其信用损失的风险由这些工具的合同金额表示。这类金融工具在获得资金时进行记录。

公司在表外信用风险上记录信用损失准备金，除非信用扩展的承诺可以无条件取消，通过对合并运营报表中未融资承诺的准备金提取来进行。表外信用风险的信用损失准备金是按贷款细分在每个资产负债表日根据当前预期信用损失模型进行估算，使用与组合贷款相同的方法，考虑到融资发生的可能性以及任何第三方担保。未融资承诺的准备金被纳入合并资产负债表的其他负债中。

银行持有人寿保险

银行是某些银行高管生命保险合同的受益人，这些合同按现金退保价值报告。截止到2024年9月30日和2023年12月31日，生命保险合同总计约为$10,603,000 和$10,332,000现金退保价值的增值约为$91,000 和$89,000 截至2024年和2023年9月30日的三个月，分别为$271,000 和$237,000 截至2024年和2023年9月30日的九个月，分别为$。保险单的增值包含在合并经营报表中的银行拥有的人寿保险非利息收入中。

房屋和设备

房屋和设备按成本扣除累计折旧进行核算。折旧通常采用直线法计算，基于资产的估计使用寿命。建筑物和改进的估计使用寿命区间为 15 到 40年，家具和固定装置的使用年限从 5 到 109

对物业的主要支出以及那些大幅延长使用寿命的支出被资本化。维护、修理和小型更换的支出如未对相关资产的使用寿命产生显著改善或延长，则作为费用在发生时计入。

当资产被报废或以其他方式处置时，其成本和相关累计折旧将从相应账户中移除，任何收益或损失将反映在其他非利息收入或支出中。

房地产所有权

通过贷款止赎获得的房地产业的初始记录为收购日期的公允价值，减去估计的销售成本。收购时的任何减值均计入信贷损失准备金。收购后的后续评估准备金将根据需要建立，以报告这些资产的较低值（a）公允价值减去估计销售成本或（b）成本。

公司能够收回房地产业的账面价值取决于未来对所拥有房地产业的销售。实现这种收回的能力受市场条件和其他因素的影响，其中许多因素超出了公司的控制范围。此类物业的经营收入，扣除相关费用以及处置的盈亏，将包含在合并的运营报表中。公司在某个时间点有$42,000 截至2024年9月30日和2023年12月31日拥有的房地产业的价值为$。

第五区银行控股公司

合并财务报表附注

所得税

递延所得税资产和负债是根据责任（或资产负债表）方法确定的。根据这种方法，净递延所得税资产或负债是基于公司资产和负债的财务报表账面金额与税基之间的暂时差异的税收影响确定的。递延所得税资产和负债反映了按照预期实现或结算递延所得税资产和负债的期间适用的当前颁布的所得税率。随着税法或税率的变化的颁布，递延所得税资产和负债通过缴纳所得税费用进行调整。在管理层认为递延所得税资产的某部分或全部不太可能实现时，递延所得税资产减少了估值准备。

根据所有可用证据，管理层认为更有可能在检验期间保留该立场的情况下，会认可税收处理的好处，并在一体化财务报表中承认这一利益，包括上诉或诉讼程序的解决，如果有的话。所采取的税收立场的评估被视为独立考虑，而不与其他立场相抵销或合并。符合更有可能认可门槛的税收立场被计量为在与适用征税机构结算时更有50%以上可能实现的税收利益最大金额。

与上述所述金额相比超出的与所采取税收立场相关的利益部分被反映为未确认税收利益的负债，在一体化资产负债表中列示，连同在检验时将支付给征税机构的任何相关利息和罚款。与未确认税收利益相关的利息和罚款被分类为一体化损益表中的额外所得税。

美国普遍接受的会计原则提供了有关公司在税务申报中可能存在不确定性立场的会计和披露指导。公司相信其对所采取的任何税务立场都有适当的支持，管理层已经确定在合并财务报表中不存在任何对财务状况有重大影响的不确定税务立场。

公司在截至2024年6月30日的六个月内实现了无在截至2024年9月30日和2023年的三个月和九个月合并财务报表中，并且在截至2024年9月30日和2023年12月31日的合并资产负债表中，未在利润表中披露有关利息和/或罚款，也未披露任何应付利息和/或罚款的金额，与其所得税申报相关。任何罚款或利息将计入所得税费用。

该银行不再受2021年之前的美国联邦审查的约束。

综合收益（损失）

综合收益（损失）包括净利润（损失）和其他综合收益（损失），扣除适用所得税。其他综合收益（损失）包括可供出售证券的未实现收益和损失，以及除净周期性养老金成本之外的养老金相关变动。累计其他综合（损失）包括可供出售证券的累计未实现收益和损失，以及养老金计划责任的资金状况累计未实现盈利或亏损，扣除税金。

每股收益

每股收益（损失）代表可供普通股股东支配的收入或损失，除以期间内普通股股份加权平均数。由ESOP持有的未分配普通股股份显示为股东权益减少，并从加权平均数中排除。

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

average common shares outstanding for both basic and diluted earnings per share calculations until they are committed to be released.

The Company had no dilutive or potentially dilutive securities during the period ended September 30, 2024.

Revenue Recognition

In the ordinary course of business, the Company recognizes income from various revenue generating activities. Revenue from contracts with customers within the scope of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 606 is measured based on the consideration the Company expects to be entitled to receive in exchange for those goods or services as the related performance obligation is satisfied. Some obligations are satisfied at a point in time while others are satisfied over a period of time. A performance obligation is deemed to be satisfied when the control over goods or services is transferred to the customer.

The majority of the Company’s revenue is specifically excluded from the scope of ASC 606. Service charges on deposit accounts and ATM and check card fees are the most significant categories of revenue within the scope of ASC 606 and is included in non-interest income on the consolidated statements of operations.

Service charges on deposit accounts include charges related to depository accounts under standard service agreements. Fees are generally recognized at a point in time as services are delivered to or consumed by the customer or as penalties are assessed.

ATM and check card fees includes interchange fees from credit and debit cards processed through card association networks, annual fees, and other transaction and account management fees. Interchange rates are generally set by the credit card associations and based on purchase volumes and other factors. The Company records interchange fees as services are provided. Transaction and account management fees are recognized as services are provided, except for annual fees which are recognized over the applicable period. The costs of related loyalty rewards programs are netted against interchange revenue as a direct cost of the revenue generating activity.

Non-Direct-Response Advertising

The Company expenses all advertising costs, except for direct-response advertising, as incurred. Advertising and promotional expenses totaled approximately $30,000 and $55,000 for the three months ended September 30, 2024 and 2023, respectively, and $107,000 and $197,000 for the nine months ended September 30, 2024 and 2023, respectively. If the Company incurs expenses for material direct-response advertising, it will be amortized over the estimated benefit period. Direct-response advertising consists of advertising whose primary purpose is to elicit sales to customers who could be shown to have responded specifically to the advertising and results in probable future benefits. For the three months and nine months ended September 30, 2024 and 2023, the Company did not incur any direct-response advertising costs.

Recent Accounting Pronouncements - Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This ASU applies to contracts, hedging relationships and other transactions that reference London Inter-Bank Offered Rate (LIBOR) or other rate references expected to be discontinued because of reference rate reform and provides optional expedients and exceptions for applying U.S. GAAP if certain criteria are met. The updated guidance was originally effective upon issuance through December 31, 2022. In December 2022, the FASB issued ASU 2022-06 which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. Management does not anticipate the guidance will have a material impact on the Company’s consolidated financial statements.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting- Improvements to Reportable Segment Disclosures. This amendment is intended to improve disclosures about a public entity’s reportable segments and addresses requests from investors and other decision makers for additional, more detailed information about a reportable segment’s expenses. The amendment applies to all public entities that are required to report segment information in accordance with Topic 280. All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 31, 2024. Early adoption is permitted. The amendments are to be applied retrospectively to all periods presented and segment expense categories should be based on the categories identified at adoption. The Company does not currently expect adoption of the amendment to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, which amended the Income Taxes topic in the Accounting Standards Codification 742 to improve the transparency of income tax disclosures. The amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Note 2.

Investment Securities

The amortized cost and estimated fair values of investment securities available-for-sale at September 30, 2024 and December 31, 2023 are as follows (in thousands):

September 30, 2024

Gross

Estimated

Amortized

Unrealized

Fair

September 30, 2024

Cost

Gains

Losses

Value

U.S. Government Agencies

1,000

—

1,000

Mortgage-Backed Securities

96,013

577

(6,231)

90,359

Collateralized Mortgage Obligations

2,529

—

(86)

2,443

Total

99,542

577

(6,317)

93,802


	December 31, 2023
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
December 31, 2023	Cost		Gains		Losses		Value
U.S. Government Agencies	$	1,000	$	—	$	(34)	$	966
Mortgage-Backed Securities		74,072		15		(8,759)		65,328
Collateralized Mortgage Obligations		1,733		—		(126)		1,607

Total	$	76,805	$	15	$	(8,919)	$	67,901

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following tables show the gross unrealized losses and estimated fair value of investment securities available-for-sale for which an allowance for credit losses has not been recorded by category and length of time that securities have been in a continuous unrealized loss position at September 30, 2024, and December 31, 2023 (in thousands):

Securities

With Losses Under

With Losses Over

12 Months

Total

Gross

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

September 30, 2024

Value

Loss

Value

Loss

Value

Loss

U.S. Government Agencies

—

1,000

—

1,000

—

Mortgage-Backed Securities

10,378

(35)

42,361

(6,196)

52,739

(6,231)

Collateralized Mortgage Obligations

990

(7)

1,453

(79)

2,443

(86)

Total

11,368

(42)

44,814

(6,275)

56,182

(6,317)


	Securities				Securities
	With Losses Under				With Losses Over
	12 Months				12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2023	Value		Loss		Value		Loss		Value		Loss
U.S. Government Agencies	$	—	$	—	$	966	$	(34)	$	966	$	(34)
Mortgage-Backed Securities		498		(2)		63,384		(8,757)		63,882		(8,759)
Collateralized Mortgage Obligations		—		—		1,607		(126)		1,607		(126)

Total	$	498	$	(2)	$	65,957	$	(8,917)	$	66,455	$	(8,919)

At September 30, 2024, 64 of the Company’s available-for-sale securities had unrealized losses totaling 10.1% of the individual securities’ amortized cost basis and 6.3% of the Company’s total amortized cost basis of the investment securities portfolio. At September 30, 2024, 57 of these 64 securities had been in a continuous loss position for over 12 months. The unrealized losses of these securities are believed to be caused by interest rate increases and changing market conditions and the Company does not intend to sell the securities, and it is not likely to be required to sell these securities prior to maturity. Management has determined that the declines in the fair value of these securities are not attributable to credit losses.

All of the mortgage-backed securities and collateralized mortgage obligations in an unrealized loss position are issued or guaranteed by government-sponsored enterprises.

No allowance for credit losses was recorded for available-for-sale securities at September 30, 2024, and December 31, 2023.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The amortized cost and estimated fair value of securities classified as available-for-sale at September 30, 2024, by contractual maturity, are shown in the table below (in thousands). Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. The expected maturity of a security may differ from its contractual maturity because of the exercise of call options and potential paydowns. Accordingly actual maturities may differ from contractual maturities.


	Amortized		Fair
	Cost		Value
Available-for-Sale
Due in 1 Year or Less	$	—	$	—
Due after 1 Year through 5 Years		165		160
Due after 5 Years through 10 Years		1,006		999
Due after 10 Years		98,371		92,643

Total	$	99,542	$	93,802

There were no sales of available-for-sale securities during the three months ended September 30, 2024 and 2023. The Company sold $18,685,000 securities available-for-sale and recorded a loss of $1,144,000 during the nine months ended September 30, 2024 and there was no sales of available-for-sale securities during the nine months ended September 30, 2023.

Note 3.

Restricted Stock

The following table shows the amount of restricted stock as of September 30, 2024, and December 31, 2023 (in thousands):


	2024		2023
Federal Home Loan Bank	$	552	$	531
First National Bankers Bank		350		350

Total	$	902	$	881

Note 4.

Loans Receivable and Allowance for Credit Losses

Loans receivable at September 30, 2024, and December 31, 2023 are summarized as follows (in thousands):


	2024		2023
One-to-Four Family Mortgages	$	334,039	$	337,056
Home Equity Loans / Lines of Credit		7,773		8,550
Construction Loans		9,618		8,128
Consumer Loans		2,783		913
Commercial Loans		14,394		12,403

Total Loans Receivable		368,607		367,050

Allowance for Credit Losses		(1,699)		(2,802)
Net Deferred Loan Costs		791		790

Total Loans Receivable, Net	$	367,699	$	365,038

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following tables present an analysis of past-due loans as of September 30, 2024, and December 31, 2023 (in thousands):


					Loans 90 Days or
	30-59 Days		60-89 Days		More Past Due and		Nonaccrual		Current		Total Loans
September 30, 2024	Past Due		Past Due		Still Accruing		Loans		Loans		Receivable
One-to-Four Family Mortgages	$	—	$	1,802	$	—	$	528	$	331,709	$	334,039
Home Equity Loans / Lines of Credit		74		—		—		—		7,699		7,773
Construction Loans		—		—		—		118		9,500		9,618
Consumer Loans		—		—		—		—		2,783		2,783
Commercial Loans		—		—		—		—		14,394		14,394

Total	$	74	$	1,802	$	—	$	646	$	366,085	$	368,607


					Loans 90 Days or
	30-59 Days		60-89 Days		More Past Due and		Nonaccrual		Current		Total Loans
December 31, 2023	Past Due		Past Due		Still Accruing		Loans		Loans		Receivable
One-to-Four Family Mortgages	$	2,655	$	1,524	$	950	$	153	$	331,774	$	337,056
Home Equity Loans / Lines of Credit		—		4		—		—		8,546		8,550
Construction Loans		—		—		—		—		8,128		8,128
Consumer Loans		33		—		—		—		880		913
Commercial Loans		—		—		—		—		12,403		12,403

Total	$	2,688	$	1,528	$	950	$	153	$	361,731	$	367,050

Credit Quality Indicators

The Company uses the following criteria to assess risk ratings with respect to its loan portfolio, which are consistent with regulatory guidelines:

Pass - Loans that comply in all material respects with the loan policies that are adequately secured with conforming collateral and that are extended to borrowers with documented ability to safely cover their total debt service requirements.

Special Mention - Includes loans that do not warrant adverse classification but do possess credit deficiencies or potential weaknesses that deserve close attention.

Substandard - Includes loans that are inadequately protected by the collateral pledged or the current net worth and paying capacity of the borrower. Such loans have one or more weaknesses that jeopardize the liquidation of the debt and expose the Company to loss if the weaknesses are not corrected.

The Company’s credit quality indicators are reviewed and updated annually.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of September 30, 2024 (in thousands):


	Term Loans by Year of Origination
	2024		2023		2022		2021		2020		Prior		Revolving		Total
One-to-Four Family Mortgages
Pass	$	8,263	$	18,400	$	41,236	$	56,965	$	47,789	$	158,261	$	—	$	330,914
Special Mention		—		—		572		1,249		—		776		—		2,597
Substandard		—		—		—		—		—		528		—		528
Total One-to-Four Family Mortgages	$	8,263	$	18,400	$	41,808	$	58,214	$	47,789	$	159,565	$	—	$	334,039

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home Equity Loans/Lines of Credit
Pass	$	127	$	66	$	88	$	—	$	—	$	487	$	7,005	$	7,773
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Home Equity Loans/Lines of Credit	$	127	$	66	$	88	$	—	$	—	$	487	$	7,005	$	7,773

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	3	$	3

Construction Loans
Pass	$	4,349	$	4,414	$	64	$	403	$	115	$	155	$	—	$	9,500
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		118		—		—		—		—		118
Total Construction Loans	$	4,349	$	4,414	$	182	$	403	$	115	$	155	$	—	$	9,618

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer Loans
Pass	$	2,082	$	244	$	58	$	35	$	40	$	324	$	—	$	2,783
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Consumer Loans	$	2,082	$	244	$	58	$	35	$	40	$	324	$	—	$	2,783

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Loans
Pass	$	4,184	$	6,316	$	3,792	$	—	$	—	$	102	$	—	$	14,394
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Commercial Loans	$	4,184	$	6,316	$	3,792	$	—	$	—	$	102	$	—	$	14,394

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following table presents the Company’s recorded investment in loans by credit quality indicator as of December 31, 2023 (in thousands):


	Term Loans by Year of Origination
	2023		2022		2021		2020		2019		Prior		Revolving		Total
One-to-Four Family Mortgages
Pass	$	12,000	$	42,225	$	60,557	$	50,786	$	28,836	$	140,000	$	—	$	334,404
Special Mention		—		1,073		779		—		—		647		—		2,499
Substandard		—		—		—		—		—		153		—		153
Total One-to-Four Family Mortgages	$	12,000	$	43,298	$	61,336	$	50,786	$	28,836	$	140,800	$	—	$	337,056

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home Equity Loans/Lines of Credit
Pass	$	20	$	226	$	—	$	—	$	174	$	369	$	7,570	$	8,359
Special Mention		—		—		—		—		—		—		191		191
Substandard		—		—		—		—		—		—		—		—
Total Home Equity Loans/Lines of Credit	$	20	$	226	$	—	$	—	$	174	$	369	$	7,761	$	8,550

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction Loans
Pass	$	4,987	$	2,189	$	414	$	366	$	—	$	172	$	—	$	8,128
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Construction Loans	$	4,987	$	2,189	$	414	$	366	$	—	$	172	$	—	$	8,128

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer Loans
Pass	$	386	$	74	$	39	$	52	$	36	$	326	$	—	$	913
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Consumer Loans	$	386	$	74	$	39	$	52	$	36	$	326	$	—	$	913

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Loans
Pass	$	7,568	$	4,724	$	—	$	—	$	—	$	111	$	—	$	12,403
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Commercial Loans	$	7,568	$	4,724	$	—	$	—	$	—	$	111	$	—	$	12,403

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Nonaccrual Loans

The following table is a summary of the Company’s nonaccrual loans by major categories at September 30, 2024 and December 31, 2023(in thousands):

September 30, 2024

December 31, 2023

Nonaccrual

Total

Loans

with

Total

with

Nonaccrual

Allowance

Loans

Allowance

Loans

One-to-Four Family Mortgages

528

—

528

153

—

153

Home Equity Loans/Lines of Credit

—

Construction Loans

118

—

118

—

Consumer Loans

—

Commercial Loans

—

Total

646

—

646

153

—

153

Interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Payments received while on nonaccrual status are applied to the principal balance of nonaccrual loans. The Company does not recognize interest income while loans are on nonaccrual status.

The following table represents the accrued interest receivables written off by reversing interest income during the three and nine months ended September 30, 2024 and 2023 (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2024		2023		2024		2023
One-to-Four Family Mortgages	$	9	$	4	$	9	$	4
Home Equity Loans/Lines of Credit		—		—		—		—
Construction Loans		5		—		5		—
Consumer Loans		—		—		—		—
Commercial Loans		—		—		—		—

Total	$	14	$	4	$	14	$	4

Collateral-Dependent Loans

The Company designates individually evaluated loans on nonaccrual status as collateral-dependent loans, as well as other loans that management of the Company designates as having higher risk. Collateral-dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. For collateral-dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following table presents an analysis of collateral-dependent loans of the Company as of September 30, 2024 and December 31, 2023 (in thousands):


	Residential				Business
September 30, 2024	Properties		Land		Assets		Other		Total
One-to-Four Family Mortgages	$	528	$	—	$	—	$	—	$	528
Home Equity Loans/Lines of Credit		—		—		—		—		—
Construction Loans		—		118		—		—		118
Consumer Loans		—		—		—		—		—
Commercial Loans		—		—		—		—		—

Total	$	528	$	118	$	—	$	—	$	646


	Residential				Business
December 31, 2023	Properties		Land		Assets		Other		Total
One-to-Four Family Mortgages	$	153	$	—	$	—	$	—	$	153
Home Equity Loans/Lines of Credit		—		—		—		—		—
Construction Loans		—		—		—		—		—
Consumer Loans		—		—		—		—		—
Commercial Loans		—		—		—		—		—

Total	$	153	$	—	$	—	$	—	$	153

Allowance for Credit Losses

The decrease in the allowance for credit losses as of September 30, 2024 as compared to December 31, 2023 was driven by various factors, including the evolving economic outlook, values in the local real estate market, low net charge-offs, and refining our peer group selection to better align with peers whose loan portfolios reflect the composition of our own loan portfolio and the current local economic conditions. Adjusting this component of our estimate has resulted in a reduced peer group loss rate and corresponding adjustments to our peer comparisons. This change in accounting estimate was recognized prospectively. In turn our CECL reserve percentage was decreased resulting in a $1.1 million reversal in our allowance for credit loss. This adjustment was made in the second quarter of 2024.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following table summarizes the activity related to the allowance for credit losses for the three months ended September 30, 2024 and 2023 (in thousands):


	One-to-Four		Home Equity
	Family		Loans / Lines		Construction		Consumer		Commercial
Three Months Ended September 30, 2024	Mortgages		of Credit		Loans		Loans		Loans		Unallocated		Total
Allowance for Credit Losses
Beginning Balance	$	1,273	$	57	$	7	$	—	$	145	$	217	$	1,699
Recovery of Credit Loss		119		(13)		—		—		(23)		(83)		—
Loans Charged-Off		—		—		—		—		—		—		—
Recoveries Collected		—		—		—		—		—		—		—

Ending Balance	$	1,392	$	44	$	7	$	—	$	122	$	134	$	1,699

Three Months Ended September 30, 2023
Allowance for Credit Losses
Beginning Balance, Prior to Adoption of ASC 326	$	2,738	$	60	$	73	$	—	$	2	$	380	$	3,253
Recovery of Credit Loss		—		—		—		—		—		(100)		(100)
Loans Charged-Off		—		—		—		—		—		—		—
Recoveries Collected		—		—		—		—		—		—		—

Ending Balance	$	2,738	$	60	$	73	$	—	$	2	$	280	$	3,153

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following table includes disclosures related to the allowance for loan losses for the nine months ended September 30, 2024 and 2023 (in thousands):


	One-to-Four		Home Equity
	Family		Loans / Lines		Construction		Consumer		Commercial
Nine Months Ended September 30, 2024	Mortgages		of Credit		Loans		Loans		Loans		Unallocated		Total
Allowance for Credit Losses
Beginning Balance	$	2,554	$	57	$	32	$	9	$	126	$	24	$	2,802
Recovery of Credit Loss		(1,162)		(10)		(25)		(9)		(4)		110		(1,100)
Loans Charged-Off		—		(3)		—		—		—		—		(3)
Recoveries Collected		—		—		—		—		—		—		—

Ending Balance	$	1,392	$	44	$	7	$	—	$	122	$	134	$	1,699

Nine Months Ended September 30, 2023
Allowance for Credit Losses
Beginning Balance	$	2,738	$	60	$	73	$	—	$	2	$	380	$	3,253
Recovery of Credit Loss		—		—		—		—		—		(100)		(100)
Loans Charged-Off		—		—		—		—		—		—		—
Recoveries Collected		—		—		—		—		—		—		—

Ending Balance	$	2,738	$	60	$	73	$	—	$	2	$	280	$	3,153

Modifications Made to Borrowers Experiencing Financial Difficulty

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Upon determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectable, the loan (or portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

The Company had no loans with modifications to borrowers experiencing financial difficulty as of September 30, 2024, and December 31, 2023.

There were no modifications to borrower’s experiencing financial difficulty entered into during the three and nine months ended September 30, 2024 and 2023 and no loans which had defaults during the three and nine months ended September 30, 2024 and 2023 which have been modified due to the borrower experiencing financial difficulty.

Unfunded Commitments

The Company did not record an adjustment for unfunded commitments for the adoption of ASC 326. For the three and nine months ended September 30, 2024 and 2023, provision for credit losses for unfunded commitments totaled approximately ($110,000) and -0-, respectively. At September 30, 2024 and December 31, 2023, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities was $15,000 and $125,000, respectively.

Related Party Loans

In the normal course of business, loans are made to officers and directors of the Company, as well as to their affiliates. Such loans are made in the ordinary course of business with substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons. They do not involve more than normal risk of collectability or present other unfavorable features.

An analysis of the related party activity during the nine months ended September 30, 2024 and 2023 is as follows (in thousands):


	September 30,
	2024		2023
Balance, Beginning of the Year	$	546	$	579
New Loans		—		—
Change in Related Parties, Net		—		—
Repayments, Net		(26)		(25)

Balance, End of Year	$	520	$	554

Related Party Other

The Company generally requires an inspection of the property before disbursement of funds during the term of the construction loan and inspections are typically performed by one of the Company’s directors. There is no revenue or expense recorded by the Company related to those services as the customer pays these fees through their closing costs.

Note 5.

Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the OCC. Failure to meet the minimum regulatory capital requirements can initiate certain mandatory, and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Company’s consolidated financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the assets, liabilities, and certain off-balance-sheet items, as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of common equity Tier I capital, Tier I capital and total capital to risk-weighted assets and Tier I capital to average assets. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel Ill rules) became fully effective for the Company on January 1, 2019. Management believes, as of September 30, 2024 and December 31, 2023, that the Company meets all capital adequacy requirements to which it is subject.

As of September 30, 2024 and December 31, 2023, the most recent notification from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total ratios as disclosed in the table below. There are no conditions or events since the notification that management believes have changed the Bank’s prompt corrective action category.

The Bank’s actual capital amounts and ratios as of September 30, 2024 and December 31, 2023 are also presented in the table below (dollar amounts in thousands):


									Required to Be Well-
					Required for				Capitalized Under
					Capital Adequacy				Prompt Corrective
	Actual				Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2024
Tier 1 Capital to Average Assets	$	110,617	20.75	%	$	21,324	4.00	%	$	26,655	5.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets		110,617	43.70			11,391	4.50			16,453	6.50
Tier 1 Capital to Risk-Weighted Assets		110,617	43.70			15,188	6.00			20,250	8.00
Total Capital to Risk-Weighted Assets		112,331	44.38			20,249	8.00			25,311	10.00

December 31, 2023
Tier 1 Capital to Average Assets	$	84,771	17.41	%	$	19,476	4.00	%	$	24,345	5.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets		84,771	34.15			11,170	4.50			16,135	6.50
Tier 1 Capital to Risk-Weighted Assets		84,771	34.15			14,894	6.00			19,859	8.00
Total Capital to Risk-Weighted Assets		87,698	35.33			19,858	8.00			24,823	10.00

Note 6.

Financial Instruments with Off-Balance Sheet Risk

In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers. These financial instruments include commitments to extend credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the Company’s consolidated balance sheets.

The contract amounts of those instruments reflect the extent of the involvement the Company has in particular classes of financial instruments. As of September 30, 2024 and December 31, 2023, the Bank had made various commitments to extend credit totaling approximately $24,000,000. respectively. Of these commitments,

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

approximately $8,391,000 and $9,368,000 are at variable rates as of September 30, 2024 and December 31, 2023, respectively.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being fully drawn upon, the total commitment amount disclosed above does not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer.

Note 7.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, accounting guidance has established a hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

Level 1    Quoted prices for identical assets or liabilities in instruments traded in active markets that the entity has the ability to access as of the  measurement date.

Level 2    Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in  markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3  Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would  use in pricing an asset or liability.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Assets and Liabilities Measured on a Recurring Basis

The following describes the hierarchy designation, valuation methodology, and key inputs to measure fair value on a recurring basis for designated financial instruments:

Investment Securities Available-for-Sale

Where available, fair value estimates for available-for-sale securities are based on quoted market prices in an active market (Level 1). If quoted market prices are not available, fair values are based on quoted market prices of securities with similar characteristics, quoted prices of identical securities in less active markets, discounted cash flow techniques or matrix pricing models (Level 2). In certain cases where Level 1 or Level 2 are not available, securities are classified as Level 3 of the hierarchy. The carrying amount of accrued interest on securities approximates its fair value.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 are summarized below (in thousands):

Total

Fair Value Measurements

Estimated

September 30, 2024

Level 1

Level 2

Level 3

Fair Value

Investment Securities Available-for-Sale

U.S. Government Agencies

—

1,000

—

1,000

Mortgage-Backed Securities

—

90,359

—

90,359

Collateralized Mortgage Obligations

—

2,443

—

2,443

Total

—

93,802

—

93,802


							Total
	Fair Value Measurements						Estimated
December 31, 2023	Level 1		Level 2		Level 3		Fair Value
Investment Securities Available-for-Sale
U.S. Government Agencies	$	—	$	966	$	—	$	966
Mortgage-Backed Securities		—		65,328		—		65,328
Collateralized Mortgage Obligations		—		1,607		—		1,607

Total	$	—	$	67,901	$	—	$	67,901

The Company did not record any liabilities at fair market value for which measurement of the fair value was made on a recurring basis at September 30, 2024 and December 31, 2023.

There were no transfers into, out of, purchases, or sales of Level 3 securities during the three and nine months ended September 30, 2024 and 2023.

Assets and Liabilities Measured on a Non-Recurring Basis

The following describes the hierarchy designation, valuation methodologies, and key inputs for those assets that are measured at fair value on a non-recurring basis:

Collateral Dependent Loans

For collateral dependent loans, fair value is measured based on the value of the collateral securing these loans and is classified at a Level 3 in the fair value hierarchy. Collateral dependent loans consist of one-to-four family mortgages secured by residential properties. The value of residential property collateral is determined based on appraisal by qualified licensed appraisers hired by the Company. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

Foreclosed Assets and Real Estate Owned

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired and classified at a Level 3 in the fair value hierarchy. These assets are subsequently accounted for at the lower of cost or fair value less estimated cost to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following tables present the Company’s assets and liabilities measured at fair value on a non-recurring basis at September 30, 2024 and December 31, 2023 (in thousands):


							Total
	Fair Value Measurements						Estimated
September 30, 2024	Level 1		Level 2		Level 3		Fair Value
Assets
Collateral Dependent Loans	$	—	$	—	$	646	$	646
Real Estate Owned		—		—		42		42

Total	$	—	$	—	$	688	$	688


							Total
	Fair Value Measurements						Estimated
December 31, 2023	Level 1		Level 2		Level 3		Fair Value
Assets
Collateral Dependent Loans	$	—	$	—	$	153	$	153
Real Estate Owned		—		—		42		42

Total	$	—	$	—	$	195	$	195

The following tables show significant unobservable inputs used in the fair value measurement of Level 3 assets:


	Valuation	Unobservable	Range of	Weighted Average
September 30, 2024	Technique	Inputs	Discount	Discount
Collateral Dependent Loans	Third-party appraisals and discounted cash flows	Collateral discounts and estimated costs to sell	6% - 10%	6%
Real Estate Owned	Third-party appraisals, sales contracts or brokered price options	Collateral discounts and estimated costs to sell	6% - 10%	6%


	Valuation	Unobservable	Range of	Weighted Average
December 31, 2023	Technique	Inputs	Discount	Discount
Collateral Dependent Loans	Third-party appraisals and discounted cash flows	Collateral discounts and estimated costs to sell	6% - 10%	6%
Real Estate Owned	Third-party appraisals, sales contracts or brokered price options	Collateral discounts and estimated costs to sell	6% - 10%	6%

The following methods and assumptions were used by the Bank to estimate fair value of financial instruments.

Cash and Cash Equivalents - Fair value approximates carrying value.

Investment Securities Available-for-Sale - Fair value is obtained from an independent pricing service based on quoted market prices or quoted market prices of securities with similar characteristics, quoted prices of identical securities in less active markets, discounted cash flow techniques, or matrix pricing models.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Restricted Stock - Consists of stock held as required by the respective institutions for membership and are carried at cost. While a fixed stock amount is required, the Federal Home Loan Bank stock requirement increases or decreases with the level of borrowing activity.

Loans Receivable, Net – Fair value is estimated by discounting the future cash flows using the current rate at which similar loans would be made to borrowers with similar credit rating and for the same remaining maturity. The fair value of loans is measured using an exit price notion.

Bank Owned Life Insurance - Fair value approximates carrying value.

Deposits - For NOW, savings and certain money market fund accounts, fair value is equal to the amount payable on demand or carrying value. For time deposits, fair value is estimated using a discounted cash flow method.

Federal Home Loan Bank Advances- Fair value approximates carrying value.

The carrying amount and estimated fair value of the Company’s financial instruments are as follows (in thousands):

Carrying

Fair Value Measurements

September 30, 2024

Value

Level 1

Level 2

Level 3

Financial Assets

Cash and Cash Equivalents

34,088

—

Investment Securities Available-for-Sale

93,802

—

93,802

—

Restricted Stock

902

—

902

Loans Receivable, Net

367,699

—

314,159

Financial Liabilities

Deposits

384,123

—

347,795


	Carrying		Fair Value Measurements
December 31, 2023	Value		Level 1		Level 2		Level 3
Financial Assets
Cash and Cash Equivalents	$	19,306	$	19,306	$	—	$	—
Investment Securities Available-for-Sale		67,901		—		67,901		—
Restricted Stock		881		—		—		881
Loans Receivable, Net		365,038		—		—		303,183

Financial Liabilities
Deposits		390,003		—		—		327,412
Short-Term Federal Home Loan Bank Advances		4,000		—		4,000		—

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Fair value estimates may not be realizable in an immediate settlement of the instrument. In some instances, there are no quoted market prices for the Company’s various financial instruments, in which case fair values may be based on estimates using the present value or other valuation techniques, or based on judgements regarding future expected loss experience, current economic conditions, risk characteristics of financial instruments, or other factors. Those techniques are significantly affected by assumptions used, including the discount rate and estimate of future cash flows. Subsequent changes in assumptions could significantly affect the estimates.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Note 8.

ESOP

In connection with the Conversion, the Company established an ESOP for the exclusive benefit of eligible employees. The Company makes quarterly contributions to the ESOP in amounts as defined by the plan document. The contributions are used to pay debt services. Certain ESOP shares are pledged as collateral for debt. As the debt is repaid, shares are released from collateral and allocated to active employees, based on the proportion of debt service paid during the period.

In connection with the Company’s initial public offering, the ESOP borrowed $4,447,580 payable to the Company for the purpose of purchasing shares of the Company’s common stock. A total of 444,758 shares were purchased with loan proceeds. Common stock acquired by the ESOP is shown as a reduction of stockholders’ equity. The loan is expected to be repaid over a period of up to 20 years.

Contributions to the ESOP totaled $224,000 during the three and nine months ended September 30, 2024. Compensation expense is recognized over the service period based on the average fair value of the shares and totaled $115,000 for the three and nine months ended September 30, 2024.

Note 9:

Earnings per Share

Earnings (loss) per common share was computed based on the following:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands, except per share data)	2024		2023		2024		2023
Numerator:
Net Income (Loss) Available to Common Stockholders	$	(788)	$	—	$	(1,237)	$	—

Denominator:
Weighted Average Common Shares Oustanding		5,559		—		5,559		—
Weighted Average Unearned ESOP Shares		(434)		—		(434)		—
Weighted Average Shares		5,125		—		5,125		—

Earnings (Loss) per Common Share - Basic and Diluted	$	(0.15)	$	—	$	(0.24)	$	—

Note 10.

Subsequent Events

In accordance with the subsequent events topic of the FASB ASC 855, the Company evaluates events and transactions that occur after the consolidated balance sheets date for potential recognition in the consolidated financial statements. The effects of all subsequent events that provide additional evidence of conditions that existed at the consolidated balance sheets date are recognized in the consolidated financial statements as of September 30, 2024 and December 31, 2023. In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred through the date the consolidated financial statements were available to be issued. Management has concluded that there are no additional events, other than disclosed above, which require disclosure.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Management’s discussion and analysis is intended to enhance your understanding of our financial condition and results of operations. The financial information in this section is derived from the accompanying consolidated financial statements. You should read the financial information in this section in conjunction with the business and financial information contained in this report and in the Company’s definitive prospectus dated May 10, 2024, as filed with the Securities and Exchange Commission on May 20, 2024.

Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

●

statements of our goals, intentions and expectations;

●

statements regarding our business plans, prospects, growth and operating strategies;

●

statements regarding the asset quality of our loan and investment portfolios; and

●

estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this prospectus.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

●

general economic conditions, either nationally or in our market area, which are worse than expected;

●

inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of our financial instruments, or our loan origination volume, or increase the level of defaults, losses and prepayments within our loan portfolio;

●

changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses;

●

our ability to access cost-effective funding;

●

our ability to maintain adequate liquidity, primarily through deposits;

●

fluctuations in real estate values and in the conditions of the residential real estate market;

●

demand for loans and deposits in our market area;

●

our ability to implement and change our business strategies;

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●

competition among depository and other financial institutions;

●

adverse changes in the securities markets;

●

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums;

●

changes in the quality or composition of our loan or investment portfolios;

●

technological changes that may be more difficult or expensive than expected;

●

the inability of third-party providers to perform as expected;

●

a failure or breach of our operational or information security systems or infrastructure, including cyberattacks;

●

our ability to manage market risk, credit risk, operational risk and reputation risk;

●

our ability to enter new markets successfully and capitalize on growth opportunities;

●

changes in consumer spending, borrowing and savings habits;

●

changes in accounting policies and practices, as may be adopted by bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

●

our ability to retain key employees; and

●

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, the Company assumes no obligation and disclaims any obligation to update any forward-looking statements.

Critical Accounting Policies and Use of Critical Accounting Estimates

The discussion and analysis of the financial condition and results of operations are based on our financial statements, which are prepared in conformity with GAAP. The preparation of these financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policy discussed below to be our critical accounting policy. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The Jumpstart Our Business Startups Act of 2012 (JOBS Act) contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.

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We consider the accounting policy for the allowance for credit losses to be our critical accounting policy. Effective January 1, 2023, we adopted the Current Expected Credit Loss (CECL) methodology. Under the CECL methodology, the allowance for credit losses represents management’s estimate of lifetime credit losses in loans as of the balance sheet date using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. For reporting periods before January 1, 2023 and the adoption of CECL, we used the incurred loss impairment method to estimate the allowance for loan losses on loans receivable. Under the incurred loss impairment methodology, the allowance for loan losses was based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, and other factors, and consisted of allocated and unallocated components.

Internal Control Over Financial Reporting

We have identified material weaknesses in our internal control over financial reporting with respect to our allowance for credit losses that existed as of September 30, 2024 and December 31, 2023. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements may not be prevented or detected on a timely basis. We concluded that our procedures were not effective as of December 31, 2023 and un-remediated as of September 30, 2024. Specifically, we identified, the following material weaknesses in our internal control over our financial reporting:

●

management did not maintain sufficient evidence of independent review or supporting documentation related to key methodologies, assumptions, and calculations, including support for the qualitative factors, utilized in the allowance for credit losses as of September 30, 2024 and December 31, 2023; and

●

management did not maintain sufficient evidence of independent review or supporting documentation, including support for the qualitative factors, related to the January 1, 2023 adoption of Accounting Standard Update (ASU) 2016-13 Financial Instruments – Credit Losses.

These material weaknesses could result in misstatements of our allowance for credit losses and related disclosures that would result in a material misstatement of our financial statements that would not be prevented or detected.

We intend to remediate these material weaknesses. We currently are assessing and improving our processes and control procedures to ensure they will operate at an acceptable level of assurance. The remedial measures we will take to address these material weaknesses include calculating an allowance for credit losses on unfunded commitments; revising the peer group of institutions to include institutions whose loan portfolios better reflect the composition of our loan portfolio; obtaining updated independent appraisals for loans being evaluated for impairment; enhancing qualitative factors support to include data points tied to a specified timeframe, such as, for example, the unemployment rate, to consistently allocate basis point reserves for each reporting period; using qualitative factors to adjust the allowance for credit losses for economic conditions that impact us and documenting the adjustments in a narrative accompanying the allowance calculation; and assigning an independent individual to review the allowance calculation to assure its accuracy and completeness.

We believe these actions and any other that we may determine need to be implemented, when complete, will remediate the control weaknesses. However, the weaknesses will not be considered fully remediated until the applicable controls operate for a sufficient period of time for management to test the results for operating effectiveness. Once implemented, we intend to continue periodic testing and reporting of the internal controls to ensure continuity of compliance.

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resulted in a reduced peer group loss rate and corresponding adjustments to our peer comparisons. In turn our CECL reserve percentage was decreased resulting in a $1.1 million reversal in our allowance for credit loss.

Comparison of Financial Condition at September 30, 2024 and December 31, 2023

Total Assets. Total assets were $523.8 million at September 30, 2024, an increase of $43.0 million, or 9.0%, compared to $480.8 million at December 31, 2023. This increase is primarily due to $14.8 million increase in cash and cash equivalents, $25.9 million increase in investment securities available-for-sale, and $2.7 million increase in loans receivable, net.

Cash and Cash Equivalents. Cash and cash equivalents increased by $14.8 million, or 76.6%, to $34.1 million at September 30, 2024 from $19.3 million at December 31, 2023. This increase resulted primarily from the cash received for subscriptions to purchase shares of the Company’s common stock in its initial public offering. The net proceeds of the public offering are reflected in Stockholders’ equity at September 30, 2024.

Investment Securities Available-for-Sale. Investment securities available-for-sale increased $25.9 million, or 38.1%, to $93.8 million at September 30, 2024 from $67.9 million at December 31, 2023. Securities purchased totaled $48.2 million during the nine months ended September 30, 2024, securities sold totaled $18.7 million, and calls, maturities, and repayments totaled $5.3 million.

Loans Receivable, Net. Loans receivable, net, increased by $2.7 million, or 0.7%, to $367.7 million at September 30, 2024 from $365.0 million at December 31, 2023. During the nine months ended September 30, 2024, loan originations were $26.9 million and loan repayments totaled $24.2 million. During the nine months ended September 30, 2024, commercial and industrial loans increased by $3.7 million, primarily from the purchase of the guaranteed portion of government loans, and Bankers Healthcare loans. 1-4 single family mortgages decreased by $2.8 million, home equity loans decreased by $629,000, construction loans increased by $1.5 million, and we reversed $1.1 million from our allowance for credit losses.

Deposits. Deposits decreased by $5.9 million, or 1.5%, to $384.1 million at September 30, 2024, from $390.0 million at December 31, 2023. Certificates of deposit increased $3.6 million, or 1.59%, to $231.8 million at September 30, 2024, from $228.1 million at December 31, 2023. The majority of the increase in certificates of deposit was driven by new customer activity and migration from lower yielding money markets accounts. NOW accounts increased $2.0 million, or 3.9%, to $52.8 million at September 30, 2024, from $50.8 million at December 31, 2023. MMDA accounts decreased $4.4 million, or 16.8%, to $22.0 million at September 30, 2024, from $26.4 million at December 31, 2023. Savings Accounts decrease $7.1 million, or 8.37%, to $77.5 million at September 30, 2024, from $84.6 million at December 31, 2023.

Total Stockholders’ Equity. Total stockholders’ equity increased by $50.1 million, or 64.4%, to $127.9 million at September 30, 2024, from $77.8 million at December 31, 2023. The increase resulted from the sale of stock in the initial public offering that totaled $53.2 million, offset by the unearned ESOP of $4.3 million, the accumulated other comprehensive loss (as a result of market value adjustment of investment securities available-for-sale due to the rise in market interest rates during the period) declining $2.5 million and retained earnings decreasing $1.2 million due to the net loss for the period ended September 30, 2024.

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Average Balances and Yields. The following table sets forth average balance sheets, average yields and rates, and other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects are immaterial. Average balances are calculated using daily average balances. Non-accrual loans are included in average balances only. Average yields include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Net deferred loan fees/costs are immaterial.


	For the Three Months Ended September 30,
	2024						2023
	Average						Average
	Outstanding				Average		Outstanding				Average
	Balance		Interest		Yield/Rate (4)		Balance		Interest		Yield/Rate (4)


Interest-earning assets:
Cash and cash equivalents	$	40,493	$	548	5.37	%	$	9,515	$	115	4.80	%
Investment securities available-for-sale		82,639		772	3.71			69,232		419	2.40
Loans receivable, net		368,805		3,863	4.16			361,902		3,611	3.96
Restricted stock		896		10	4.43			855		10	4.64
Total interest-earning assets		492,833		5,193	4.18			441,504		4,155	3.73
Noninterest-earning assets		32,408						31,942
Total assets	$	525,241					$	473,446

Interest-bearing liabilities:
Savings accounts	$	79,804		20	0.10	%	$	93,070		23	0.10	%
NOW accounts		66,363		3	0.02			51,511		3	0.02
Money market accounts		22,193		28	0.50			31,682		42	0.53
Certificates of deposit		235,163		2,259	3.81			208,568		1,691	3.22
Total interest-bearing deposits		403,523		2,310	2.27			384,831		1,759	1.81
Federal Home Loan Bank advances		—		—	—			3,348		43	5.10
Total interest-bearing liabilities		403,523		2,310	2.27			388,179		1,802	1.84
Noninterest-bearing demand deposits		1,185						898
Other noninterest-bearing liabilities		10,542						9,263
Total liabilities		415,250						398,340
Total stockholders' equity		109,991						75,106
Total liabilities and stockholders' equity		525,241						473,446
Net interest income			$	2,883					$	2,353
Net interest rate spread (1)					1.91	%					1.89	%
Net interest-earning assets (2)	$	89,310					$	53,325
Net interest margin (3)					2.32	%					2.11	%
Average interest-earning assets to interest-bearing liabilities					122.13	%					113.74	%

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	For the Nine Months Ended September 30,
	2024						2023
	Average						Average
	Outstanding				Average		Outstanding				Average
	Balance		Interest		Yield/Rate (4)		Balance		Interest		Yield/Rate (4)


Interest-earning assets:
Cash and cash equivalents	$	27,197	$	1,061	5.20	%	$	12,901	$	441	4.55	%
Investment securities available-for-sale		71,213		1,675	3.13			72,983		1,273	2.32
Loans receivable, net		366,991		11,375	4.13			357,360		10,444	3.89
Restricted stock		889		24	3.60			846		20	3.15
Total interest-earning assets		466,290		14,135	4.04			444,090		12,178	3.65
Noninterest-earning assets		32,572						30,802
Total assets	$	498,862					$	474,892

Interest-bearing liabilities:
Savings accounts	$	81,915		61	0.10	%	$	97,525		73	0.10	%
NOW accounts		47,957		9	0.02			53,940		10	0.02
Money market accounts		23,870		91	0.51			35,648		143	0.53
Certificates of deposit		236,268		6,763	3.81			201,327		4,100	2.71
Total interest-bearing deposits		390,010		6,924	2.36			388,440		4,326	1.48
Federal Home Loan Bank advances		113		4	4.72			1,128		43	5.08
Total interest-bearing liabilities		390,123		6,928	2.37			389,568		4,369	1.49
Noninterest-bearing demand deposits		1,116						1,383
Other noninterest-bearing liabilities		9,598						8,071
Total liabilities		400,837						399,022
Total stockholders' equity		98,025						75,870
Total liabilities and stockholders' equity		498,862						474,892
Net interest income			$	7,207					$	7,809
Net interest rate spread ⁽¹⁾					1.67	%					2.16	%
Net interest-earning assets ⁽²⁾	$	76,167					$	54,522
Net interest margin ⁽³⁾					2.06	%					2.34	%
Average interest-earning assets to interest-bearing liabilities					119.52	%					114.00	%

(1)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)	Net interest margin represents net interest income divided by average total interest-earning assets.

(4)	Average yield/rate is an annualized amount.

Comparison of Operating Results for the Three Months Ended September 30, 2024 and 2023

General. Net income (loss) for the three months ended September 30, 2024, was ($788,000), a decrease of $827,000, or 2,120.5%, compared to $39,000 for the three months ended September 30, 2023. The net loss was primarily from an increase in non-interest expense of $1.6 million resulting from a $1.3 million charitable contribution to establish the Fifth District Community Foundation, a $508,000 increase in interest expense, partially offset by a $1.0 million increase in interest income, and a $220,000 decrease in provision for income taxes.

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Interest and Dividend Income. Interest and dividend income increased by $1.0 million, or 25.0%, to $5.2 million for the three months ended September 30, 2024, compared to $4.2 million for the three months ended September 30, 2023. The increase is attributed to a $252,000, or 7.0%, increase in interest on loans, a $433,000, or 346.4%, increase in interest on other interest-earning assets and $353,000, or 84.3%, increase in interest on investment securities available-for-sale.

During the three months ended September 30, 2024, average loans receivable, net, increased by $6.9 million, or 1.9%, from the three months ended September 30, 2023. The average yield on loans increased to 4.16% for the three months ended September 30, 2024, from 3.96% for the three months ended September 30, 2023, due to the rising market rate environment.

The average balance of investment securities available-for-sale increased $13.4 million, or 19.4%, to $82.6 million for the three months ended September 30, 2024, from $69.2 million for the three months ended September 30, 2023. The average yield on available-for-sale investment securities increased to 3.71% for the three months ended September 30, 2024, from 2.40% for the three months ended September 30, 2023. The increase in the average yield on available-for-sale investment securities was primarily due to the rising market interest rate environment.

Interest income on cash and cash equivalents, comprised primarily of overnight deposits, increased by $433,000, or 376.5%, for the three months ended September 30, 2024, due to an increase in the average yield to 5.37% for the three months ended September 30, 2024, from 4.80% for the three months ended September 30, 2023. The increase in interest income was mainly due to the increase in the balance of cash and cash equivalents arising from the cash received for the purchase of stock in the IPO. The increase in average yield was due to the rise in market interest rates.

Interest Expense. Total interest expense increased $508,000 or 28.2%, to $2.3 million for the three months ended September 30, 2024, from $1.8 million for the three months ended September 30, 2023. The increase was primarily due to the increase in the average cost of deposits to 2.27% for the three months ended September 30, 2024, from 1.81% for the three months ended September 30, 2023, reflecting the rising market interest rate environment. The average balance of interest-bearing deposits increased by $18.7 million, or 4.9%, to $403.5 million for the three months ended September 30, 2024, from $384.8 million for the three months ended September 30, 2023.

Net Interest Income. Net interest income increased $530,000, or 22.5%, to $2.9 million for the three months ended September 30, 2024, compared to $2.4 million for the three months ended September 30, 2023. The increase reflects the increase in the interest rate spread to 1.91% for the three months ended September 30, 2024, from 1.89% for the three months ended September 30, 2023, while average net interest-earning assets increased $36.0 million period-to-period. The net interest margin increased to 2.32% for the three months ended September 30, 2024, from 2.11% for the three months ended September 30, 2023. The average yield on interest-earning assets increased from 3.73% for the three months ended September 30, 2023, to 4.18% for the three months ended September 30, 2024. The average rate paid on interest-bearing liabilities increased from 1.84% for the three months ended September 30, 2023, to 2.27% for the three months ended September 30, 2024, primarily due to an increase in the average rate paid on certificates of deposit from 3.22% in 2023 to 3.81% in 2024. The increase in the average rate paid on certificates of deposit contributed to migration from lower yielding savings accounts and money market accounts, to higher yielding certificates of deposit. The average balance of certificates of deposit increased from $208.6 million as of September 30, 2023, to $235.2 million as September 30, 2024, while over the same period the average balance of savings accounts decreased from $93.1 million to $79.8 million, and the average balance of money market accounts decreased from $31.7 million to $22.2 million.

Provision (Recovery) for Credit Losses. The recovery of credit losses on loans decreased $100,000 to $0 for the three months ended September 30, 2024, compared to $100,000 for the three months ended September 30, 2023. The allowance for credit losses on loans represented 0.46% of total loans at September 30, 2024, and 0.76% of total loans at September 30, 2023. The recovery of credit losses is based on our evaluation of the adequacy of the allowance for credit losses throughout the reporting period.

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The recovery of credit losses on unfunded commitments increased $110,000 for the three months ended September 30, 2024 compared to no recovery for the three months ended September 30, 2023. The recovery of credit losses on unfunded commitments is based on an evaluation of the historical usage rate.

Total non-performing loans were $647,000 at September 30, 2024, compared to $0 at September 30, 2023. We did not have any loans over 90 days delinquent at September 30, 2023 compared to $647,000 at September 30, 2024. Classified loans totaled $647,000 at September 30, 2024, compared to $106,000 at September 30, 2023. As a percentage of nonperforming loans, the allowance for credit losses on loans was 262.6% at September 30, 2024, and there were no non-performing loans at September 30, 2023.

Noninterest Income. Noninterest income totaled $252,000 for the three months ended September 30, 2024, an increase of $3,000, or 1.2%, from $249,000 for the three months ended September 30, 2023.

Noninterest Expense. Noninterest expense increased $1.6 million, or 59.9%, to $4.2 million for the three months ended September 30, 2024, compared to $2.7 million for the three months ended September 30, 2023. The increase was primarily due to an increase in salaries and employee benefits of $243,000, or 15.9%, an increase in occupancy and equipment expense of $28,000, or 6.5%, an increase in professional and legal fees of $16,000, or 41.0%, an increase in data processing expense of $9,000, or 3.3%, an increase in audit and examination fees of $68,000, or 194.3%, and an increase in charitable contributions of $1.3 million, or 9,615.4% from establishing the Fifth District Community Foundation, partially offset by a $5,000, or 8.8%, decrease in FDIC insurance expense, an $18,000, or 19.8% decrease in directors fees, and a $25,000, or 45.5% decrease in advertising.

Provision (Benefit) for Income Taxes. The provision (benefit) for income taxes decreased by $220,000, or 2,200.0%, to ($210,000) for the three months ended September 30, 2024, compared to $10,000 for the three months ended September 30, 2023. The decrease was due to a $1.0 million, or 2,136.7%, decrease in pretax income. The effective tax rate was 21% for both periods.

Comparison of Operating Results for the Nine Months Ended September 30, 2024 and 2023

General. Net income (loss) for the nine months ended September 30, 2024, was ($1.2) million, a decrease of $1.9 million, or 299.8%, compared to $619,000 for the nine months ended September 30, 2023. The net loss was primarily from an increase in non-interest expense of $1.9 million resulting from a $1.3 million charitable contribution to establish the Fifth District Community Foundation, an increase in interest expense of $2.6 million, a decrease in non-interest income of $956,000, partially offset by an increase in interest income of $2.0 million, and a $493,000 decrease in provision for income taxes.

Interest and Dividend Income. Interest and dividend income increased by $2.0 million, or 16.1%, to $14.1 million for the nine months ended September 30, 2024, compared to $12.2 million for the nine months ended September 30, 2023. The increase in interest income is attributed to a $931,000, or 8.9%, increase in interest on loans, a $624,000, or 135.4%, increase in interest on other interest-earning assets and $402,000, or 31.6%, increase in interest on investment securities available-for-sale.

During the nine months ended September 30, 2024, average loans receivable, net, increased by $9.6 million, or 2.7%, from the nine months ended September 30, 2023. The average yield on loans increased to 4.13% for the nine months ended September 30, 2024, from 3.89% for the nine months ended September 30, 2023, due to the rising market interest rate environment.

The average balance of investment securities available-for-sale decreased $1.8 million, or 2.4%, to $71.2 million for the nine months ended September 30, 2024, from $73.0 million for the nine months ended September 30, 2023. The average yield on available-for-sale investment securities increased to 3.13% for the nine months ended September 30, 2024, from 2.32% for the nine months ended September 30, 2023. The increase in the average yield on

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available-for-sale investment securities was primarily due to the rising market interest rate environment as well as selling low yielding bonds to reinvest in higher yielding bonds.

Interest income on cash and cash equivalents, comprised primarily of certificate of deposit in other financial institutions and overnight deposits, increased by $620,000, or 140.8%, for the nine months ended September 30, 2024, due to an increase in the average yield to 5.20% for the nine months ended September 30, 2024, from 4.55% for the nine months ended September 30, 2023. The increase in average yield was due to the rise in market interest rates.

Interest Expense. Total interest expense increased $2.6 million, or 58.6%, to $6.9 million for the nine months ended September 30, 2024, from $4.4 million for the nine months ended September 30, 2023. The increase was primarily due to the increase in the average cost of deposits to 2.36% for the nine months ended September 30, 2024, from 1.48% for the nine months ended September 30, 2023, reflecting the rising market interest rate environment. The average balance of interest-bearing deposits increased by $1.6 million, or 0.4%, to $390.0 million for the nine months ended September 30, 2024, from $388.4 million for the nine months ended September 30, 2023.

Net Interest Income. Net interest income decreased $602,000, or 7.7%, to $7.2 million for the nine months ended September 30, 2024, compared to $7.8 million for the nine months ended September 30, 2023. The decrease reflects the decrease in the interest rate spread to 1.67% for the nine months ended September 30, 2024, from 2.16% for the nine months ended September 30, 2023, while average net interest-earning assets increased $21.6 million period-to-period. The net interest margin decreased to 2.06% for the nine months ended September 30, 2024, from 2.34% for the nine months ended September 30, 2023. Both the interest rate spread and net interest margin decreased due to the rising interest rate environment. The average yield on interest-earning assets increased from 3.65% for the nine months ended September 30, 2023, to 4.04% for the nine months ended September 30, 2024. The average rate paid on interest-bearing liabilities increased from 1.49% for the nine months ended September 30, 2023, to 2.37% for the nine months ended September 30, 2024, primarily due to an increase in the average rate paid on certificates of deposit from 2.71% in 2023 to 3.81% in 2024. The increase in the average rate paid on certificates of deposit contributed to migration from lower yielding savings accounts, NOW accounts and money market accounts, to higher yielding certificates of deposit. The average balance of certificates of deposit increased from $201.3 million as of September 30, 2023, to $236.3 million as of September 30, 2024, while over the same period the average balance of savings accounts decreased from $97.5 million to $81.9 million, the average balance of NOW accounts decreased from $53.9 million to $48.0 million and the average balance of money market accounts decreased from $35.6 million to $23.9 million.

Provision (Recovery) for Credit Losses. The recovery of credit losses on loans increased $1.0 million to $1.1 million for the nine months ended September 30, 2024, compared to $100,000 for the nine months ended September 30, 2023. The recovery was primarily due to changes in the peer group for the CECL calculation. The allowance for credit losses on loans represented 0.46% of total loans at September 30, 2024, and 0.86% of total loans at September 30, 2023. The recovery of credit losses is based on our evaluation of the adequacy of the allowance for credit losses throughout the reporting period.

Noninterest Income (Loss). Noninterest income (loss) totaled ($231,000) for the nine months ended September 30, 2024, a decrease of $956,000, or 131.9%, from $725,000 for the nine months ended September 30, 2023. The decrease was primarily due to the $1.1 million realized loss on the sale of investment securities available-for-sale and a $10,000, or 3.3%, decrease in ATM and check card fees, offset by a $34,000, or 14.4%, increase in the cash surrender value of the

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bank owned life insurance, a $13,000, or 8.6%, increase in deposit service charges and fees, and a $141,000 gain on sale of property.

Noninterest Expense. Noninterest expense increased $1.9 million, or 24.2%, to $9.8 million for the nine months ended September 30, 2024, compared to $7.9 million for the nine months ended September 30, 2023. The increase was primarily due to an increase in salaries and employee benefits of $382,000, or 8.4%, an increase in occupancy and equipment expense of $109,000, or 8.8%, an increase in FDIC insurance of $36,000, or 30.8%, an increase in data processing expense of $93,000, or 11.7%, an increase in audit and examination fees of $118,000, or 105.4%, an increase in other fees of $45,000 or 11.6%, and an increase in charitable contributions of $1.3 million, or 3,289.5% from establishing the Fifth District Community Foundation, offset by a $90,000, or 45.7%, decrease in advertising expense, and a $56,000, or 20.4% decrease in directors fees.

Provision (Benefit) for Income Taxes. The provision (benefit) for income taxes decreased by $493,000, or 300.6%, to ($329,000) for the nine months ended September 30, 2024, compared to $164,000 for the nine months ended September 30, 2023. The decrease was due to a $2.3 million, or 300.0%, decrease in pretax income. The effective tax rate was 21% for both periods.

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We also have the ability to borrow from the Federal Home Loan Bank of Dallas and from two correspondent banks and, until March 11, 2024, had the ability to obtain advances under the Federal Reserve Board’s Bank Term Funding Program. Under the terms of the Bank Term Funding Program, advances cannot be obtained after March 11, 2024. At September 30, 2024, we had no outstanding advances from the Federal Home Loan Bank of Dallas. At September 30, 2024, we had no outstanding balances under the correspondent bank credit facilities and no outstanding balance under the Bank Term Funding Program.

Time deposits that meet or exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit of $250,000 at September 30, 2024 and December 31, 2023 were $45.2 million and $42.2 million, respectively.

Based on collateral pledged, consisting of all shares of FHLB stock owned and the blanket pledge of approximately $237.0 million of its qualifying mortgage loans as of September 30, 2024, the Company was eligible to borrow up to an additional $180.5 million as of September 30, 2024.

The Company has an unsecured federal funds line of credit with FNBB that expires on September 30, 2025. The Company is eligible to borrow up to $27.2 million. There was no amount outstanding on this line of credit as of September 30, 2024 and December 31, 2023.

The Company is eligible to borrow from TIB’s Federal Funds Purchase Line Program, which provides overnight liquidity through pledge of certain qualifying securities. The Bank is eligible to borrow up to $15.0 million and repayment is due the next day. There was no amount outstanding on this line of credit as of September 30, 2024 and December 31, 2023.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets depend on our operating, financing, lending, and investing activities during any given period.

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Our cash flows are comprised of three primary classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. See the accompanying Statements of Cash Flows for further information.

Fifth District Bancorp, Inc. is a separate legal entity from Fifth District Savings Bank and must provide for its own liquidity to pay its operating expenses and other financial obligations. Its primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to the Company is governed by applicable bank regulations. At September 30, 2024, the Company (on an unconsolidated basis) had liquid assets of $21.4 million.

We believe we maintain a strong liquidity position, and are committed to maintaining it. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

At September 30, 2024, the Bank was categorized as well-capitalized under applicable bank regulatory capital guidelines. Management is not aware of any conditions or events since the most recent notification that would change its category.

Off-Balance Sheet Arrangements

At September 30, 2024, we had $23.6 million of outstanding commitments to originate loans, which primarily consists of $8.4 million of remaining funds to be disbursed on construction loans in process and $13.4 million of unused balances of home equity lines of credit. At September 30, 2024, certificates of deposit that are scheduled to mature on or before September 30, 2025 totaled $215.2 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may raise interest rates on deposits to attract new accounts or utilize Federal Home Loan Bank of Dallas advances, which may result in higher levels of interest expense.

Management of Market Risk

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. All directors participate in discussions during the regular board meetings evaluating the interest rate risk inherent in our assets and liabilities, and the level of risk that is appropriate. These discussions take into consideration our business strategy, operating environment, capital, liquidity and performance objectives consistent with the policy and guidelines approved by them. The board of directors establishes policies and guidelines for managing interest rate risk.

Our asset/liability management strategy attempts to manage the impact of changes in interest rates on net interest income, our primary source of earnings. Among the techniques we are using to manage interest rate risk are:

●

maintaining capital levels that substantially exceed the thresholds for well-capitalized status under federal regulations;

●

maintaining a high liquidity level;

●

growing our core deposit accounts; and

●

managing our investment securities portfolio to reduce the average maturity and effective life of the portfolio.

By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.

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We have not engaged in hedging activities, such as investing in futures or options. We do not anticipate entering into hedging transactions in the future.

Economic Value of Equity. We compute amounts by which the net present value of our assets and liabilities (economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases instantaneously by 100, 200, 300 and 400 basis point increments or decreases instantaneously by 100, 200, 300 and 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

The following table sets forth, as of September 30, 2024, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve. All estimated changes presented in the table are within the policy limits established by the board of directors.


At September 30, 2024
							EVE as a Percentage of Present Value
							of Assets ⁽³⁾
				Estimated Increase (Decrease) in					Increase
				EVE					(Decrease)
Change in Interest Rates (basis points) ⁽¹⁾		Estimated EVE ⁽²⁾		Amount	Percent		EVE Ratio ⁽⁴⁾		(basis points)
(Dollars in thousands)

400	$	52,713	$	(56,237)	(51.62)	%	13.56	%	(960)
300	$	63,445	$	(45,505)	(41.77)	%	15.66	%	(750)
200	$	77,920	$	(31,030)	(28.48)	%	18.31	%	(485)
100	$	93,572	$	(15,378)	(14.11)	%	20.89	%	(227)
Level	$	108,950		—	—	%	23.16	%	—
(100)	$	120,964	$	12,014	11.03	%	24.51	%	135
(200)	$	131,033	$	22,083	20.27	%	25.35	%	219
(300)	$	137,532	$	28,582	26.23	%	25.53	%	237
(400)	$	139,425	$	30,475	27.97	%	24.98	%	182

(1)	Assumes an immediate uniform change in interest rates at all maturities.

(2)	EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3)	Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4)	EVE Ratio represents EVE divided by the present value of assets.

The table above indicates that at September 30, 2024, we would have experienced a 28.48% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 20.27% increase in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.

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Change in Net Interest Income. The following table sets forth, as of September 30, 2024, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve. All estimated changes presented in the table are within the policy limits established by the board of directors.


At September 30, 2024
Change in Interest Rates	Net Interest Income Year 1
(basis points) ⁽¹⁾	Forecast		Year 1 Change from Level
	(Dollars in thousands)

400	$	8,528	(33.40)	%
300	$	9,612	(24.94)	%
200	$	10,718	(16.31)	%
100	$	11,771	(8.08)	%
Level	$	12,806	—
(100)	$	13,030	1.75	%
(200)	$	13,129	2.52	%
(300)	$	13,149	2.68	%
(400)	$	13,205	3.12	%

(1)	Assumes an immediate uniform change in interest rates at all maturities.

The table above indicates that as of September 30, 2024, we would have experienced a 16.31% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 2.52% increase in net interest income in the event of an instantaneous 200 basis point decrease in market interest rates.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurement. Modeling changes in EVE and NII require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. For instance, the EVE and NII tables presented above assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. However, the shape of the yield curve changes constantly and the value and pricing of our assets and liabilities, including our deposits, may not closely correlate with changes in market interest rates. Accordingly, although the EVE and NII tables may provide an indication of our interest rate risk exposure at a particular point in time and in the context of a particular yield curve, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on EVE and NII and will differ from actual results.

EVE and net interest NII calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

The information in Item 2 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Management of Market Risk” is incorporated in this Item 3 by reference.

Item 4.Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of September 30, 2024. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were not effective due to the material weaknesses disclosed above in Item 2 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Internal Control Over Financial Reporting.”

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During the quarter ended September 30, 2024, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, except as follows to address the material weaknesses disclosed above in Item 2 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Internal Control Over Financial Reporting”: We currently are assessing and improving our processes and control procedures to ensure they will operate at an acceptable level of assurance. The remedial measures we will take to address these material weaknesses include calculating an allowance for credit losses on unfunded commitments; revising the peer group of institutions to include institutions whose loan portfolios better reflect the composition of our loan portfolio; obtaining updated independent appraisals for loans being evaluated for impairment; enhancing qualitative factors support to include data points tied to a specified timeframe, such as, for example, the unemployment rate, to consistently allocate basis point reserves for each reporting period; using qualitative factors to adjust the allowance for credit losses for economic conditions that impact us and documenting the adjustments in a narrative accompanying the allowance calculation; and assigning an independent individual to review the allowance calculation to assure its accuracy and completeness.

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Part II – Other Information

Item 1.Legal Proceedings

The Company is not subject to any pending legal proceedings. The Bank is subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s consolidated financial condition or results of operations.

Item 1A. Risk Factors

Not applicable, as the Company is a smaller reporting company.

Item 2.Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

During the quarter ended September 30, 2024, the Company did not sell any equity securities that were not registered under the Securities act of 1933, as amended.

Effective July 31, 2024, the Company completed its initial public stock offering in connection with the Bank’s conversion from the mutual form of organization to the stock form of organization. The Company sold 5,459,473 shares of common stock at $10.00 per share pursuant to a Registration Statement on Form S-1, as amended (SEC File No. 333-277776), which was declared effective by the Securities and Exchange Commission on May 10, 2024. The stock offering resulted in gross offering proceeds of $54.6 million and net offering proceeds (after payment of offering expenses) of approximately $52.2 million. From the net offering proceeds, the Company lent $4.4 million to the Bank’s employee stock ownership plan (which used those funds to purchase 444,758 shares of the Company’s common stock in the stock offering), invested $26.1 million in the Bank as a capital contribution, and retained the remaining $21.4 million for general corporate purchases. Performance Trust Capital Partners, LLC served as the Company’s marketing agent in connection with the stock offering.

The Company did not repurchase any shares of its common stock during the quarter ended September 30, 2024.

Item 3.Defaults Upon Senior Securities

Not applicable.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

During the three months ended September 30, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement“ (as such term is defined in Item 408 of SEC Regulation S-K).

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Item 6.Exhibits


3.1	Articles of Incorporation of Fifth District Bancorp, Inc. ⁽¹⁾

3.2	Bylaws of Fifth District Bancorp, Inc. ⁽²⁾

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101	The following materials for the quarter ended September 30, 2024, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive (Loss) Income, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements

104	Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)

(1)	Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-277776), initially filed on March 8, 2024.

(2)	Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-277776), initially filed on March 8, 2024.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		FIFTH DISTRICT BANCORP, INC.


Date: November 14, 2024		/s/ Brian W. North
		Brian W. North
		President and Chief Executive Officer (Duly Authorized Representative and Principal Executive Officer)


Date: November 14, 2024		/s/ Melissa C. Burns
		Melissa C. Burns
		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer