證券和交易委員會

華盛頓特區20549

表格10-Q

☒	根據1934年證券交易法第13或第15(d)款的季度報告

截至季度結束日期的財務報告2024年9月30日

或者

☐	根據1934年證券交易所法第13或15(d)款的過渡報告

過渡期從到

委員會文件號 001-40368001-42198

第五區銀行集團，公司

（按其章程規定的確切註冊人名稱）

馬里蘭		99-1897673
（註冊地或其他組織機構的州或其他轄區）		（聯邦納稅人識別號）

4000 General DeGaulle Drive, 新奧爾良, 路易斯安那州		70114
(主要領導機構的地址)		(郵政編碼)

(504) 362-7544

(註冊人電話號碼，包括區號)

不適用

（曾用名稱、曾用地址以及如果自上次報告以來發生變更的財政年度）

根據證券法第12(b)條註冊的證券：


每一類的名稱	交易標的	名稱爲每個註冊的交易所:
普通股，面值每股0.01美元	FDSB	納斯達克股票市場有限公司

請通過勾選標註來表明公司（1）是否已在過去12個月內根據1934年證券交易所法第13或15（d）條的規定提交了所有要求提交的報告（或對於要求提交此類報告的縮短期間），和（2）過去90天是否受到了這些要求的約束。是的 ☒ 否 ☐

請通過勾選標註來表明公司是否已在過去12個月內按照Regulation S-t第405條的規定遞交了每份交互式數據文件（或對於要求提交此類文件的縮短期間）。是 ☒ 不是 ☐

用覈對標記指示公司是否爲大型加速報告者、加速報告者、非加速報告者、較小的報告公司或新興成長公司。請參閱交易所法案規則120億.2中對「大型加速報告者」、「加速報告者」、「較小的報告公司」和「新興成長公司」的定義。


大型加速報告人☐	加速文件提交者 ☐
非加速文件提交人 ☒	小型報告公司☒
	新興增長型企業 ☒

如果是新興成長型企業，請勾選是否選擇不使用按照《證券交易法》第13(a)條規定的新或修訂財務會計準則的過渡期。 ☐

請勾選此項，表示註冊人是外殼公司（根據Act規則12b-2的定義）。是的☐ 沒有 ☒

5,559,473 截至2024年11月14日，註冊人普通股總額爲0.01美元，發行並持有。

第五區銀行集團，公司

表格10-Q

指數


		頁面
第一部分 - 基本報表

事項1.	基本報表	2

	2024年9月30日的合併資產負債表（未經審計）和2023年12月31日	2

	2024年9月30日和2023年(未經審計)三個月和九個月的綜合收支表	3

	2024年9月30日和2023年(未經審計)三個月和九個月的綜合收益（損失）表	4

	2024年9月30日和2023年股東權益變動表（未經審計）	5

	2024年9月30日和2023年(未經審計)九個月的現金流量表	6

	合併財務報表註釋（未經審計）	8

項目2。	分銷計劃	33

項目3。	市場風險的定量和定性披露	45

項目4。	控制和程序	45

第二部分 - 其他信息

項目1.	法律訴訟	47

項目1A。	風險因素	47

項目2。	未註冊的股權銷售、使用收益和發行人購買股權	47

項目3。	對優先證券的違約	47

第4項。	礦山安全披露	47

項目5。	其他信息	47

項目6。	展示資料	48

	簽署頁	49

說明：

第五區銀行控股公司（以下簡稱「公司」、「我們」或「我們的」）於2月註冊。2024年2月15日，公司成立爲第五區儲蓄銀行（「第五區」或「銀行」）的儲蓄和貸款控股公司，作爲銀行從互助組織形式轉換爲股份制組織形式時的樞紐。此項轉換於2024年7月31日正式完成。在2024年7月31日之前的所有財務信息僅涉及銀行。

本報告中包含的未經審計的基本報表和其他財務信息應與截至2023年和2022年12月31日的銀行審計財務報表及相關附註一起閱讀，這些信息包含在公司於2024年5月10日提交給證券交易委員會的最終招股說明書中，該說明書於2024年5月20日提交。

第I部分 - 財務信息

項目1。基本報表

第五區銀行股份有限公司

合併資產負債表

（以千美元計的金額，每股金額）


	September 30,		十二月31日，
	2024		2023
	(未經審計)		(已經審計)
資產
庫存現金和存款銀行	$	5,565	$	4,587
其他金融機構的利息存款		28,523		14,719
現金及現金等價物總額		34,088		19,306

可供出售的投資證券，按公允價值計量		93,802		67,901
受限股		902		881
減未賺取收入的應收貸款淨額		369,398		367,840
信用損失準備		(1,699)		(2,802)
淨應收貸款		367,699		365,038
銀行持有人壽保險		10,603		10,332
房地產業和設備-淨資產		12,069		12,475
250,000		2,150		1,757
房地產所有權		42		42
推遲稅項資產，淨額		1,407		2,063
其他資產		1,059		1,002

總資產	$	523,821	$	480,797

負債和股東權益
負債
存款
人形機器人-軸承	$	383,161		389,207
非息憑證		962		796
借款人用於稅款、保險和維修的預付款		6,335		4,352
短期聯邦住房貸款銀行預支		—		4,000
其他負債		5,474		4,644

總負債		395,932		402,999

股東權益
Preferred Stock - $0.01 面值; 1,000,000 授權股數		—		—
普通股 - $0.01 面值; 20,000,000 授權股數: 5,559,473和 -0- 已發行股份傑出於2024年9月30日及2023年12月31日分別		56		—
資本公積金		53,143		—
未獲得的ESOP股票		(4,337)		—
留存收益		83,534		84,771
累計其他全面收益虧損		(4,507)		(6,973)

股東權益總計		127,889		77,798

負債和股東權益總計	$	523,821	$	480,797

附註是這些合併財務報表的一部分。

第五區銀行股份有限公司。

合併報表 業務（未經審計）

（以千計）


	三個月截至				截至九個月
	September 30,				九月三十日
	2024		2023		2024		2023
利息和股息收入
貸款，包括費用	$	3,863	$	3,611	$	11,375	$	10,444
投資證券		772		419		1,675		1,273
其他產生利息的資產		558		125		1,085		461

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

利息費用
存款		2,310		1,759		6,924		4,326
短期聯邦住房貸款銀行預付款項		—		43		4		43

利息支出合計		2,310		1,802		6,928		4,369

淨利息收入		2,883		2,353		7,207		7,809

貸款信用損失的回收		—		(100)		(1,100)		(100)
未撥備承諾的信貸損失恢復		(110)		—		(110)		—

信用損失的總恢復		(110)		(100)		(1,210)		(100)

信貸損失回收後的淨利息收入		2,993		2,453		8,417		7,909

非利息收入
存入資金服務費和費用		59		53		164		151
ATM和支票卡費用		100		101		298		308
銀行持有人壽保險		91		89		271		237
投資證券的損失		—		—		(1,144)		—
資產出售收益		—		—		141		—
其他		2		6		39		29

非利息收入（損失）總額		252		249		(231)		725

非利息支出
工資和員工福利		1,774		1,531		4,945		4,563
佔用和設備		460		432		1,355		1,246
聯邦存款保險		52		57		153		117
董事		73		91		218		274
專業和法律		55		39		131		117
審計和檢查		103		35		230		112
數據處理		284		275		891		798
廣告		30		55		107		197
慈善捐贈		1,263		13		1,288		38
其他		149		125		434		389

總非利息支出		4,243		2,653		9,752		7,851

稅前收益（虧損）		(998)		49		(1,566)		783

所得稅費用（收益）		(210)		10		(329)		164

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

每股收益（虧損）-基本和攤薄	$	(0.15)		不適用	$	(0.24)		N/A

附註是這些合併財務報表的一部分。

第五區銀行控股公司

綜合收益（損失）合併報表 （未經審計）

（以千計）


	三個月截至				截至九個月
	September 30,				2023年9月30日，
	2024		2023		2024		2023
Net Income (Loss)	$	(788)	$	39	$	(1,237)	$	619

其他綜合收益（損失）
在報告期內，出售可供出售投資證券產生的未實現收益（損失）		2,302		(2,578)		4,308		(2,320)

重新分類調整，用於在淨利潤（損失）中實現的淨虧損		—		—		(1,144)		—

確定福利養老金計劃的損失		(42)		(2)		(42)		(2)

稅收影響		(475)		541		(656)		487

其他綜合收益（稅後淨額）總額		1,785		(2,039)		2,466		(1,835)

綜合收益（損失）	$	997	$	(2,000)	$	1,229	$	(1,216)

附註是這些合併財務報表的一部分。

第五區銀行公司，Inc.

股東的合併報表 權益（未經審計）

（以千計）

截至2024年9月30日和2023年9月30日的三個月。


									累積
			Additional		這些單位				其他		合計
	Common		實收資本		ESOP		留存		綜合		股東的
	股票		資本		股票		收益		收入（損失）		股權
2023年6月30日的餘額	$	—	$	—	$	—	$	84,554	$	(7,701)	$	76,853

淨利潤		—		—		—		39		—		39

其他全面損失		—		—		—		—		(2,039)		(2,039)

2023年9月30日餘額	$	—	$	—	$	—	$	84,593	$	(9,740)	$	74,853

2024年6月30日餘額	$	—	$	—	$	—	$	84,322	$	(6,292)	$	78,030

淨損失		—		—		—		(788)		—		(788)

其他綜合收益		—		—		—		—		1,785		1,785

普通股發行，減去發行費用		56		53,139		(4,448)		—		—		48,747

ESOP股票已釋放以供分配		—		4		111		—		—		115

截至2024年9月30日的餘額	$	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日的九個月


									累積
			Additional		這些單位				其他		合計
	Common		實收資本		ESOP		留存		綜合		股東的
	股票		資本		股票		收益		收入（損失）		股權
2022年12月31日餘額	$	—	$	—	$	—	$	83,974	$	(7,905)	$	76,069

淨利潤		—		—		—		619		—		619

其他全面損失		—		—		—		—		(1,835)		(1,835)

2023年9月30日餘額	$	—	$	—	$	—	$	84,593	$	(9,740)	$	74,853

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

淨損失		—		—		—		(1,237)		—		(1,237)

其他綜合收益		—		—		—		—		2,466		2,466

普通股的發行，扣除發行費用		56		53,139		(4,448)		—		—		48,747

ESOP 股票已釋放以供分配		—		4		111		—		—		115

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

附註是這些合併財務報表的一部分。

第五區銀行控股公司

合併現金流量表 （未經審計）

（以千計）


	截至九個月
	September 30,
	2024		2023
經營活動產生的現金流量
Net Income (Loss)	$	(1,237)	$	619
調整以使淨利潤（虧損）與淨值對賬
經營活動產生的現金流量（淨額）
信用損失的回收		(1,210)		(100)
資產出售收益		(141)		—
折舊		523		409
遞延貸款成本的淨攤銷		1		30
投資證券的淨攤銷		228		214
投資證券出售損失		1,144		—
聯邦住房貸款銀行股票分紅		(21)		(16)
銀行擁有的人壽保險的現金價值增加		(271)		(237)
員工持股計劃薪酬費用		115		—
營運資產和負債的變動
250,000		(393)		30
其他資產		(57)		(450)
其他負債		898		834

經營活動現金流量淨額		(421)		1,333

投資活動產生的現金流量
投資證券銷售或到期收益
可供出售證券		24,043		8,408
可供出售的投資證券購買		(48,154)		(1,000)
存入資金到期的收益來自於
其他金融機構		—		249
購買聯邦住房貸款銀行股票		—		(19)
貸款應收款淨增加		(1,562)		(12,982)
處置房屋及設備的收益		510		—
購買房屋及設備		(484)		(1,208)

投資活動中使用的淨現金流量		(25,647)		(6,552)

附註是這些合併財務報表的一部分。

第五區銀行控股公司

持續經營的現金流量表（續）（未經審計）

（以千計）


	截至九個月
	九月三十日
	2024		2023
籌資活動產生的現金流量
存款減少，淨額		(5,880)		(3,570)
聯邦住房抵押貸款銀行貸款		(4,000)		4,000
Advances by Borrowers for Taxes,
保險和維修		1,983		885
發行普通股的淨收入		48,747		—

融資活動提供的淨現金		40,850		1,315

現金及現金等價物淨增(減)		14,782		(3,904)

期初現金及現金等價物餘額		19,306		20,036

期末現金及現金等價物餘額	$	34,088	$	16,132

現金流量補充披露
餘額期間內支付的利息現金	$	6,725		3,902
稅款支付期間的現金	$	—		125
定義利益養老金計劃的市場價值調整	$	(42)		(2)

未實現損失的市場價值調整
可供出售證券投資	$	3,164		(2,320)

非現金投資和融資活動
通過強制扣押取得的房地產業	$	—	$	42

附註是這些合併財務報表的一部分。

第五區銀行控股公司

合併財務報表附註

注1。

重要會計政策摘要 （未經審計）

業務描述

第五區銀行股份有限公司（「第五區銀行股份有限公司」或「公司」）成立於2024年2月15日，是一家馬里蘭公司，旨在充當第五區儲蓄銀行（「第五區」或「銀行」）的銀行控股公司，與銀行從相互轉變爲股份組織形式（「轉變」）有關。轉變工作於2024年7月31日完成。與轉變相關，第五區銀行股份有限公司收購 100第五區和公司出售了的所有權份額 5,459,473 向服務提供者發放了購買10.00 每股售價，總髮行價爲$54,594,730。轉換和發行普通股的成本約爲$2,400,000，這筆費用已從總髮行收益中扣除。此外，公司向一家新設立的慈善基金捐贈了 100,000 股。銀行的員工持股計劃（「ESOP」）購買了公司出售的 444,758 股普通股，與 8佔中國衛生集團總股本的62,234,737股普通股。2009年4月7日，孫先生將28,200,000股普通股轉讓給其他個人，剩餘33,003,088股普通股，約佔中國衛生集團總股本的53.03％。5,559,473 公司發行的普通股股份。ESOP使用貸款從公司購買了這些股份。公司大約貢獻了 $26,097,000 募集款項淨額的一部分交給了銀行，向ESOP借出了4,447,580 募集款項的一部分，留下了大約21,400,000 的淨收益。

銀行是一家聯邦特許股票儲蓄銀行，吸收來自普通公衆的存款，主要用這些存款發放以居民自住家庭爲抵押的貸款。銀行的主要監管機構是美國國家貨幣監理局（OCC）。銀行的活動由位於新奧爾良大區的分支機構向銀行客戶提供；但是，貸款和存款客戶分散在更廣泛的地理區域，覆蓋路易斯安那州東南部。該銀行作爲一個報告細分板塊營運。

呈現基礎

公司的會計和報告政策與美國通用會計準則（U.S. GAAP）以及銀行業內主流做法一致。

管理層認爲，附帶的未經審計的基本財務報表已經進行了必要的調整，以公平地展示截至2024年9月30日和2023年12月31日的公司財務狀況，截至2024年9月30日和2023年的三個月和九個月的經營業績，以及截至2024年9月30日和2023年的現金流量。所有調整均爲正常和經常性質，並且是附帶的未經審計的合併財務報表中唯一包括的調整。中期結果未必能夠反映全年的結果。

合併原則

截至2024年9月30日的合併基本報表包括第五區域銀行公司及其全資子公司第五區域的金額。所有公司內部交易和餘額已被消除。

截至2023年9月30日的基本報表代表僅銀行，因爲轉換爲股份制形式，包括第五區域銀行公司的形成，已於2024年7月31日完成。在此提及的有關「公司」的內容，應該是指在股份轉換完成之前的「銀行」。

第五區銀行股份有限公司

合併財務報表附註

估算值的使用

根據美國公認會計原則編制財務報表要求管理層做出估算和假設，這些估計和假設會影響財務報表日報告的資產負債金額和或有資產負債的披露以及報告期內報告的收入和支出金額。實際結果可能與這些估計值有所不同。

在短期內特別容易受到重大變化的實質性估計與信用損失備抵額、遞延稅收和金融工具公允價值的估值有關。

信貸損失備抵是否充足的確定所依據的估算值特別容易受到經濟環境和市場條件重大變化的影響。在確定貸款和無準備金承付款的估計損失方面，管理層需要對大量抵押品進行獨立評估。儘管管理層利用現有信息確認貸款損失，但根據當地經濟條件的變化，可能需要進一步減少貸款的賬面金額。此外，作爲審查程序不可分割的一部分，監管機構定期審查貸款的估計損失。根據此類審查，公司可能會根據對審查時所獲得信息的判斷，決定確認額外損失。由於這些因素，估計的貸款損失有可能在短期內發生重大變化。但是，無法估計合理可能的變更金額。

現金和現金等價物

就合併現金流量表而言，現金和現金等價物包括手頭現金、現金項目、銀行應付金額、原始到期日爲90天或更短的其他金融機構的計息存款以及出售的聯邦基金。通常，聯邦基金的銷售期限爲一天。

來自銀行的現金和應付賬款包括總額約爲 $ 的銀行存款帳戶23,595,000 和 $8,934,000 超過聯邦存款保險公司的限額 $250,000 分別在 2024 年 9 月 30 日和 2023 年 12 月 31 日爲每個被保險帳戶。該公司沒有遭受任何損失，也不認爲這種做法存在重大的信用風險。

公司可能需要在聯邦儲備銀行維持現金儲備。該要求取決於公司的手頭現金或非計息餘額。有不截至 2024 年 9 月 30 日和 2023 年 12 月 31 日的存款準備金要求。

投資證券

歸類爲持有至到期的債務證券是指無論市場狀況、流動性需求或總體經濟狀況的變化如何，公司都有意和能力持有至到期的債務證券。這些證券按成本記賬，並根據溢價的攤銷和折扣的增加進行調整。購買溢價和折扣使用證券條款的實際利息法在利息收入中確認，證券條款確定爲保費的追加日和折扣的到期日。該公司持有不截至2024年9月30日或2023年12月31日持有至到期的證券。

歸類爲可供出售的債務證券是公司打算無限期持有但不一定到期的債務證券。出售歸類爲可供出售的證券的任何決定都將基於各種因素，包括利率的重大變動、公司資產和負債到期組合的變化、流動性需求、監管資本考慮和其他類似因素。這些證券由第三方定價服務機構按估計的公允價值進行記賬

第五區銀行股份有限公司

合併財務報表附註

未實現收益或虧損不計入淨收益，以累計其他綜合收益（虧損）形式列報，扣除相關的遞延所得稅影響後，該收益作爲股東權益的單獨組成部分列報。

被歸類爲交易的債務證券被收購和持有的主要目的是短期內出售。這些證券由第三方定價服務機構按估計的公允價值記賬，任何未實現的收益或虧損都包含在淨收益中，並在合併運營報表中以非利息收入形式列報。該公司持有不截至 2024 年 9 月 30 日或 2023 年 12 月 31 日交易證券。

根據所售特定證券的調整後成本基礎確定的債務證券銷售所實現的收益和虧損包含在經營報表的非利息收入中。所有類別投資證券的股息和利息收入，包括攤銷溢價和收購時產生的折扣的增加，均包含在合併運營報表的利息收入中。

限制性股票

限制性股票是聯邦住房貸款銀行（FHLB）和第一國民銀行家銀行（FNBB）的股票，其適銷性受到限制。由於這些投資沒有現成市場，也沒有報價市值，因此公司對這些股票的投資按成本計提。限制性股票投資是否存在減值的確定每年進行一次，包括對發行人當前財務狀況的審查。

信貸損失備抵金——可供出售的投資證券

對於可供出售的證券，管理層每季度評估所有處於未實現虧損狀況的投資，當經濟或市場條件需要進行此類評估時，更頻繁地進行評估。如果公司打算出售證券，則該證券將減記爲公允價值，並將全部虧損記入收益。

如果不滿足上述任一標準，公司將評估公允價值的下降是信貸損失還是其他因素造成的。在進行評估時，公司可以考慮各種因素，包括公允價值在多大程度上低於攤銷成本、標的抵押品的表現、評級機構下調證券評級、發行人未能按期支付利息或本金以及與證券特別相關的不利條件。如果評估表明存在信貸損失，則將預期收取的現金流的現值與證券的攤銷成本基礎進行比較，任何超出部分都記作信用損失備抵金，僅限於公允價值低於攤銷成本基礎的金額，在運營報表中確認爲信用損失準備金。任何未通過信用損失備抵記錄的與信貸無關的未實現虧損均計入其他綜合收益。

信用損失備抵額的變動記作信貸損失費用的準備金（或追回）。當管理層認爲可供出售的證券已確認無法收回時，或者當有關出售意向或要求的任一標準得到滿足時，損失將從信用損失備抵中扣除。在 2024 年 9 月 30 日和 2023 年 12 月 31 日，有不與可供出售投資組合相關的信用損失備抵金。

可供出售證券的應計應收利息總額約爲 $337,000 和 $168,000 分別爲2024年9月30日和2023年12月31日，未包括在信貸損失估計中。

第五區銀行控股公司

合併財務報表附註

貸款應收賬款

管理層有意願和能力持有的貸款，直到可預見的未來、到期或還款時，按照攤銷成本報告。攤銷成本是指未償還的本金餘額，扣除購買溢價和折扣以及遞延費用和成本。

與貸款相關的應計利息應收款總額約爲 $1,813,000 和$1,589,000 截至2024年9月30日和2023年12月31日，分別在資產負債表的應計利息應收款中報告。利息收入根據未支付的本金餘額按利息法在貸款的整個生命週期內計入。貸款發放和承諾費用以及某些直接貸款發放成本被遞延，並根據貸款的合同期限使用有效利息法作爲相關貸款收益的調整進行攤銷。

當貸款逾期90天且缺乏足夠的擔保，並且正在收款過程中，或者當管理層在考慮經濟和業務狀況以及收款努力後認爲，主本金或利息在正常業務過程中無法收回時，利息的累積通常會被停止。逾期狀態基於貸款的合同條款。當預定付款在合同到期日後30天內未收到時，貸款被認爲已逾期。

當貸款被置於非累積狀態時，所有應計利息將會衝抵利息收入。在這些貸款上收到的利息將採用成本回收法進行會計處理，直到符合恢復到累積的條件。在成本回收法下，利息收入在貸款餘額減少到零之前不會被確認。當所有按合同到期的本金和利息金額被結清，且有持續的償還表現，以及未來的付款 reasonably assured，貸款將恢復到累積狀態。

信貸損失準備金 - 應收貸款

信貸損失準備金是一個評估帳戶，從貸款的攤餘成本基礎中扣除，以呈現預期可收回的淨額。當管理層認爲貸款餘額的不可收回性已確認時，貸款將從準備金中核銷。預期的回收不超過先前已覈銷和預計將被覈銷的總金額。應計利息應收款不包含在信貸損失的估算中。

信貸損失準備金代表管理層截至資產負債表日期對貸款的生命週期信貸損失的估計。信貸損失準備金是由管理層使用相關的可用信息進行估算的，這些信息來自內部和外部來源，涉及過去事件、當前狀況和合理且可支持的預測。

當存在相似風險特徵時，預期信貸損失在池基礎上進行測量，採用加權平均剩餘壽命法。加權平均剩餘壽命法對給定貸款池的損失率進行應用，這基於歷史數據。貸款損失由於貸款組合的性質和相對簡單性，採用加權平均剩餘壽命法進行計算。

第五區銀行控股公司

合併財務報表附註

公司已經識別並對以下每個投資組合細分計算信用損失準備金：

貸款組合		風險特徵
一至四家庭抵押貸款		這一類別包括以住宅房地產爲抵押的貸款。這些貸款的表現可能會受到當地住宅房地產市場狀況、利率環境和通貨膨脹等多種因素的負面影響。

施工貸款		這一類別包括用於資助住宅和空地貸款的從零開始的施工和/或改善的貸款。施工貸款的表現通常依賴於對最終用戶的改善和/或土地開發的成功完成。計劃中的改善和開發的成功完成可能會受到施工完成後估計的物業價值變化、預期成本以及導致項目延誤的其他條件的負面影響。

房屋淨值貸款/信用額度		該類別包含以住宅房地產業的第一和次級留置權作爲擔保的貸款。這些貸款的表現可能會受到多個因素的不利影響，包括當地住宅房地產市場情況、利率環境和通貨膨脹。

商業貸款		該類別包括向各類從業者和其他專業人士發放的商業貸款。這些貸款通常最初由綜合UCC-1提交進行擔保。當貸款被購買時，銀行購買 100% 的貸款並向賣方支付 97% 的貸款餘額，賣方在銀行開設一個存入資金帳戶，金額等於 3% 的貸款餘額。如果貸款逾期，銀行將從存入資金帳戶中提取付款。如果貸款變爲 90天如果貸款違約，賣方通常會用一個平衡相等或更高的 performing 貸款替換違約貸款（儘管這不是賣方的合同義務）。這些貸款的表現可能會受到多種因素的負面影響，包括地方和國家市場條件、利率環境和通貨膨脹。

消費貸款		這一類別包括向個人提供的家庭、家庭和其他個人使用的貸款。這些貸款的表現可能會受到國家和地方經濟條件、通貨膨脹及其他影響借款人可用於償還債務的收入的因素的負面影響。

此外，信用損失準備金的計算包括針對可能導致預估信用損失與歷史經驗差異的定性風險因素的主觀調整。這些定性調整可能會增加或減少準備金水平，包括對貸款管理經驗和風險承受能力、貸款審查和審計結果、資產質量和投資組合趨勢、貸款組合增長、行業集中度、基礎擔保的趨勢、外部因素以及尚未反映的經濟條件的調整。公司估計合理且可支持的預期信用損失預測，並在貸款池的剩餘生命週期內，對於預測期之外的期間回歸到歷史損失信息。

不具有相似風險特徵的貸款將單獨評估。當借款人面臨財務困難，並且預計通過擔保的操作或銷售來提供還款時，預期信用損失基於報告日擔保的公允價值，適當時調整估計的銷售成本。

第五區銀行控股公司

合併財務報表附註

信用損失準備金 - 未融資承諾

金融工具包括諸如爲了滿足客戶融資需求而發放的貸款承諾等表外信用工具。公司在金融工具的表外貸款承諾中，如果另一方未能履約，其信用損失的風險由這些工具的合同金額表示。這類金融工具在獲得資金時進行記錄。

公司在表外信用風險上記錄信用損失準備金，除非信用擴展的承諾可以無條件取消，通過對合並運營報表中未融資承諾的準備金提取來進行。表外信用風險的信用損失準備金是按貸款細分在每個資產負債表日根據當前預期信用損失模型進行估算，使用與組合貸款相同的方法，考慮到融資發生的可能性以及任何第三方擔保。未融資承諾的準備金被納入合併資產負債表的其他負債中。

銀行持有人壽保險

銀行是某些銀行高管生命保險合同的受益人，這些合同按現金退保價值報告。截止到2024年9月30日和2023年12月31日，生命保險合同總計約爲$10,603,000 和$10,332,000現金退保價值的增值約爲$91,000 和$89,000 截至2024年和2023年9月30日的三個月，分別爲$271,000 和$237,000 截至2024年和2023年9月30日的九個月，分別爲$。保險單的增值包含在合併經營報表中的銀行擁有的人壽保險非利息收入中。

房屋和設備

房屋和設備按成本扣除累計折舊進行覈算。折舊通常採用直線法計算，基於資產的估計使用壽命。建築物和改進的估計使用壽命區間爲 15 到 40年，傢俱和固定裝置的使用年限從 5 到 109

對物業的主要支出以及那些大幅延長使用壽命的支出被資本化。維護、修理和小型更換的支出如未對相關資產的使用壽命產生顯著改善或延長，則作爲費用在發生時計入。

當資產被報廢或以其他方式處置時，其成本和相關累計折舊將從相應帳戶中移除，任何收益或損失將反映在其他非利息收入或支出中。

房地產所有權

通過貸款止贖獲得的房地產業的初始記錄爲收購日期的公允價值，減去估計的銷售成本。收購時的任何減值均計入信貸損失準備金。收購後的後續評估準備金將根據需要建立，以報告這些資產的較低值（a）公允價值減去估計銷售成本或（b）成本。

公司能夠收回房地產業的賬面價值取決於未來對所擁有房地產業的銷售。實現這種收回的能力受市場條件和其他因素的影響，其中許多因素超出了公司的控制範圍。此類物業的經營收入，扣除相關費用以及處置的盈虧，將包含在合併的運營報表中。公司在某個時間點有$42,000 截至2024年9月30日和2023年12月31日擁有的房地產業的價值爲$。

第五區銀行控股公司

合併財務報表附註

所得稅

遞延所得稅資產和負債是根據責任（或資產負債表）方法確定的。根據這種方法，淨遞延所得稅資產或負債是基於公司資產和負債的財務報表賬面金額與稅基之間的暫時差異的稅收影響確定的。遞延所得稅資產和負債反映了按照預期實現或結算遞延所得稅資產和負債的期間適用的當前頒佈的所得稅率。隨着稅法或稅率的變化的頒佈，遞延所得稅資產和負債通過繳納所得稅費用進行調整。在管理層認爲遞延所得稅資產的某部分或全部不太可能實現時，遞延所得稅資產減少了估值準備。

根據所有可用證據，管理層認爲更有可能在檢驗期間保留該立場的情況下，會認可稅收處理的好處，並在一體化財務報表中承認這一利益，包括上訴或訴訟程序的解決，如果有的話。所採取的稅收立場的評估被視爲獨立考慮，而不與其他立場相抵銷或合併。符合更有可能認可門檻的稅收立場被計量爲在與適用徵稅機構結算時更有50%以上可能實現的稅收利益最大金額。

與上述所述金額相比超出的與所採取稅收立場相關的利益部分被反映爲未確認稅收利益的負債，在一體化資產負債表中列示，連同在檢驗時將支付給徵稅機構的任何相關利息和罰款。與未確認稅收利益相關的利息和罰款被分類爲一體化損益表中的額外所得稅。

美國普遍接受的會計原則提供了有關公司在稅務申報中可能存在不確定性立場的會計和披露指導。公司相信其對所採取的任何稅務立場都有適當的支持，管理層已經確定在合併財務報表中不存在任何對財務狀況有重大影響的不確定稅務立場。

公司在截至2024年6月30日的六個月內實現了無在截至2024年9月30日和2023年的三個月和九個月合併財務報表中，並且在截至2024年9月30日和2023年12月31日的合併資產負債表中，未在利潤表中披露有關利息和/或罰款，也未披露任何應付利息和/或罰款的金額，與其所得稅申報相關。任何罰款或利息將計入所得稅費用。

該銀行不再受2021年之前的美國聯邦審查的約束。

綜合收益（損失）

綜合收益（損失）包括淨利潤（損失）和其他綜合收益（損失），扣除適用所得稅。其他綜合收益（損失）包括可供出售證券的未實現收益和損失，以及除淨週期性養老金成本之外的養老金相關變動。累計其他綜合（損失）包括可供出售證券的累計未實現收益和損失，以及養老金計劃責任的資金狀況累計未實現盈利或虧損，扣除稅金。

每股收益

每股收益（損失）代表可供普通股股東支配的收入或損失，除以期間內普通股股份加權平均數。由ESOP持有的未分配普通股股份顯示爲股東權益減少，並從加權平均數中排除。

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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:

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

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maintaining a high liquidity level;

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growing our core deposit accounts; and

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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