UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ~~June 30, 2021~~March 31, 2022

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission file number: ~~333-254200~~001-40893

CATALYST BANCORP, INC.

(Exact name of registrant as specified in its charter)

Louisiana		86-2411762
(State or other jurisdiction of incorporation of organization)		(I.R.S. Employer Identification No.)

235 N. Court Street, Opelousas, Louisiana 70570

(Address of principal executive offices; Zip Code)

(337) 948-3033

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
~~None~~Common Stock		~~N/A~~CLST		~~N/A~~Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐☒ No ☒☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 05,290,000 shares of Registrant’s common stock, par value of $0.01 per share, issued and outstanding as of ~~September 16, 2021.~~May 9, 2022.

Table of Contents

CATALYST BANCORP, INC.

FORM 10-Q

TABLE OF CONTENTS


		Page Number
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Financial Condition ~~at June 30, 2021 and December 31, 2020~~	1

	Consolidated Statements of Income ~~for the Three and Six Months Ended June 30, 2021 and 2020~~	2

	Consolidated Statements of Comprehensive Income ~~for the Three and Six Months Ended June 30, 2021 and 2020~~	3

	Consolidated Statements of Changes in Shareholders' Equity ~~for the Six Months Ended June 30, 2021 and 2020~~	4

	Consolidated Statements of Cash Flows ~~for the Six Months Ended June 30, 2021 and 2020~~	5

	Notes to Unaudited Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2122

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3335

Item 4.	Controls and Procedures	3335

PART II	OTHER INFORMATION	3536

Item 1.	Legal Proceedings	3536

Item 1A.	Risk Factors	3536

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3536

Item 3.	Defaults Upon Senior Securities	3536

Item 4.	Mine Safety Disclosures	3536

Item 5	Other Information	3536

Item 6.	Exhibits	3637

SIGNATURES		3738

~~Table of Contents~~

~~EXPLANATORY NOTE~~

~~Catalyst Bancorp, Inc.~~

~~Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021~~

Catalyst Bancorp, Inc. (the “Company”) was formed to serve as the holding company for St. Landry Homestead Federal Savings Bank (the “Bank”) upon the completion of the Bank’s mutual-to-stock conversion (the “Conversion”). As of June 30, 2021, the Company had no assets or liabilities and had not conducted any business activities other than organizational activities. Accordingly, the unaudited financial statements and the other financial information contained in this quarterly report on Form 10-Q relate solely to the Bank.

The unaudited financial statements and other financial information contained in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements of St. Landry Homestead Federal Savings Bank as of and for the years ended December 31, 2020 and 2019 contained in the Company’s definitive prospectus, dated August 6, 2021 (the “Prospectus”), as filed with the Securities and Exchange Commission pursuant to Securities Act Rule 424(b)(3) on August 16, 2021 (File No. 333-254200).

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

~~ST LANDRY HOMESTEAD FEDERAL SAVINGS BANK~~CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)


June 30,

December 31,
(Dollars in thousands)

2021

2020
ASSETS




Non-interest-bearing cash

$
6,426

$
5,507
Interest-bearing cash and due from banks

22,661

19,738
Total cash and cash equivalents

29,087

25,245
Investment securities -




Securities held-to-maturity (fair values of $15,320 and $17,505, respectively)

15,511

17,523
Securities available-for-sale, at fair value

41,856

20,730
Loans receivable, net of unearned income

140,599

151,800
Allowance for loan losses

(2,649)

(3,022)
Loans receivable, net

137,950

148,778
Accrued interest receivable

558

564
Foreclosed real estate

590

415
Premises and equipment, net

6,545

5,489
Stock in Federal Home Loan Bank, at cost

1,398

1,394
Bank owned life insurance

3,258

3,213
Other assets

1,887

1,337
TOTAL ASSETS

$
238,640

$
224,688
LIABILITIES AND EQUITY




LIABILITIES




Deposits




Non-interest-bearing

$
29,031

$
26,169
Interest-bearing

148,857

138,429
Total deposits

177,888

164,598
Advances from Federal Home Loan Bank

8,928

8,838
Other liabilities

1,092

719
TOTAL LIABILITIES

187,908

174,155
Commitments and Contingencies (Note 6)




EQUITY




Retained earnings

50,837

50,426
Accumulated other comprehensive income (loss)

(105)

107
TOTAL EQUITY

50,732

50,533
TOTAL LIABILITIES AND EQUITY

$
238,640

$
224,688

~~The accompanying Notes are an integral part of these financial statements.~~

~~Table of Contents~~

~~ST LANDRY HOMESTEAD FEDERAL SAVINGS BANK~~

~~STATEMENTS OF INCOME (Unaudited)~~

Three Months Ended

Six Months Ended

June 30,

June 30,

(Dollars in thousands)

2021

2020

2021

2020

INTEREST INCOME









Loans receivable, including fees

$
1,691

$
1,963

$
3,463

$
3,967

Investment securities

142

175

262

293

Other

10

13

24

69

Total interest income

1,843

2,151

3,749

4,329

INTEREST EXPENSE









Deposits

135

247

290

507

Advances from Federal Home Loan Bank

69

199

136

397

Total interest expense

204

446

426

904

Net interest income

1,639

1,705

3,323

3,425

(Reversal of) Provision for loan loss

(286)

—

(286)

65

Net interest income after (reversal) provision for loan losses

1,925

1,705

3,609

3,360

NON-INTEREST INCOME









Service charges on deposit accounts

160

121

283

281

Gain on sale of fixed assets

—

16

24

16

Bank owned life insurance income

22

17

45

33

Other

182

14

235

27

Total non-interest income

364

168

587

357

NON-INTEREST EXPENSE









Salaries and employee benefits

1,212

903

2,290

1,901

Occupancy and equipment

191

158

383

312

Computer services expense

156

130

307

257

Legal and accounting

94

49

167

101

Foreclosed assets expense, net

42

27

35

51

ATM and debit card expense

46

37

89

73

Advertising and marketing

12

22

21

56

Directors’ fees

70

80

141

160

Other

144

118

259

252

Total non-interest expense

1,967

1,524

3,692

3,163

INCOME BEFORE INCOME TAX

322

349

504

554

Income Tax Expense

62

89

93

139

NET INCOME

$
260

$
260

$
411

$
415


	(Unaudited)
	March 31,		December 31,
(Dollars in thousands)	2022		2021
ASSETS
Non-interest-bearing cash	$	511	$	4,933
Interest-bearing cash and due from banks		39,585		35,951
Total cash and cash equivalents		40,096		40,884
Investment securities:
Securities available-for-sale, at fair value		84,649		88,339
Securities held-to-maturity (fair values of $12,181 and $13,152, respectively)		13,492		13,498
Loans receivable, net of unearned income		132,003		131,842
Allowance for loan losses		(2,173)		(2,276)
Loans receivable, net		129,830		129,566
Accrued interest receivable		536		579
Foreclosed assets		320		340
Premises and equipment, net		6,475		6,577
Stock in correspondent banks, at cost		1,794		1,793
Bank-owned life insurance		8,824		3,303
Other assets		1,256		470
TOTAL ASSETS	$	287,272	$	285,349

LIABILITIES
Deposits
Non-interest-bearing	$	33,056	$	30,299
Interest-bearing		150,028		146,496
Total deposits		183,084		176,795
Advances from Federal Home Loan Bank		9,063		9,018
Other liabilities		663		1,190
TOTAL LIABILITIES		192,810		187,003

SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value - 5,000,000 shares authorized; NaN issued		-		-
Common stock, $0.01 par value - 30,000,000 shares authorized; 5,290,000 issued and outstanding at March 31, 2022 and December 31, 2021		53		53
Additional paid-in capital		50,821		50,802
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")		(4,126)		(4,179)
Retained earnings		52,222		52,353
Accumulated other comprehensive income (loss)		(4,508)		(683)
TOTAL SHAREHOLDERS' EQUITY		94,462		98,346
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	287,272	$	285,349

The accompanying Notes are an integral part of these financial statements.

Table of Contents

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended March 31,
(Dollars in thousands)	2022		2021
INTEREST INCOME
Loans receivable, including fees	$	1,563	$	1,808
Investment securities		329		121
Other		19		14
Total interest income		1,911		1,943
INTEREST EXPENSE
Deposits		92		155
Advances from Federal Home Loan Bank		68		68
Total interest expense		160		223
Net interest income		1,751		1,720
Provision for (reversal of) loan losses		(71)		-
Net interest income after provision for (reversal of) loan losses		1,822		1,720
NON-INTEREST INCOME
Service charges on deposit accounts		168		123
Gain on sale of fixed assets		-		25
Bank-owned life insurance		21		22
Other		8		17
Total non-interest income		197		187
NON-INTEREST EXPENSE
Salaries and employee benefits		1,261		1,067
Occupancy and equipment		210		182
Data processing and communication		208		174
Professional fees		140		73
Directors’ fees		55		71
ATM and debit card		49		43
Foreclosed assets, net		(17)		(7)
Advertising and marketing		42		9
Franchise and shares tax		58		-
Other		182		114
Total non-interest expense		2,188		1,726
Income (loss) before income tax expense (benefit)		(169)		181
Income tax expense (benefit)		(38)		30
NET INCOME (LOSS)	$	(131)	$	151

Earnings (loss) per share - basic	$	(0.03)	$	N/A

The accompanying Notes are an integral part of these financial statements.

Table of Contents

~~ST LANDRY HOMESTEAD FEDERAL SAVINGS BANK~~CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,				Three Months Ended March 31,
(Dollars in thousands)	2021		2020		2021		2020		2022		2021
Net income	$	260	$	260	$	411	$	415
OTHER COMPREHENSIVE INCOME (LOSS)
Change in unrealized gain (loss) on marketable securities		146		14		(268)		287
Less: deferred income tax effect		(31)		(3)		56		(60)
Net income (loss)									$	(131)	$	151
Net unrealized gains (losses) on available-for-sale securities										(4,842)		(413)
Income tax effect										1,017		86
Total other comprehensive income (loss)		115		11		(212)		227		(3,825)		(327)
Total comprehensive income	$	375	$	271	$	199	$	642
Total comprehensive income (loss)									$	(3,956)	$	(176)

The accompanying Notes are an integral part of these financial statements.

Table of Contents

~~ST. LANDRY HOMESTEAD FEDERAL SAVINGS BANK~~CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY ~~(Unaudited)~~

Retained

Accumulated Other

Total
(Dollars in thousands)

Earnings

Comprehensive Income (Loss)

Equity
BALANCE, DECEMBER 31, 2019

$
51,129

$
(12)

$
51,117
Net income

415

—

415
Other comprehensive income

—

227

227
BALANCE, JUNE 30, 2020

$
51,544

$
215

$
51,759

BALANCE, DECEMBER 31, 2020

$
50,426

$
107

$
50,533
Net income

411

—

411
Other comprehensive income (loss)

—

(212)

(212)
BALANCE, JUNE 30, 2021

$
50,837

$
(105)

$
50,732

~~The accompanying Notes are an integral part of these financial statements.~~

~~Table of Contents~~

~~ST. LANDRY HOMESTEAD FEDERAL SAVINGS BANK~~

~~STATEMENTS OF CASH FLOWS~~ (Unaudited)

Six Months Ended

June 30,

(Dollars in thousands)

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES





Net income

$
411

$
415

Adjustments to reconcile net income to net cash provided by operating activities:





Investment securities amortization net

191

67

Stock dividend on Federal Home Loan Bank stock

(4)

(16)

(Reversal) Provision for loan losses

(286)

65

Writedowns and (gains) losses on sales of foreclosed real estate

40

48

Net (gain) loss on sale of premises and equipment

(24)

(16)

Depreciation of premises and equipment

202

168

Increase (Decrease) in other assets and liabilities, net

(71)

930

Net cash provided by operating activities

459

1,661

CASH FLOWS FROM INVESTING ACTIVITIES





Net decrease in loans

10,899

1,453

Activity in held-to-maturity securities:





Proceeds from maturities and calls

2,000

12,000

Purchases

—

(19,828)

Activity in available-for-sale securities:





Proceeds from maturities, calls, and paydowns

3,846

6,485

Purchases

(25,418)

(5,097)

Proceeds from sale of foreclosed real estate

—

116

Purchases of premises and equipment

(1,258)

(378)

Proceeds from sale of premises and equipment

24

16

Net cash used in investing activities

(9,907)

(5,233)

CASH FLOWS FROM FINANCING ACTIVITIES



Net increase in deposits

13,290

18,719

Net cash provided by financing activities

13,290

18,719

NET INCREASE IN CASH AND CASH EQUIVALENTS

3,842

15,147

CASH AND CASH EQUIVALENTS, beginning of period

25,245

17,909

CASH AND CASH EQUIVALENTS, end of period

$
29,087

$
33,056

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES





Loans originated to facilitate the sale of real estate owned

$
—

$
—

Loan principal reductions resulting from foreclosures on real estate

$
215

$
—

SUPPLEMENTAL SCHEDULE OF INTEREST AND TAXES PAID





Cash paid for interest

$
432

$
899

Cash paid for income taxes

$
—

$
75


(Dollars in thousands)	Common Stock		Additional Paid-in Capital		Unallocated Common Stock Held by ESOP		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
BALANCE, DECEMBER 31, 2020	$	-	$	-	$	-	$	50,426	$	107	$	50,533
Net income (loss)		-		-		-		151		-		151
Other comprehensive income (loss)		-		-		-		-		(327)		(327)
BALANCE, MARCH 31, 2021	$	-	$	-	$	-	$	50,577	$	(220)	$	50,357

BALANCE, DECEMBER 31, 2021	$	53	$	50,802	$	(4,179)	$	52,353	$	(683)	$	98,346
Net income (loss)		-		-		-		(131)		-		(131)
Other comprehensive income (loss)		-		-		-		-		(3,825)		(3,825)
ESOP shares released for allocation		-		19		53		-		-		72
BALANCE, MARCH 31, 2022	$	53	$	50,821	$	(4,126)	$	52,222	$	(4,508)	$	94,462

The accompanying Notes are an integral part of these financial statements.

Table of Contents

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(Dollars in thousands)	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(131)	$	151
Adjustments to reconcile net income to net cash provided by operating activities:
Investment securities amortization, net		139		91
Federal Home Loan Bank stock dividends		(1)		(3)
Amortization of prepayment penalties on debt restructuring		45		45
Provision for (reversal of) loan losses		(71)		-
Net gain on sale of premises and equipment		-		(25)
Increase in cash surrender value of bank-owned life insurance		(21)		(22)
Stock-based compensation		72		-
Depreciation of premises and equipment		121		100
Net gains on the sale of foreclosed assets		(21)		-
Deferred income tax expense (benefit)		11		(25)
(Increase) decrease in other assets		(68)		(212)
Increase (decrease) in other liabilities		(198)		202
Net cash provided by (used in) operating activities		(123)		302
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in available-for-sale securities:
Proceeds from maturities, calls, and paydowns		3,056		1,903
Purchases		(4,340)		(8,164)
Activity in held-to-maturity securities:
Proceeds from maturities and calls		-		-
Purchases		-		-
Net (increase) decrease in loans		(180)		5,752
Proceeds from sale of foreclosed assets		29		-
Purchases of premises and equipment		(19)		(63)
Proceeds from sale of premises and equipment		-		25
Purchase of bank-owned life insurance		(5,500)		-
Net cash used in investing activities		(6,954)		(547)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		6,289		12,071
Net cash provided by financing activities		6,289		12,071
NET CHANGE IN CASH AND CASH EQUIVALENTS		(788)		11,826
CASH AND CASH EQUIVALENTS, beginning of period		40,884		25,245
CASH AND CASH EQUIVALENTS, end of period	$	40,096	$	37,071

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
Loans originated to facilitate the sale of real estate owned	$	-	$	-
Acquisition of real estate in settlement of loans	$	-	$	120

SUPPLEMENTAL SCHEDULE OF INTEREST AND TAXES PAID
Cash paid for interest	$	113	$	214
Cash paid for income taxes	$	-	$	-

The accompanying Notes are an integral part of these financial statements.

Table of Contents

CATALYST BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~ST LANDRY HOMESTEAD FEDERAL SAVINGS BANK~~

~~NOTES TO FINANCIAL STATEMENTS (Unaudited)~~

NOTE 11. BASIS OF PRESENTATION

~~The accompanying unaudited financial statements of~~Catalyst Bancorp, Inc. (“Catalyst Bancorp” or the “Company”) was incorporated by St. Landry Homestead Federal Savings Bank (“St. Landry Homestead” or the “Bank”) in February 2021 as part of the conversion of St. Landry Homestead from the mutual to the stock form of organization (the “Conversion). The Conversion was completed on October 12, 2021, at which time the Company acquired all of the issued and outstanding shares of common stock of the Bank and became the holding company for the Bank. Shares of the Company’s common stock were issued and sold in an offering to certain depositors of the Bank and others. The Company was not engaged in operations and had not issued any shares of stock prior to the completion of the Conversion.

As used in this report, unless the context otherwise requires, the terms “we,” “our,” “us,” or the “Company” refer to Catalyst Bancorp, and the term the “Bank”) refers to St. Landry Homestead, the wholly owned subsidiary of the Company. In addition, unless the context otherwise requires, references to the operations of the Company include the operations of the Bank.

The accompanying unaudited consolidated financial statements of the Company were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three-month ~~and six-month~~ periods ended ~~June 30,~~March 31, 2022 and 2021 are not necessarily indicative of the results which may be expected for the entire fiscal year. These statements should be read in conjunction with the ~~Financial Statements~~audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, ~~2020 included~~2021.

There have been no material changes from the significant accounting policies previously disclosed in the Company’s Annual Report on Form ~~S-1 of Catalyst Bancorp, Inc. as filed with~~10-K for the Securities and Exchange Commission (“SEC”). Reference is made to the accounting policies of the Bank described in the Notes to the Financial Statements contained in the Prospectus (SEC File No. 333-254200).

year ended December 31, 2021. In preparing the financial statements, the ~~Bank~~Company is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the ~~Bank’s~~Company’s financial condition, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.

Certain amounts reported in prior periods may have been reclassified to conform to the current period presentation. Such reclassifications had no effect on previously reported equity or net income.

NOTE 2. COMPLETION OF STOCK OFFERING

The Company completed its initial public offering (“IPO”) of stock in connection with the Bank’s conversion from the mutual to the stock form of organization on October 12, 2021. Information for periods prior to the completion of the Conversion are for the Bank only.

The Company issued a total of 5,290,000 shares of its common stock, par value $0.01 per share, for an aggregate of $52.9 million in total offering proceeds, including shares issued to the Company’s employee stock ownership plan (“ESOP”). The Company made a loan to the ESOP in the amount of $4.2 million, which the ESOP used to purchase 423,200 shares. The Company’s common stock trades on the Nasdaq Capital Market under the symbol “CLST”.

The costs of issuing the common stock were deferred and deducted from the sales proceeds of the IPO at December 31, 2021. Conversion costs totaled $2.1 million at December 31, 2021. The net proceeds of the IPO of $50.8 million are reflected in the Company’s shareholders’ equity at December 31, 2021.

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NOTE 23. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses ~~(Topic~~(ASC 326), Measurement of Credit Losses on Financial Instruments. The amendments introduce an impairment model that is based on current expected credit losses (“CECL”), rather than incurred losses, to estimate credit losses on certain types of financial instruments, ~~(ex. Loans~~including loans, held-to-maturity securities and ~~held to maturity securities), including~~ certain off-balance sheet financial ~~instruments (ex. commitments to extend credit and standby letters of credit that are not unconditionally cancellable).~~instruments. The CECL should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Financial instruments with similar risk characteristics may be grouped together when estimating the CECL. The allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination that are measured at amortized cost basis is determined in a similar manner to other financial assets measured at amortized cost basis; however, the initial estimate of expected credit loss would be recognized through an allowance for credit losses with an offset to the purchase price at acquisition. Only subsequent changes in the allowance for credit losses are recorded as a credit loss expense for these assets. The ASU also amends the current ~~available for sale~~available-for-sale security impairment model for debt securities whereby credit losses related to ~~available for sale~~available-for-sale debt securities should be recorded through an allowance for credit losses. The amendments will be applied through a modified retrospective approach, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. On October 18, 2019, FASB approved an effective date delay applicable to smaller reporting companies and non-public business entities until January 2023. The ~~Bank~~Company has elected to delay implementation of the ~~standard.~~standard until January 2023. Currently, the Company has implemented a software application to assist in determining our allowance for loan losses under the CECL model and is in the process of evaluating certain methodologies. The ~~future~~impact upon adoption of this ASU is not known and may have a material effect on the ~~Bank’s~~Company’s consolidated financial statements

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326), Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures. The amendments in this ASU respond to feedback received by the FASB during the post-implementation review of the amendments included in ASU 2016-13. The amendments in ASU 2022-02 eliminate the accounting guidance for TDRs by creditors in ASC 310-40, Receivables – Troubled Debt Restructurings by Creditors and enhance disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Stakeholders have observed that the additional designation of a loan modification as a TDR and the related accounting under current GAAP are unnecessarily complex and do not provide decision-useful information after the adoption of ASU 2016-13 since credit losses from TDRs are incorporated under the CECL model. Under the amendments in ASU 2022-02, an entity must apply the guidance under ASC 310-20 to determine whether a modification results in a new loan or a continuation of an existing loan rather than applying the guidance for TDRs. For public business entities, the amendments in ASU 2022-02 also require an entity to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20. The amendments in ASU 2022-02 are effective at the time of adoption of the amendments in ASU 2016-13. The Company is currently evaluating the provisions of the amendment, however, we do not expect the adoption of ASU 2022-02 to have a material effect on the Company’s consolidated financial statements.

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NOTE 4. EARNINGS PER SHARE

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


	Three Months Ended March 31,
(In thousands, except per share data)	2022
Numerator
Net income (loss) available to common shareholders	$	(131)
Denominator
Weighted average common shares outstanding		5,290
Weighted average unallocated ESOP shares		(415)
Weighted average shares		4,875
Basic earnings (loss) per common share	$	(0.03)

During the three months ended March 31, 2022, there were 0 convertible securities or other contracts to issue common stock outstanding that if converted or exercised would result in potential dilution of earnings per share. At and during the three months ended March 31, 2021, the Company did not have any common shares outstanding. The Company completed its initial public offering (“IPO”) of stock in connection with the Bank’s conversion from the mutual to the stock form of organization on October 12, 2021.

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NOTE 35. INVESTMENT SECURITIES

Investment securities have been classified according to management’s intent. The amortized cost of securities and their approximate fair values are as follows:


	June 30, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		March 31, 2022
(Dollars in thousands)	Cost		Gains		Losses		Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Held-to-Maturity
U.S. Government and agency obligations	$	15,027	$	64	$	(262)	$	14,829
Municipal obligations		484		7		—		491
	$	15,511	$	71	$	(262)	$	15,320
Securities Available-for-Sale
Securities available-for-sale
Mortgage-backed securities	$	37,381	$	148	$	(185)	$	37,344	$	74,914	$	2	$	(4,767)	$	70,149
U.S. Government and agency obligations		2,000		—		(71)		1,929		10,974		-		(594)		10,380
Municipal obligations		2,609		—		(26)		2,583		4,467		-		(347)		4,120
	$	41,990	$	148	$	(282)	$	41,856
Total available-for-sale									$	90,355	$	2	$	(5,708)	$	84,649
Securities held-to-maturity
U.S. Government and agency obligations									$	13,016	$	-	$	(1,287)	$	11,729
Municipal obligations										476		-		(24)		452
Total held-to-maturity									$	13,492	$	-	$	(1,311)	$	12,181


	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		December 31, 2021
(Dollars in thousands)	Cost		Gains		Losses		Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Held-to-Maturity
U.S. Government and agency obligations	$	17,034	$	93	$	(121)	$	17,006
Municipal obligations		489		10		—		499
	$	17,523	$	103	$	(121)	$	17,505
Securities Available-for-Sale
Securities available-for-sale
Mortgage-backed securities	$	15,968	$	179	$	(7)	$	16,140	$	75,374	$	87	$	(798)	$	74,663
U.S. Government and agency obligations		2,000		—		(39)		1,961		9,347		1		(111)		9,237
Municipal obligations		2,628		12		(11)		2,629		4,482		-		(43)		4,439
	$	20,596	$	191	$	(57)	$	20,730
Total available-for-sale									$	89,203	$	88	$	(952)	$	88,339
Securities held-to-maturity
U.S. Government and agency obligations									$	13,019	$	23	$	(375)	$	12,667
Municipal obligations										479		6		-		485
Total held-to-maturity									$	13,498	$	29	$	(375)	$	13,152

There were 0 securities transferred between classifications during the first three months of 2022 or in 2021.

Investment securities with a carrying amount of approximately ~~$7.9~~$10.5 million and ~~$6.9~~$10.2 million, respectively, were pledged to secure deposits as required or permitted by law at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~

Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments, or call options. The expected maturities may differ from its contractual maturities because of the exercise of call options and potential paydowns. Accordingly, actual maturities may differ from contractual maturities.2021.

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~~NOTE 3 INVESTMENT SECURITIES (Continued)~~

The following is a summary of maturities of securities held-to-maturity and available-for-sale at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


	June 30, 2021
	Held-to-Maturity				Available-for-Sale				March 31, 2022
	Amortized		Fair		Amortized		Fair		Available-for-Sale				Held-to-Maturity
(Dollars in thousands)	Cost		Value		Cost		Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	—	$	—	$	—	$	—	$	-	$	-	$	-	$	-
After one through five years		—		—		—		—		11,401		10,906		-		-
After five through ten years		11,483		11,261		3,445		3,418		13,363		12,653		9,476		8,498
After ten years		4,028		4,059		38,545		38,438		65,591		61,090		4,016		3,683
	$	15,511	$	15,320	$	41,990	$	41,856
Total									$	90,355	$	84,649	$	13,492	$	12,181


	December 31, 2020
	Held-to-Maturity				Available-for-Sale				December 31, 2021
	Amortized		Fair		Amortized		Fair		Available-for-Sale				Held-to-Maturity
(Dollars in thousands)	Cost		Value		Cost		Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	—	$	—	$	—	$	—	$	-	$	-	$	-	$	-
After one through five years		—		—		1		1		8,431		8,396		-		-
After five through ten years		11,490		11,452		3,361		3,355		12,695		12,604		9,479		9,157
After ten years		6,033		6,053		17,234		17,374		68,077		67,339		4,019		3,995
	$	17,523	$	17,505	$	20,596	$	20,730
Total									$	89,203	$	88,339	$	13,498	$	13,152

~~There were 0 securities transferred between classifications during~~Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments, or call options. The expected maturities may differ from contractual maturities because of the ~~first six months~~exercise of ~~2021 or in 2020.~~call options and potential paydowns. Accordingly, actual maturities may differ from contractual maturities.

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~~NOTE 3 INVESTMENT SECURITIES (Continued)~~

Information pertaining to securities with gross unrealized losses at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


	June 30, 2021
	Less than 12 Months				12 Months or Greater				Total				March 31, 2022
	Fair		Gross Unrealized		Fair		Gross Unrealized		Fair		Gross Unrealized		Less than 12 Months				12 Months or Greater				Total
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Securities Held-to-Maturity
U.S. Government and agency obligations	$	11,738	$	(262)	$	—	$	—	$	11,738	$	(262)
Municipal obligations		—		—		—		—		—		—
	$	11,738	$	(262)	$	—	$	—	$	11,738	$	(262)
Securities Available-for-Sale
Securities available-for-sale
Mortgage-backed securities	$	22,640	$	(185)	$	—	$	—	$	22,640	$	(185)	$	64,650	$	(4,256)	$	5,103	$	(511)	$	69,753	$	(4,767)
U.S. Government and agency obligations		1,929		(71)		—		—		1,929		(71)		8,600		(374)		1,780		(220)		10,380		(594)
Municipal obligations		2,583		(26)		—		—		2,583		(26)		3,051		(247)		1,069		(100)		4,120		(347)
	$	27,152	$	(282)	$	—	$	—	$	27,152	$	(282)
Total available-for-sale													$	76,301	$	(4,877)	$	7,952	$	(831)	$	84,253	$	(5,708)
Securities held-to-maturity
U.S. Government and agency obligations													$	2,831	$	(185)	$	8,898	$	(1,102)	$	11,729	$	(1,287)
Municipal obligations														452		(24)		-		-		452		(24)
Total held-to-maturity													$	3,283	$	(209)	$	8,898	$	(1,102)	$	12,181	$	(1,311)
Total	$	38,890	$	(544)	$	—	$	—	$	38,890	$	(544)	$	79,584	$	(5,086)	$	16,850	$	(1,933)	$	96,434	$	(7,019)


	December 31, 2020
	Less than 12 Months				12 Months or Greater				Total				December 31, 2021
	Fair		Gross Unrealized		Fair		Gross Unrealized		Fair		Gross Unrealized		Less than 12 Months				12 Months or Greater				Total
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Securities Held-to-Maturity
U.S. Government and agency obligations	$	7,879	$	(121)	$	—	$	—	$	7,879	$	(121)
	$	7,879	$	(121)	$	—	$	—	$	7,879	$	(121)
Securities Available-for-Sale
Securities available-for-sale
Mortgage-backed securities	$	4,010	$	(7)	$	—	$	—	$	4,010	$	(7)	$	68,412	$	(746)	$	1,889	$	(52)	$	70,301	$	(798)
U.S. Government and agency obligations		1,961		(39)		—		—		1,961		(39)		5,697		(24)		1,913		(87)		7,610		(111)
Municipal obligations		1,751		(11)		—		—		1,751		(11)		3,283		(24)		1,156		(19)		4,439		(43)
	$	7,722	$	(57)	$	—	$	—	$	7,722	$	(57)
Total available-for-sale													$	77,392	$	(794)	$	4,958	$	(158)	$	82,350	$	(952)
Securities held-to-maturity
U.S. Government and agency obligations													$	1,940	$	(61)	$	7,685	$	(314)	$	9,625	$	(375)
Municipal obligations														-		-		-		-		-		-
Total held-to-maturity													$	1,940	$	(61)	$	7,685	$	(314)	$	9,625	$	(375)
Total	$	15,601	$	(178)	$	—	$	—	$	15,601	$	(178)	$	79,332	$	(855)	$	12,643	$	(472)	$	91,975	$	(1,327)

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which that fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the ~~Bank~~Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At ~~June 30, 2021,~~March 31, 2022, there were 2686 securities with an unrealized loss, compared to 867 securities with an unrealized loss at December 31, ~~2020. All~~2021. The securities in unrealized loss positions consisted of ~~those~~government-sponsored mortgage-backed securities ~~are either~~and debt obligations guaranteed by federal, state and local ~~governments or secured by mortgage loans.~~government entities. These unrealized losses relate principally to current interest rates for similar types of securities. In analyzing an issuer's financial condition, management considers whether the securities are issued by the federal government, its agencies, or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer's financial condition. As management has the intent and ability to hold securities until maturity, or for the foreseeable future if classified as available-for-sale, no0 declines are deemed to be other-than-temporary.

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NOTE 46. LOANS RECEIVABLE

Loans receivable at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 are summarized as follows:


	June 30,		December 31,		March 31,		December 31,
(Dollars in thousands)	2021		2020		2022		2021
Real Estate
Real estate loans
One- to four-family residential	$	91,778	$	99,869	$	87,144	$	87,303
Commercial real estate		28,217		30,304		22,611		23,112
Construction & land		4,527		5,538
Construction and land						4,739		4,079
Multi-family residential		4,344		4,801		3,367		4,589
Farmland		27		53
Total Real Estate		128,893		140,565
Total real estate loans						117,861		119,083
Other loans
Commercial and industrial						10,119		8,374
Consumer		4,667		4,499		4,023		4,385
Commercial and industrial		7,039		6,736
		140,599		151,800
Less allowance for loan losses		(2,649)		(3,022)
	$	137,950	$	148,778
Total other loans						14,142		12,759
Total loans						132,003		131,842
Less: Allowance for loan losses						(2,173)		(2,276)
Net loans					$	129,830	$	129,566

The following tables outline the changes in the allowance for loan losses by collateral type for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~June 30, 2020.~~2021.


	For the Six Months Ended June 30, 2021
			(Reversal)
	Beginning		Provision for loan						Ending		For the Three Months Ended March 31, 2022
(Dollars in thousands)	Balance		losses		Charge-offs		Recoveries		Balance		Beginning Balance		Provision (Reversal)		Charge-offs		Recoveries		Ending Balance
Allowance for Loan Losses
Allowance for loan losses
One- to four-family residential	$	1,910	$	(199)	$	(117)	$	35	$	1,629	$	1,573	$	(53)	$	(55)	$	30	$	1,495
Commercial real estate		744		(31)		—		—		713		370		(37)		-		-		333
Construction & land		81		(26)		—		—		55
Construction and land												55		4		-		-		59
Multi-family residential		68		(7)		—		—		61		73		(22)		-		-		51
Farmland		1		(1)		—		—		—
Commercial and industrial												137		41		(2)		-		176
Consumer		78		(12)		(15)		10		61		68		(4)		(6)		1		59
Commercial and industrial		101		2		—		—		103
Unallocated		39		(12)		—		—		27
Total	$	3,022	$	(286)	$	(132)	$	45	$	2,649	$	2,276	$	(71)	$	(63)	$	31	$	2,173


	For the Six Months Ended June 30, 2020
	Beginning		Provision for loan						Ending		For the Three Months Ended March 31, 2021
(Dollars in thousands)	Balance		losses		Charge-offs		Recoveries		Balance		Beginning Balance		Provision (Reversal)		Charge-offs		Recoveries		Ending Balance
Allowance for Loan Losses
Allowance for loan losses
One- to four-family residential	$	1,162	$	(58)	$	(20)	$	27	$	1,111	$	1,910	$	(48)	$	(82)	$	24	$	1,804
Commercial real estate		637		24		—		—		661		744		(7)		-		-		737
Construction & land		56		3		—		—		59
Construction and land												82		(15)		-		-		67
Multi-family residential		76		(3)		—		1		74		68		(1)		-		-		67
Farmland		1		—		—		—		1
Commercial and industrial												101		5		-		-		106
Consumer		80		(3)		(16)		5		66		78		41		(7)		5		117
Commercial and industrial		12		91		(15)		—		88
Unallocated		47		11		—		—		58		39		25		-		-		64
Total	$	2,071	$	65	$	(51)	$	33	$	2,118	$	3,022	$	-	$	(89)	$	29	$	2,962

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The following tables outline the changes in the allowance for loan losses individually and collectively evaluated for impairment, and the amount of loans individually and collectively evaluated for impairment at March 31, 2022 and December 31, 2021.


	March 31, 2022						December 31, 2021
(Dollars in thousands)	Individually Evaluated		Collectively Evaluated		Total		Individually Evaluated		Collectively Evaluated		Total
Allowance for loan losses
One- to four-family residential	$	340	$	1,155	$	1,495	$	319	$	1,254	$	1,573
Commercial real estate		-		333		333		-		370		370
Construction and land		-		59		59		-		55		55
Multi-family residential		-		51		51		-		73		73
Commercial and industrial		17		159		176		17		120		137
Consumer		-		59		59		-		68		68
Total	$	357	$	1,816	$	2,173	$	336	$	1,940	$	2,276
Loans
One- to four-family residential	$	2,901	$	84,243	$	87,144	$	2,266	$	85,037	$	87,303
Commercial real estate		51		22,560		22,611		-		23,112		23,112
Construction and land		62		4,677		4,739		37		4,042		4,079
Multi-family residential		-		3,367		3,367		-		4,589		4,589
Commercial and industrial		17		10,102		10,119		18		8,356		8,374
Consumer		-		4,023		4,023		-		4,385		4,385
Total	$	3,031	$	128,972	$	132,003	$	2,321	$	129,521	$	131,842

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A summary of current, past due and nonaccrual loans as of March 31, 2022 and December 31, 2021 follows:


	As of March 31, 2022
(Dollars in thousands)	Past Due 30-89 Days and Accruing		Past Due Over 90 Days and Accruing		Past Due Over 30 Days and Non-accruing		Total Past Due		Current and Accruing		Current and Non-accruing		Total Loans
One- to four-family residential	$	1,798	$	-	$	571	$	2,369	$	84,211	$	564	$	87,144
Commercial real estate		261		-		-		261		22,298		52		22,611
Construction and land		7		-		62		69		4,667		3		4,739
Multi-family residential		-		-		-		-		3,367		-		3,367
Commercial and industrial		-		-		17		17		10,102		-		10,119
Consumer		12		-		-		12		4,011		-		4,023
Total	$	2,078	$	-	$	650	$	2,728	$	128,656	$	619	$	132,003


	As of December 31, 2021
(Dollars in thousands)	Past Due 30-89 Days and Accruing		Past Due Over 90 Days and Accruing		Past Due Over 30 Days and Non-accruing		Total Past Due		Current and Accruing		Current and Non-accruing		Total Loans
One- to four-family residential	$	2,116	$	-	$	411	$	2,527	$	84,396	$	380	$	87,303
Commercial real estate		133		-		-		133		22,979		-		23,112
Construction and land		62		-		31		93		3,949		37		4,079
Multi-family residential		-		-		-		-		4,589		-		4,589
Commercial and industrial		-		-		17		17		8,356		1		8,374
Consumer		32		1		13		46		4,339		-		4,385
Total	$	2,343	$	1	$	472	$	2,816	$	128,608	$	418	$	131,842

The Company was not committed to lend any additional funds on nonaccrual loans at March 31, 2022 or December 31, 2021. At March 31, 2022 and December 31, 2021, loans secured by residential real estate for which formal foreclosure proceedings were in process totaled $158,000 and $47,000, respectively.

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A Troubled Debt Restructuring (“TDR”) is considered such if the lender, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. During the three months ended March 31, 2022, 0 loans were modified in a manner deemed to constitute a TDR. Information pertaining to loans modified during the year ended December 31, 2021 follows:

~~NOTE 4 LOANS RECEIVABLE (Continued)~~


		Recorded Investment
(Dollars in thousands)	Number of Contracts	Pre-modification		Post-modification
December 31, 2021
One- to four-family residential	3	$	186	$	189
Total	3	$	186	$	189

Troubled debt restructured loans were modified to defer principal and extend maturity on average for three months. All 3 loans modified during the year ended December 31, 2021 defaulted after modification. The ~~following tables outline~~modifications and defaults did not have a significant impact on the ~~changes in~~determination of the allowance for loan ~~losses individually and collectively evaluated for impairment, and~~losses. The Company has 0 commitments to loan additional funds to the ~~amount~~borrowers whose loans have been modified.

Information on impaired loans as of ~~loans individually and collectively evaluated for impairment at June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~

As of June 30, 2021

As of December 31, 2020

Individually

Collectively

Individually

Collectively

Evaluated for

Evaluated for

Evaluated for

Evaluated for

(Dollars in thousands)

Impairment

Impairment

Total

Impairment

Impairment

Total
Allowance for Loan Losses Ending Balance












One- to four-family residential

$
556

$
1,073

$
1,629

$
599

$
1,311

$
1,910
Commercial real estate

—

713

713

—

744

744
Construction & land

—

55

55

—

81

81
Multi-family residential

—

61

61

—

68

68
Farmland

—

—

—

—

1

1
Consumer

—

61

61

—

78

78
Commercial and industrial

—

103

103

—

101

101
Unallocated

—

27

27

—

39

39
Total

$
556

$
2,093

$
2,649

$
599

$
2,423

$
3,022
Loans Receivable Ending Balance









One- to four-family residential

$
2,920

$
88,858

$
91,778

$
3,209

$
96,660

$
99,869
Commercial real estate

—

28,217

28,217

—

30,304

30,304
Construction & land

46

4,481

4,527

46

5,492

5,538
Multi-family residential

1,186

3,158

4,344

1,205

3,596

4,801
Farmland

—

27

27

—

53

53
Consumer

—

4,667

4,667

—

4,499

4,499
Commercial and industrial

3

7,036

7,039

4

6,732

6,736
Total

$
4,155

$
136,444

$
140,599

$
4,464

$
147,336

$
151,800

~~A summary of current, past due and nonaccrual loans as of June 30,~~ 2021 ~~and December 31, 2020~~ follows:

As of June 30, 2021

Past Due

Past Due

Past Due

30-89 Days

Over 90 Days

Over 30 Days

Total Past

Current and

Current and Non-

(Dollars in thousands)

Accruing

and Accruing

Non-Accruing

Due

Accruing

Accruing

Total Loans
One- to four-family residential

$
1,664

$
132

$
238

$
2,034

$
88,779

$
965

$
91,778
Commercial real estate

54

—

—

54

28,163

—

28,217
Construction and land

26

—

46

72

4,455

—

4,527
Multi-family residential

—

—

—

—

4,344

—

4,344
Farmland

—

—

—

—

27

—

27
Consumer

24

11

—

35

4,632

—

4,667
Commercial & industrial

17

—

—

17

7,019

3

7,039
Total

$
1,785

$
143

$
284

$
2,212

$
137,419

$
968

$
140,599


	As of and for the Three Months Ended March 31, 2022
(Dollars in thousands)	Recorded Investment Without an Allowance		Recorded Investment With an Allowance		Unpaid Principal		Related Allowance		Average Recorded Investment		Interest Income Recognized
One- to four-family residential	$	2,117	$	784	$	3,502	$	340	$	2,911	$	21
Commercial real estate		51		-		52		-		52		-
Construction and land		62		-		70		-		62		-
Multi-family residential		-		-		-		-		-		-
Commercial and industrial		-		17		17		17		17		-
Consumer		-		-		-		-		-		-
Total	$	2,230	$	801	$	3,641	$	357	$	3,042	$	21


	As of and for the Year Ended December 31, 2021
(Dollars in thousands)	Recorded Investment Without an Allowance		Recorded Investment With an Allowance		Unpaid Principal		Related Allowance		Average Recorded Investment		Interest Income Recognized
One- to four-family residential	$	1,153	$	1,113	$	3,128	$	319	$	2,365	$	67
Commercial real estate		-		-		-		-		-		-
Construction and land		37		-		44		-		39		-
Multi-family residential		-		-		-		-		-		-
Commercial and industrial		1		17		21		17		20		2
Consumer		-		-		-		-		-		-
Total	$	1,191	$	1,130	$	3,193	$	336	$	2,424	$	69

1115

Table of Contents

~~NOTE 4 LOANS RECEIVABLE (Continued)~~

As of December 31, 2020

Past Due

Past Due

Past Due

30-89 Days

Over 90 Days

Over 30 Days

Total Past

Current and

Current and Non-

(Dollars in thousands)

Accruing

and Accruing

Non-Accruing

Due

Accruing

Accruing

Total Loans
One- to four-family residential

$
1,842

$
367

$
235

$
2,444

$
96,419

$
1,006

$
99,869
Commercial real estate

192

—

—

192

30,112

—

30,304
Construction and land

154

—

47

201

5,337

—

5,538
Multi-family residential

—

—

—

—

4,801

—

4,801
Farmland

—

—

—

—

53

—

53
Consumer

38

13

—

51

4,448

—

4,499
Commercial & industrial

94

—

—

94

6,638

4

6,736
Total

$
2,320

$
380

$
282

$
2,982

$
147,808

$
1,010

$
151,800

~~The Bank was not committed to lend any additional funds on nonaccrual loans at June 30, 2021 or December 31, 2020.~~

A Troubled Debt Restructuring (“TDR”) is considered such if the lender for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. Information pertaining to loans modified during the six months ended June 30, 2021 and the year ended December 31, 2020:

Pre-modification

Post-modification

Outstanding

Outstanding

Number of

Recorded

Recorded
(Dollars in thousands)

Contracts

Investment

Investment
June 30, 2021






One- to four-family residential

2

$
140

$
142
Total

2

$
140

$
142

Pre-modification

Post-modification

Outstanding

Outstanding

Number of

Recorded

Recorded
(Dollars in thousands)

Contracts

Investment

Investment
December 31, 2020






One- to four-family residential

18

$
2,643

$
2,703
Total

18

$
2,643

$
2,703

~~Table of Contents~~

~~NOTE 4 LOANS RECEIVABLE (Continued)~~

Troubled debt restructured loans were modified to defer principal and extend maturity on average for 3 months. There was 1 payment default as of June 30, 2021 and 0 payment defaults in 2020 for prior year modified loans. The Bank has 0 commitments to loan additional funds to the borrowers whose loans have been modified.

~~Information on impaired loans as of June 30, 2021 and December 31, 2020 follows:~~

As of and for the Six Months Ended June 30, 2021

Unpaid

Average

Interest

Interest

Recorded

Principal

Related

Recorded

Income

Income
(Dollars in thousands)

Investment

Balance

Allowance

Investment

Recognized

Collected
Real Estate












One- to four-family residential

$
2,920

$
3,270

$
556

$
2,962

$
39

$
38
Commercial real estate

—

—

—

—

—

—
Construction & land

46

46

—

46

—

—
Multi-family residential

1,186

1,186

—

1,195

28

28
Farmland

—

—

—

—

—

—
Total real estate loans

4,152

4,502

556

4,203

67

66
Consumer

—

—

—

—

—

—
Commercial & industrial

3

6

—

4

—

—

$
4,155

$
4,508

$
556

$
4,207

$
67

$
66

As of and for the Year Ended December 31, 2020

Unpaid

Average

Interest

Interest

Recorded

Principal

Related

Recorded

Income

Income
(Dollars in thousands)

Investment

Balance

Allowance

Investment

Recognized

Collected
Real Estate












One- to four-family residential

$
3,209

$
3,586

$
599

$
3,266

$
86

$
78
Commercial real estate

—

—

—

—

—

—
Construction & land

46

46

—

48

—

—
Multi-family residential

1,205

1,205

—

1,210

47

43
Farmland

—

—

—

—

—

—
Total real estate loans

4,460

4,837

599

4,524

133

121
Consumer

—

—

—

—

—

—
Commercial & industrial

4

7

—

5

—

—

$
4,464

$
4,844

$
599

$
4,529

$
133

$
121

Principal balances of loans receivable include approximately $101.9 million and $109.6 million of adjustable-rate loans and $38.7 million and $42.2 million of fixed rate loans at June 30, 2021 and December 31, 2020, respectively. Interest only loans amounted to approximately $1.9 million and $2.0 million at June 30, 2021 and December 31, 2020, respectively.

Loans are categorized by credit quality indicators based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. ~~Internally assigned grade:~~Credit quality classifications follow regulatory guidelines and can generally be described as follows:

Pass – Loans in this category have strong asset quality and liquidity along with a multi-year track record of profitability.

Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

~~Table of Contents~~

~~NOTE 4 LOANS RECEIVABLE (Continued)~~

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss – Loans classified as loss have been identified as uncollectible and are generally charged-off in the period identified.

The information for each of the credit quality indicators is updated ~~on a~~at least quarterly ~~basis~~ in conjunction with the determination of the adequacy of the allowance for loan losses.


	As of and for the Six Months ended June 30, 2021
			Special								March 31, 2022
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total		Pass		Special Mention		Substandard		Doubtful		Total
One- to four-family residential	$	87,347	$	360	$	4,071	$	—	$	91,778	$	83,237	$	296	$	3,611	$	-	$	87,144
Commercial real estate		27,172		983		62		—		28,217		20,492		2,010		109		-		22,611
Construction & land		4,433		—		94		—		4,527
Construction and land												4,654		-		85		-		4,739
Multi-family residential		3,157		—		1,187		—		4,344		3,367		-		-		-		3,367
Farmland		27		—		—		—		27
Commercial and industrial												10,102		-		17		-		10,119
Consumer		4,658		—		9		—		4,667		4,021		2		-		-		4,023
Commercial & industrial		7,036		—		3		—		7,039
Total	$	133,830	$	1,343	$	5,426	$	—	$	140,599	$	125,873	$	2,308	$	3,822	$	-	$	132,003


	As of and for the Year ended December 31, 2020
			Special								December 31, 2021
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total		Pass		Special Mention		Substandard		Doubtful		Total
One- to four-family residential	$	93,008	$	1,915	$	4,946	$	—	$	99,869	$	83,405	$	504	$	3,394	$	-	$	87,303
Commercial real estate		28,217		2,022		65		—		30,304		20,995		2,058		59		-		23,112
Construction & land		5,310		133		95		—		5,538
Construction and land												3,990		-		89		-		4,079
Multi-family residential		3,457		—		1,344		—		4,801		3,419		1,170		-		-		4,589
Farmland		53		—		—		—		53
Commercial and industrial												8,356		-		18		-		8,374
Consumer		4,434		33		32		—		4,499		4,372		-		13		-		4,385
Commercial & industrial		6,542		171		23		—		6,736
Total	$	141,021	$	4,274	$	6,505	$	—	$	151,800	$	124,537	$	3,732	$	3,573	$	-	$	131,842

Table of Contents

NOTE 57. CAPITAL REQUIREMENTS AND OTHER REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the Office of the Comptroller of the Currency (“OCC”). Failure to meet minimum regulatory capital requirements can ~~initiate~~result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification under the prompt corrective action guidelines are also subject to qualitative ~~judgements~~judgments by the regulators about components, risk weightings, and other factors.

~~Table of Contents~~

~~NOTE 5 CAPITAL REQUIREMENTS AND OTHER REGULATORY MATTERS (Continued)~~

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of: total risk-based capital, Tier 1 Capital to risk-weighted assets, and Tier 1 Capital to adjusted total assets. As ~~discussed in greater detail below, as~~ of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Bank ~~does meet~~met all of the capital adequacy requirements to which it is subject.

At ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as adequately capitalized, the Bank would have to maintain minimum total risk-based, Tier 1 risk based, Tier 1 leverage ratios and Common Equity Tier 1 capital as disclosed in the table below. There are no conditions or events since the most recent notification that management believes have changed the Bank’s prompt corrective action category. The following table presents actual and required capital ratios for the Bank.


					To be Well Capitalized under the
	Actual				Prompt Corrective Action Provision				Actual					To be Well Capitalized under the Prompt Corrective Action Provision
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio			Amount		Ratio
As of June 30, 2021
As of March 31, 2022
Common Equity Tier 1 Capital	$	50,837	41.81	%	$	7,903	>6.5	%	$	77,713	57.98	%		$	8,712	>6.5	%
Tier 1 Risk-Based Capital		50,837	41.81	%		9,727	>8.0	%		77,713	57.98		��		10,723	>8.0
Total Risk-Based Capital		52,371	43.07	%		12,159	>10.0	%		79,394	59.23				13,403	>10.0
Tier 1 Leverage Capital		50,837	21.34	%		11,911	>5.0	%		77,713	28.39				13,689	>5.0
As of December 31, 2020

As of December 31, 2021
Common Equity Tier 1 Capital	$	50,426	40.92	%	$	8,010	>6.5	%	$	77,819	63.51	%		$	7,965	>6.5	%
Tier 1 Risk-Based Capital		50,426	40.92	%		9,858	>8.0	%		77,819	63.51				9,803	>8.0
Total Risk-Based Capital		52,118	42.29	%		12,323	>10.0	%		79,360	64.77				12,253	>10.0
Tier 1 Leverage Capital		50,426	21.06	%		11,970	>5.0	%		77,819	27.38				14,210	>5.0

1517

Table of Contents

NOTE 68. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the ~~Bank~~Company has various outstanding commitments and contingent liabilities that are not reflected in the accompanying financial statements. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the financial statements.

~~In addition, the Bank~~The Company is ~~a defendant~~not involved in ~~various~~any pending legal proceedings ~~arising~~as a plaintiff or defendant other than routine legal proceedings occurring in ~~connection with its business. It is~~ the ~~best judgment~~ordinary course of ~~management that neither~~business, and at March 31, 2022, we were not involved in any legal proceedings, the outcome of which would be material to our financial ~~position nor~~condition or results of ~~operations of the Bank will be materially affected by the final outcome of these legal proceedings.~~operations.

The ~~Bank~~Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments consist of commitments to extend credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the statement of financial position. The contract or notional amounts of these instruments reflect the extent of the ~~Bank’s~~Company’s involvement in particular classes of instruments.

NOTE 79. FAIR VALUE MEASUREMENTS

In accordance with fair value guidance, the ~~Bank~~Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 — Valuation is based on quoted prices in active markets for identical assets or liabilities that the ~~Bank~~Company has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 — Valuation is based on inputs other than quoted prices included with Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on 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 for substantially the full term for the asset or liability.

Level 3 — Valuation is based on unobservable income inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

1618

Table of Contents

~~NOTE 7 FAIR VALUE MEASUREMENTS (Continued)~~

Fair values of assets and liabilities measured on a recurring basis at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 follows:


	Fair Value Measurements at Reporting Date Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets/Liabilities		Inputs		Inputs		Fair Value Measurements at Reporting Date Using
(Dollars in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)		Fair Value		Level 1		Level 2		Level 3
June 30, 2021
March 31, 2022
Available-for-sale securities	$	41,856	$	—	$	41,856	$	—	$	84,649	$	-	$	84,649	$	-
December 31, 2020

December 31, 2021
Available-for-sale securities	$	20,730	$	—	$	20,730	$	—	$	88,339	$	-	$	88,339	$	-

Fair values of assets and liabilities measured on a nonrecurring basis at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 follows:


	Fair Value Measurements at Reporting Date Using
					Significant
			Quoted Prices		Other		Significant
			in Active Markets for		Observable		Unobservable
			Identical Assets/Liabilities		Inputs		Inputs		Fair Value Measurements at Reporting Date Using
(Dollars in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)		Fair Value		Level 1		Level 2		Level 3
June 30, 2021
March 31, 2022
Impaired loans	$	1,282	$	—	$	—	$	1,282	$	689	$	-	$	-	$	689
Foreclosed real estate		590		—		—		590
December 31, 2020
Foreclosed assets										320		-		-		320
Total									$	1,009	$	-	$	-	$	1,009
December 31, 2021
Impaired loans	$	1,365	$	—	$	—	$	1,365	$	1,020	$	-	$	-	$	1,020
Foreclosed real estate		415		—		—		415
Foreclosed assets										340		-		-		340
Total									$	1,360	$	-	$	-	$	1,360

~~For the six months ended June 30,~~At March 31, 2022 and December 31, 2021, impaired loans with a ~~carrying amount~~recorded investment of ~~$1.8~~$1.0 million ~~were~~and $1.4 million, respectively, have been written down to their fair value ~~of $1.3 million, resulting in an impairment~~by a charge ~~of $556,000, which was included in~~to the allowance for loan losses. Foreclosed ~~real estate with a carrying amount of $630,000 was~~assets are written down to ~~its~~ fair value ~~of $590,000, resulting in an impairment~~by a charge ~~of $40,000 which was included in~~to earnings ~~for~~through foreclosed asset expense. During the ~~six~~three months ended ~~June 30, 2021.~~

~~During the year ended December~~March 31, ~~2020, impaired loans with a carrying amount of $2.0 million~~2022, 0 impairment losses on foreclosed assets were written down to their fair value of $1.4 million, resulting in an impairment charge of $599,000, which was included in the allowance for loan losses. Foreclosed real estate with a carrying amount of $581,000 was written down to its fair value of $415,000, resulting in an impairment charge of $166,000, which was included in earnings for the year ended December 31, 2020.recognized.

The fair value of impaired loans and real estate owned is estimated using current appraised values less estimated costs to ~~sell.~~sell and discounts to reflect current market conditions.

NOTE 810. FAIR VALUE OF FINANCIAL INSTRUMENTS

The ~~Bank~~Company follows the guidance of FASB ASC 825, Financial Instruments, and FASB ASC 820, Fair Value Measurement. This guidance permits entities to measure many financial instruments and certain other items at fair value. No assets have been elected to be reported at fair value. The objective is to improve financial reporting by providing the ~~Bank~~Company with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or to transfer a liability in an orderly transaction between market participants. Under this guidance, fair value measurements are not adjusted for transaction costs. This guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quotes priced in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

1719

Table of Contents

~~NOTE 8 FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)~~

Accounting Standards Codification 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities requires that the ~~Bank~~Company disclose estimated fair values for its financial instruments, whether or not recognized in the statement of financial condition. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all nonfinancial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the ~~Bank.~~Company.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments of which it is practicable to estimate that value:

Cash and Cash Equivalents - The carrying amounts reported in the statements of financial condition for cash and cash equivalents approximate those assets’ fair values and are classified within Level 1 of the fair value hierarchy.

~~Investments and Mortgage-Backed~~Investment Securities - The fair market values of investments ~~and mortgage-backed~~ securities ~~presented have been taken~~are obtained from ~~the Bank’s Securities Portfolio Summary,~~a third-party service provider, whose prices are based on a combination of observed market prices for identical or similar instruments and various matrix pricing programs. ~~Investments and mortgage-backed~~The fair market values of investment securities are classified within Level 2 of the fair value hierarchy.

Loans Receivable, net - Loans are valued using the methodology developed for Economic Value of Equity pricing, with a build-up for loans based on the U.S. Treasury yield curve, a credit risk spread and an overhead coverage rate. Loans receivable are classified within Level 3 of the fair value hierarchy.

~~Accrued Interest Receivable and Accrued Interest Payable~~Bank-owned Life Insurance - The ~~carrying amounts~~cash surrender value of ~~accrued interest receivable~~bank-owned life insurance approximates its fair value and ~~accrued interest payable approximates their fair values and these are~~is classified within Level 12 of the fair value hierarchy.

Non-maturity Deposit Liabilities - Under ASC 825-10, the fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, NOW, money market and checking accounts, is equal to the amount payable on demand at the reporting date. These non-maturity deposit liabilities are classified within Level 2 of the fair value hierarchy.

Certificates of Deposit - All certificates are assumed to remain on the ~~Bank’s~~Company’s books until maturity without any change in coupon. Fair ~~value was~~values are estimated using market pricing data for new CDs of similar structure and remaining maturity. Certificates of deposit are classified within Level 2 of the fair value hierarchy.

Federal Home Loan Bank Borrowings - Data is taken from the ~~Bank’s~~Company’s FHLB Customer Profile report. All borrowings ~~were~~are priced using current advance pricing data from the FHLB’s website for new borrowings of similar structure and remaining maturity. FHLB borrowings are classified within Level 2 of the fair value hierarchy.

Other Assets and Liabilities - All other assets and liabilities are reported at current book value unless noted otherwise.

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~~NOTE 8 FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)~~

~~Limitations~~ - 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 ~~Bank’s~~Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the ~~Bank’s~~Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

The estimated fair values of the Bank’s financial instruments as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 are as follows:


	June 30, 2021										March 31, 2022
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3		Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	29,087	$	29,087	$	29,087	$		$		$	40,096	$	40,096	$	40,096	$	-	$	-
Investment securities
Investment securities:
Available-for-sale												84,649		84,649		-		84,649		-
Held-to-maturity		15,511		15,320				15,320				13,492		12,181		-		12,181		-
Available-for-sale		41,856		41,856				41,856
Loans receivable, net		137,950		137,356						137,356		129,830		128,464		-		-		128,464
Accrued interest receivable		558		558		558
Bank-owned life insurance												8,824		8,824		-		8,824		-
Financial Liabilities:
Deposits		177,888		178,114				178,114				183,084		182,839		-		182,839		-
Borrowed funds		8,928		8,847				8,847				9,063		8,170		-		8,170		-
Accrued interest payable		45		45		45


	December 31, 2020										December 31, 2021
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3		Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	25,245	$	25,245	$	25,245	$		$		$	40,884	$	40,884	$	40,884	$	-	$	-
Investment securities
Investment securities:
Available-for-sale												88,339		88,339		-		88,339		-
Held-to-maturity		17,523		17,505				17,505				13,498		13,152		-		13,152		-
Available-for-sale		20,730		20,730				20,730
Loans receivable, net		148,778		148,674						148,674		129,566		128,591		-		-		128,591
Accrued interest receivable		564		564		564
Bank-owned life insurance												3,303		3,303		-		3,303		-
Financial Liabilities:
Deposits		164,598		164,951				164,951				176,795		176,869		-		176,869		-
Borrowed funds		8,838		9,052				9,052				9,018		8,720		-		8,720		-
Accrued interest payable		51		51		51

The carrying amounts in the preceding table are included in the statement of financial condition under the applicable captions. It is not practical to estimate the fair value of Federal Home Loan Bank (“FHLB”) and First National Bankers Bank stock because they are not marketable. The carrying amount of investments without readily determinable fair value are reported in the ~~statements~~Consolidated Statements of ~~financial condition~~Financial Condition at historical cost.

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~~NOTE 9 PLAN OF CONVERSION AND CHANGE IN CORPORATE FORM~~

On January 27, 2021, the Board of Directors of the Bank adopted a plan of conversion (“Plan of Conversion”). The Plan of Conversion is subject to the approval of the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System and must be approved by the affirmative vote of at least a majority of the total votes eligible to be cast by the voting members of the Bank at a special meeting. The Plan of Conversion provides that the Bank will convert to the stock-form savings bank structure and establish a holding company, Catalyst Bancorp, Inc., as parent of the Bank. The Bank will convert to the stock form of ownership, followed by the issuance of all of the Bank’s outstanding stock to Catalyst Bancorp, Inc. Pursuant to the Plan of Conversion, the total offering value and number of shares of common stock of Catalyst Bancorp, Inc. to be offered and sold will be determined based upon an independent appraiser’s valuation. The stock will be priced at $10.00 per share. In addition, the Bank’s Board of Directors will adopt an employee stock ownership plan (“ESOP”) which will subscribe for up to 8% of the common stock sold in the offering. Catalyst Bancorp, Inc. has been organized as a corporation under the laws of the State of Louisiana and will own all of the outstanding common stock of the Bank upon completion of the conversion.

The costs of issuing the common stock will be deferred and deducted from the sales proceeds of the offering. If the conversion is unsuccessful, all deferred costs will be charged to operations. Deferred conversion costs totaled approximately $21,431 at December 31, 2020 and $498,000 at June 30, 2021, respectively.

At the completion of the conversion to stock form, the Bank will establish a liquidation account in the amount of retained earnings contained in the final prospectus. The liquidation account will be maintained for the benefits of eligible account holders and supplemental eligible account holders who maintain deposit accounts in the Bank after conversion.

~~The conversion will be accounted for as a change in corporate form with the historic basis of the Bank’s assets, liabilities and equity unchanged as a result.~~

Catalyst Bancorp is an emerging growth company, and, for as long as it continues to be an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies.” Catalyst Bancorp intends to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, its financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Management’s discussion and analysis of financial condition and results of operations at ~~June 30, 2021~~March 31, 2022 and for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ is intended to assist in understanding our financial condition and results of operations. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements of the ~~Bank~~Company and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q as well as the business and financial information ~~regarding the Bank~~ included in the Company’s ~~Prospectus, dated August 6, 2021, as~~Annual Report on Form 10-K filed with the ~~Securities and Exchange Commission on August 16, 2021 (File No. 333-254200).~~SEC for the year ended December 31, 2021.

Cautionary Note Regarding Forward-Looking Statements

Certain matters in this Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of words such as “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would,” and “could.” 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 quality of our loan and investment portfolios; and

●

estimates of our risks and future costs and benefits.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These forward-looking statements are based on our current beliefs and expectations and, by their nature, 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.

Important factors that could cause our actual results to differ materially from the results anticipated or projected, include, but are not limited to, the following:

●

general economic conditions, either nationally or in our market areas, that are different than expected;

●

conditions relating to the ~~Covid-19~~COVID-19 pandemic, or other infectious disease outbreaks, including the severity and duration of the associated economic slowdown, either nationally or in our market areas, that are worse than expected;

●

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

●

our ability to access cost-effective funding;

●

major catastrophes such as hurricanes, floods or other natural disasters, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies;

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●

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

●

success or consummation of new business initiatives may be more difficult or expensive than expected;

●

the inability of third party service providers to perform;

●

fluctuations in real estate values and both residential and commercial real estate market conditions;

●

demand for loans and deposits in our market area;

●

our ability to continue to implement our business strategies;

●

competition among depository and other financial institutions;

●

inflation and changes in the interest rate environment that reduce our margins and yields, reduce the fair value of financial instruments or reduce the origination levels in our lending business, or increase the level of defaults, losses and prepayments on loans;

●

adverse changes in the securities markets;

●

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

●

our ability to manage market risk, credit risk and operational risk in the current economic conditions;

●

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

●

our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;

●

changes in consumer spending, borrowing and savings habits;

●

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

●

our ability to retain key employees; and our compensation expense associated with equity allocated or awarded to our employees.

We undertake no obligation to publicly update or revise any forward-looking statements included in this report or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur and you should not put undue reliance on any forward-looking statements.

~~Additional factors that may affect our results are discussed in the Prospectus under the heading “Risk Factors.”~~

~~Overview~~

The Bank is a community-oriented savings bank headquartered in Opelousas, Louisiana. We currently operate four full-service banking offices in St. Landry Parish, Louisiana and one full-service banking office in Lafayette Parish,

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Overview

Catalyst Bancorp, Inc. (“Catalyst Bancorp” or the “Company”) was incorporated by St. Landry Homestead Federal Savings Bank (“St. Landry Homestead” or the “Bank”) in February 2021 as part of the conversion of St. Landry Homestead from the mutual to the stockform of organization (the “Conversion). The Conversion was completed on October 12, 2021, at which time the Company acquired all of the issued and outstanding shares of common stock of the Bank and became the holding company for the Bank. As a result of the Conversion, the Bank is a wholly owned subsidiary of Catalyst Bancorp. The Company was not engaged in operations and had not issued any shares of stock prior to the completion of the Conversion.

Founded in 1922, the Bank is a community-oriented savings bank serving the banking needs of customers in the Acadiana region of south-central Louisiana. We ~~have purchased an additional banking office~~are headquartered in Opelousas, Louisiana and serve our customers through six full-service branches located in Carencro, Eunice, Lafayette, ~~Parish~~Opelousas, and ~~expect to open it by year-end 2021.~~Port Barre. Our primary business consists of attracting deposits from the general public and using those funds together with funds we borrow from the Federal Home Loan Bank (“FHLB”) of Dallas and other sources to originate loans to our customers and invest in securities. At June 30, 2021, we had total assets of $238.6 million, including $138.0 million in net loans and $57.4 million of investment securities, total deposits of $177.9 million and total equity of $50.7 million. We had net income of $260,000 for both the three months ended June 30, 2021 and the three months ended June 30, 2020. For the six months ended June 30, 2021, our net income was $411,000 compared to $415,000 for the six months ended June 30, 2020.

Historically, we operated as a traditional thrift relying on long-term, single-family residential mortgage loans secured by properties located primarily in St. Landry Parish and adjoining areas to generate interest income. We are re-focusing our business strategy to a relationship-based community bank ~~model.~~model targeting small- to mid-sized businesses and business professionals in our market areas while continuing to serve our traditional customer base. The Conversion and offering were important factors in our efforts to become a more dynamic, profitable and growing institution.

At March 31, 2022, total assets were $287.3 million, including total loans of $132.0 million and total investment securities of $98.1 million, total deposits were $183.1 million and total equity was $94.5 million. The Company reported a net loss of $131,000 for the three months ended March 31, 2022, compared to net income of $151,000 for the three months ended March 31, 2021. The decrease in net income over the comparable three-month periods was primarily due to an increase in non-interest expense of $462,000, or 26.8%, partially offset by an increase in net interest income after the reversal of loan losses of $102,000. During the three months ended March 31, 2022, the Company recorded a reversal to the allowance for loan losses of $71,000. No provision for or reversal of loan losses was recorded for the three months ended March 31, 2021.

Our results of operations depend, to a large extent, on net interest income, which is the difference between the income earned on our loan and investment portfolios and interest expense on deposits and borrowings. Our net interest income is largely determined by our net interest spread, which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities, and the relative amounts of interest-earning assets and interest-bearing liabilities. Results of operations are also affected by our provisions for loan losses, fee income and other non-interest income and non-interest expense. Non-interest expense principally consists of compensation, office occupancy and equipment expense, data processing, advertising and business promotion and other expense. ~~After the Conversion, we~~We expect that our non-interest expenses will increase as we grow and expand our operations. In addition, our compensation expense will increase due to the new stock benefit plans we intend to implement. Our results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, the impact of the COVID-19 pandemic, ~~and the on-going economic slowdown,~~ government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially impact our financial condition and results of operations.

Critical Accounting ~~Policies~~Estimates

In reviewing and understanding financial information for ~~St. Landry Homestead,~~the Company, you are encouraged to read and understand the significant accounting policies used in preparing our financial statements. These policies are described in Note 1 of the notes to our consolidated financial statements included in the Company’s ~~Prospectus.~~Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2021. Our accounting and financial reporting policies conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Accordingly, the financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods presented. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies.

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As an ~~“emerging~~emerging growth ~~company”~~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.

The following accounting policies comprise those that management believes are the most critical to aid in fully understanding and evaluating our reported financial results. These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods.

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Allowance for Loan Losses. We have identified the evaluation of the allowance for loan losses as a critical accounting policy where amounts are sensitive to material variation. The allowance for loan losses represents management’s estimate for probable losses that are inherent in our loan portfolio but which have not yet been realized as of the date of our balance sheet. It is established through a provision for loan losses charged to earnings. Loans, or portions of loans, are charged off against the allowance ~~for loan losses when management believes~~in the period that ~~the collectibility of the principal is unlikely.~~such loans, or portions thereof, are deemed uncollectible. Subsequent recoveries are added to the allowance. The allowance is an amount that management believes will cover ~~known~~probable and ~~inherent~~reasonably estimable losses in the loan portfolio based on evaluations of the ~~collectibility~~collectability of loans. The evaluations take into consideration such factors as changes in the types and amount of loans in the loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, estimated losses relating to specifically identified loans, and current economic conditions. This evaluation is inherently subjective as it requires material estimates including, among others, exposure at default, the amount and timing of expected future cash flows on impacted loans, value of collateral, estimated losses on our commercial and residential loan portfolios and general amounts for historical loss experience. All of these estimates may be susceptible to significant changes as more information becomes available. The allowance for loans losses totaled $2.2 million, or 1.65% of total loans, at March 31, 2022 and $2.3 million, or 1.73% of total loans, at December 31, 2021. The decrease in the allowance for loan losses primarily related to improvements in our assessment of the impact of the COVID-19 pandemic on our borrowers.

While management uses the best information available to make loan loss allowance evaluations, adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance. Historically, our estimates of the allowance for loan loss have not required significant adjustments from management’s initial estimates. In addition, the Office of the Comptroller of the Currency as an integral part of their examination processes periodically reviews our allowance for loan losses. While management is responsible for the establishment of the allowance for loan losses and for adjusting such allowance through provisions for loan losses, management may determine, as a result of such regulatory reviews, that an increase or decrease in the allowance or provision for loan losses may be necessary or that loan charge-offs are needed. To the extent that actual outcomes differ from management’s estimates, additional provisions to the allowance for loan losses may be required that would adversely impact earnings in future periods.

Investment Securities. Available-for-sale securities consist of investment securities not classified as trading securities or held-to-maturity securities. Available-for-sale securities are reported at fair value and unrealized holding gains and losses, net of tax, on available-for-sale securities are included in other comprehensive income. The fair market values of investment securities are obtained from a third party service provider, whose prices are based on a combination of observed market prices for identical or similar instruments and various matrix pricing programs. The fair market values of investment securities are classified within Level 2 of the fair value hierarchy.

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. The term “other-than-temporary” is not intended to indicate a permanent decline in value. Rather, it means that the prospects for near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the investment. Declines in the estimated fair value of individual investment securities below their cost that are considered other-than-temporary are recognized as realized losses in the statement of income. Factors affecting the determination of whether an other-than-temporary impairment has occurred include, among other things, (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) that the Company does not intend to sell these securities, and (4) it is more likely than

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not that the Company will not be required to sell before a period of time sufficient to allow for any anticipated recovery in fair value. Unrealized holding gains and losses, net of tax, on available-for-sale securities are included in other comprehensive income. At March 31, 2022 and December 31, 2021, net unrealized losses on available-for-sale securities totaled $5.7 million and $864,000, respectively. The increase in unrealized losses on available-for-sale securities relate principally to the change in interest rates for similar types of securities. No declines in fair value of available-for-sale securities were deemed to be other-than-temporary.

Income Taxes. Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various assets and liabilities and gives current recognition to changes in tax rates and laws. Realizing our deferred tax assets principally depends upon our achieving projected future taxable income. We may change our judgments regarding future profitability due to future market conditions and other factors. We may adjust our deferred tax asset balances if our judgments change.

COVID-19

In light of the recent events surrounding the COVID-19 epidemic, ~~St. Landry Homestead~~the Company is continually assessing the effects of the pandemic on its employees, customers and communities. ~~In March 2020, the 2020 Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted.~~ The CARES Act, enacted in March of 2020, contains many provisions related to banking, lending, mortgage forbearance and taxation. ~~The Bank has been working diligently to help support its~~We have supported our customers through the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”), loan modifications and loan deferrals. ~~Through June 30, 2021, St. Landry Homestead has~~We have funded 240 SBA PPP loans totaling approximately $8.5 million with an average initial loan balance of $36,000 to existing customers and key prospects located primarily in our markets in south central Louisiana. In addition, we have granted ~~loan~~ modifications, ~~under the CARES Act~~ generally in the form of three-month deferrals of principal payments and a three-month extension of the maturity ~~date.~~date, to 204 loans with principal balances totaling $28.2 million under the CARES Act. The ~~Bank~~Company handles loan modification requests on a case-by-case basis considering the effects of the COVID-19 pandemic, the related economic slowdown and stay-at-home orders on our customers and their current and projected cash flows through the terms of their respective loans. We believe the customer interaction during this time provides us with an opportunity to broaden and deepen our customer relationships while benefiting the local communities we serve. ~~Through June 30, 2021, we modified 199 loans with principal balances totaling $28.0 million.~~ As of ~~June 30,~~March 31, 2022 and December 31, 2021, ~~we had 2 COVID-19 loans currently on deferral with a~~the total ~~outstanding~~unpaid principal balance of ~~$249,000~~PPP loans totaled $841,000 and $2.8 million, respectively. We had no loans under deferral or extension agreements due to COVID-19 at ~~such date.~~March 31, 2022 or December 31, 2021.

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The ~~Bank is working~~Company has worked with customers affected by COVID-19 through modifications of their loans. In accordance with guidance from the ~~federal banking agencies,~~Federal Deposit Insurance Corporation (the “FDIC”), borrowers who were current prior to becoming affected by COVID-19, that received loan modifications as a result of the pandemic, generally ~~are~~were not reported as past ~~due or as troubled debt restructurings.~~due. Effects of COVID-19 may negatively impact management assumptions and estimates, such as the allowance for loan losses. The ~~Bank~~Company is evaluating all loan modifications to customers to identify and quantify any impact they may have on the ~~Bank.~~Company. However, it is difficult to assess or predict how and to what extent COVID-19 will affect ~~St. Landry Homestead~~the Company in the future.

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Comparison of Financial Condition at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021

Total Assets. Total assets increased ~~$14.0~~$1.9 million, or ~~6.2%~~0.7%, to ~~$238.6~~$287.3 million at ~~June 30, 2021~~March 31, 2022 from ~~$224.7~~$285.3 million at December 31, ~~2020.~~2021. The increase resulted primarily from a ~~$21.1~~$5.5 million increase in ~~available-for-sale investment securities and a $3.8 million increase in cash and cash equivalents,~~bank-owned life insurance, partially offset ~~in part~~ by a decrease of ~~$10.8~~$3.7 million in ~~net loans receivable.~~available-for-sale securities.

Cash and Cash Equivalents. Cash and cash equivalents ~~increased~~decreased by ~~$3.8 million,~~$788,000, or ~~15.2%~~1.9%, to ~~$29.1~~$40.1 million at ~~June 30, 2021~~March 31, 2022, compared to ~~$25.2~~$40.9 million at December 31, ~~2020.~~2021. The decrease resulted primarily from the purchase of $5.5 million in bank-owned life insurance and purchases of available-for-sale securities, net of proceeds from maturities, calls and paydowns, of $1.3 million, partially offset by a net increase in cash and cash equivalents reflects increased cash flows from loan principal repayments, as well as deposit inflows associated with SBA PPP loans originated during the period and government stimulus payments received by our customers. The leveltotal deposits of loan principal repayments during the six months ended June 30, 2021, reflects in part the continuing effect of the historically low market rates of interest on residential mortgage loans and increased repayments by our mortgage loan customers who have re-financed their loans with other institutions.$6.3 million.

~~Net loans~~Loans. ~~Our~~Total loans receivable ~~net, decreased~~increased by ~~$10.8 million,~~$161,000, or ~~7.3%~~0.1%, to ~~$138.0~~$132.0 million at ~~June 30, 2021~~March 31, 2022, compared to ~~$148.8~~$131.8 million at December 31, ~~2020.~~2021. During the ~~first six~~three months ~~of 2021,~~ended March 31, 2022, our total real estate loan portfolio decreased by ~~$11.7~~$1.2 million, due primarily to ~~an $8.1~~a $1.2 million decrease in ~~one- to four-family~~multi-family residential ~~mortgage loans, a $2.1 million decrease in commercial real estate loans and a $1.0 million decrease in construction and land~~ loans. Our total commercial and industrial loans increased by ~~$303,000~~$1.7 million to ~~$7.0~~$10.1 million at ~~June 30, 2021~~March 31, 2022, compared to ~~$6.7~~$8.4 million at December 31, ~~2020.~~2021. The ~~increase~~total unpaid principal balance of PPP loans, included in commercial and industrial loans, ~~during the first six months of 2021 primarily reflects the origination of SBA PPP loans, which~~ amounted to ~~$3.9~~$841,000 at March 31, 2022, down $1.9 million ~~at June 30, 2021 compared to $3.5~~from $2.8 million at December 31, ~~2020.~~2021.

Allowance for Loan Losses. The allowance for loans losses totaled $2.2 million, or 1.65% of total loans, at March 31, 2022 and $2.3 million, or 1.73% of total loans, at December 31, 2021. The decline in the ratio of the allowance for loan losses to total loans primarily reflects continued improvement in our assessment of the impact of the COVID-19 pandemic on our borrowers. During the three months ended March 31, 2022, net loan charge-offs totaled $32,000 and the Company recorded a reversal to the allowance for loan losses of $71,000.

Investment Securities. Our total investment securities, available-for-sale and held-to-maturity, amounted to ~~$57.4~~$98.1 million at ~~June 30, 2021, an increase~~March 31, 2022, a decrease of ~~$19.1~~$3.7 million, or ~~50.0%~~3.6%, compared to ~~$38.3~~$101.8 million in investment securities at December 31, ~~2020.~~2021. Net unrealized losses on securities available-for-sale totaled $5.7 million at March 31, 2022, compared to $864,000 at December 31, 2021. The increase in unrealized losses on available-for-sale securities related principally to increases in market interest rates for similar securities. At ~~June 30, 2021, $41.9~~March 31, 2022, $84.6 million, or ~~73.0%~~86.3%, of our total investment securities were classified as available-for-sale. Our investment securities portfolio at such date consisted primarily of debt obligations issued by the U.S. government and government agencies and ~~government sponsored~~government-sponsored mortgage-backed securities. During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, purchases of ~~$25.4~~$4.3 million of investment securities exceeded ~~$5.8~~$3.1 million of maturities, calls and principal repayments.

Deposits. Our total deposits amounted to ~~$177.9~~$183.1 million at ~~June 30, 2021,~~March 31, 2022, an increase of ~~$13.3~~$6.3 million, or ~~8.1%~~3.6%, compared to December 31, ~~2020. The~~2021. This increase resulted primarily from increases in ~~total deposits at June 30, 2021 compared to~~NOW accounts and demand deposit accounts, up $3.6 million and $2.8 million, respectively, from December 31, ~~2020 reflects in part depository inflows related to SBA PPP loan proceeds as well as government stimulus payments received by our banking customers.~~2021.

Borrowings. Our borrowings, which consist of FHLB advances, amounted to ~~$8.9~~$9.1 million at ~~June 30, 2021~~March 31, 2022, compared to ~~$8.8~~$9.0 million at December 31, ~~2020.~~2021. The ~~$90,000~~$45,000 increase in the carrying value of our FHLB advances reflects the amortization of deferred prepayment penalties on $10.0 million in advances ~~modified during~~restructured in December of 2020. In December 2020, a total of $15.0 million of long-term FHLB advances were paid off, with resulting prepayment penalties of $1.5 million being charged to earnings. The remaining $10.0 million of long-term debt was restructured to longer maturities at then current interest rates. An additional prepayment penalty for the ~~quarter ended December 31, 2020.~~restructuring of $1.2 million was treated as a discount on the debt.

~~Total~~Shareholders’ Equity. ~~Total~~Shareholders’ equity ~~increased $199,000~~decreased $3.9 million to ~~$50.7~~$94.5 million at ~~June 30, 2021~~March 31, 2022 compared to ~~$50.5~~$98.3 million at December 31, ~~2020.~~2021. The primary reason for the decrease in total shareholders’ equity was a $3.8 million increase in ~~total equity was net income of $411,000 during~~ the ~~six months ended June 30, 2021, partially offset by a $212,000 decrease in~~Company’s accumulated other compressive loss position due to unrealized ~~gains/~~losses on ~~available for sale~~available-for-sale securities. At ~~June 30, 2021,~~March 31, 2022, our ratio of total shareholders’ equity to total assets was ~~21.3%.~~32.9% compared to 34.5% at December 31, 2021.

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Table of Contents

Non-performing Assets. The following table shows the amounts of our non-performing assets, which include non-accruing loans, accruing loans 90 days or more past due and real estate owned at the dates indicated, and our performing TDRs.

At June 30,

At December 31,

(Dollars in thousands)

2021

2020

Non-accruing loans:





One- to four-family residential

$
1,203

$
1,241

Commercial real estate

—

—

Construction and land

46

47

Multi-family residential

—

—

Farmland

—

—

Consumer

—

—

Commercial and industrial

3

4

Total non-accruing loans

1,252

1,292

Accruing loans 90 days or more past due:





One- to four-family residential

132

367

Commercial real estate

—

—

Construction and land

—

—

Multi-family residential

—

—

Farmland

—

—

Consumer

11

13

Commercial and industrial

—

—

Total accruing loans 90 days or more past due

143

380

Total non-performing loans

1,395

1,672

Real estate owned

590

415

Total non-performing assets

1,985

2,087

Performing troubled debt restructurings

3,241

3,625

Total non-performing assets and performing TDRs

$
5,226

$
5,712

Total loans outstanding

$
140,599

$
151,800

Total assets outstanding

$
238,640

$
224,688

Total non-accruing loans as a percentage of total loans outstanding

0.89
%

0.85
%
Total non-performing loans as a percentage of total loans outstanding

0.99
%

1.10
%
Total non-performing loans as a percentage of total assets

0.58
%

0.74
%
Total non-performing assets as a percentage of total assets

0.83
%

0.93
%


	March 31,			December 31,
(Dollars in thousands)	2022			2021
Non-accruing loans
One- to four-family residential	$	1,135		$	791
Commercial real estate		52			-
Construction and land		65			68
Multi-family residential		-			-
Commercial and industrial		17			18
Consumer		-			13
Total non-accruing loans		1,269			890
Accruing loans 90 days or more past due
One- to four-family residential		-			-
Commercial real estate		-			-
Construction and land		-			-
Multi-family residential		-			-
Commercial and industrial		-			-
Consumer		-			1
Total accruing loans 90 days or more past due		-			1
Total non-performing loans		1,269			891
Foreclosed assets		320			340
Total non-performing assets		1,589			1,231
Performing troubled debt restructurings		1,153			1,873
Total non-performing assets and performing TDRs	$	2,742		$	3,104
Total loans	$	132,003		$	131,842
Total assets	$	287,272		$	285,349
Total non-accruing loans as a percentage of total loans		0.96	%		0.68	%
Total non-performing loans as a percentage of total loans		0.96	%		0.68	%
Total non-performing loans as a percentage of total assets		0.44	%		0.31	%
Total non-performing assets as a percentage of total assets		0.55	%		0.43	%

Table of Contents

Comparison of Results of Operations for the Three Months Ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

General. ~~We had net income of $260,000 for both three months ended June 30, 2021 and~~For the three months ended ~~June 30, 2020. A reduction~~March 31, 2022, the Company reported a net loss of $131,000, compared to net income of $151,000 for the three months ended March 31, 2021. The decrease in net income over the comparable three-month periods was primarily due to an increase in non-interest expense of $462,000, or 26.8%, partially offset by an increase in net interest income ~~and an increase in non-interest expenses during~~after the reversal of loan losses of $102,000. During the three months ~~period~~ ended ~~June 30, 2021 compared to~~March 31, 2022, the ~~same period in 2020 were largely offset by~~Company recorded a ~~$286,000~~ reversal to the allowance for loan losses ~~increased non-interest income and lower income tax expense in~~of $71,000. No provision for or reversal of loan losses was recorded for the ~~2021 period.~~three months ended March 31, 2021.

Interest Income. Total interest income decreased ~~$308,000,~~$32,000, or ~~14.3%~~1.6%, to ~~$1.8~~$1.9 million for the three months ended ~~June 30, 2021 from $2.2 million for~~March 31, 2022, compared to the three months ended ~~June 30, 2020.~~March 31, 2021. This decrease was primarily attributable to a ~~$272,000~~$245,000 decrease in interest income on loans ~~receivable.~~receivable, partially offset by an increase in income on investment securities of $208,000. The decrease in interest income on loans was due to a reduction in the average balance of our loans of ~~$20.5~~$18.4 million, or ~~12.7%~~12.4%, to ~~$140.5~~$130.8 million for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$161.0~~$149.2 million for the three months ended ~~June 30, 2020, coupled with a decrease~~March 31, 2021. The increase in interest income on investment securities was primarily due to an increase in the average ~~yield on loans~~balance of ~~six basis points~~total investment securities of $60.8 million, or 149.9%, compared to ~~4.83%~~the three months ended March 31, 2021. During the fourth quarter of 2021, the Company deployed $41.9 million of the proceeds from our initial public offering into the investment securities portfolio.

Interest Expense. Total interest expense decreased $63,000, or 28.3%, to $160,000 for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~4.89%~~$223,000 for the three months ended ~~June 30, 2020.~~March 31, 2021. Interest expense on deposits was $92,000 during the three months ended March 31, 2022, down $63,000, or 40.6%, from $155,000 for the three months ended March 31, 2021. While the average balance of our total interest-bearing deposits increased by $5.3 million, or 3.7%, to $147.8 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, the average rate paid on interest-bearing deposits decreased by 19 basis points to 0.25% for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Net Interest Income. Net interest income was $1.8 million for the three months ended March 31, 2022, an increase of $31,000, or 1.8%, compared to the three months ended March 31, 2021. Our interest rate spread was 2.44% and 3.06% for the three months ended March 31, 2022 and 2021, respectively. Our net interest margin was 2.61% and 3.24% for the three months ended March 31, 2022 and 2021, respectively. The decline in interest rate spread and net interest margin over the comparable periods was primarily the result of a continuing low interest rate environment and a shift in the mix of our interest-earning assets as we grew our investment securities portfolio and experienced a decline in total loans. These factors reduced average yield earned on total interest-earning assets in an amount which more than offset the reduction in the average cost of our interest-bearing liabilities.

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Table of Contents

~~Interest Expense.~~ Total interest expense decreased $242,000, or 54.3%, to $204,000 for the three months ended June 30, 2021 from $446,000 for the three months ended June 30, 2020. The decrease was primarily due to a $130,000, or 65.3%, reduction in interest expense on FHLB advances to $69,000 in the three months ended June 30, 2021 compared to $199,000 in the three months ended June 30, 2020. As a result of the prepayment of FHLB advances in the fourth quarter of 2020, the average balance of our FHLB advances was $8.9 million during the three months ended June 30, 2021 compared to $25.0 million during the three months ended June 30, 2020. Interest expense on deposits was $135,000 during the three months ended June 30, 2021, a $112,000, or 45.3%, reduction compared to $247,000 of interest expense on deposits in the three months ended June 30, 2020. While the average balance of our total deposits increased by $17.2 million, or 13.2%, to $147.9 million in the three months ended June 30, 2021 compared to the three months ended June 30, 2020, the average rate paid on deposits decreased by 39 basis points to 0.37% in the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

~~Net Interest Income.~~ Net interest income was $1.6 million for the three months ended June 30, 2021, a decrease of $66,000, or 3.9%, compared to the three months ended June 30, 2020. Our interest rate spread decreased to 2.83% for the three months ended June 30, 2021 from 2.84% for the three months ended June 30, 2020, and our net interest margin decreased to 2.98% for the three months ended June 30, 2021 from 3.17% for the three months ended June 30, 2020. The decreases in interest rate spread and net interest margin primarily reflect the effects of the continuing low interest rate environment.

Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following tables show for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. Taxable equivalent (“TE”) yields have been calculated using a marginal tax rate of 21%. All average balances are based on daily balances.

Three Months Ended June 30,

2021

2020

Average

Average

Average

Yield/

Average

Yield/

(Dollars in thousands)

Balance

Interest

Rate

Balance

Interest

Rate

Interest-earning assets:

Loans receivable⁽¹⁾

$
140,513

$
1,691

4.83
%
$
161,040

$
1,963

4.89
%
Investment securities

49,929

142

1.14

32,837

175

2.13

Other interest-earning assets

30,193

10

0.13

22,148

13

0.23

Total interest-earning assets

220,635

1,843

3.35

216,025

2,151

3.99

Non-interest-earning assets

17,595

15,138

Total assets

$
238,230

$
231,163

Interest-bearing liabilities:

Savings, NOW and money market accounts

78,600

26

0.13

66,190

52

0.32

Certificates of deposit

69,314

109

0.63

64,486

195

1.21

Total deposits

147,914

135

0.37

130,676

247

0.76

FHLB advances

8,898

69

3.07

25,000

199

3.18

Total interest-bearing liabilities

156,812

204

0.52

155,676

446

1.15

Non-interest-bearing liabilities

31,044

23,714

Total liabilities

187,856

179,390

Retained earnings

50,374

51,773

Total liabilities and retained earnings

$
238,230

$
231,163

Net interest-earning assets

$
63,823

$
60,349

Net interest income; average interest rate spread

$
1,639

2.83
%

$
1,705

2.84
%
Net interest margin⁽²⁾

2.98
%

3.17
%
Average interest-earning assets to average interest-bearing liabilities

140.70
%

138.77
%


	Three Months Ended March 31,
	2022						2021
(Dollars in thousands)	Average Balance		Interest		Average Yield/Rate		Average Balance		Interest		Average Yield/Rate
Interest-earning assets:
Loans receivable⁽¹⁾	$	130,755	$	1,563	4.85	%	$	149,183	$	1,808	4.92	%
Investment securities^(TE)		101,348		329	1.31			40,551		121	1.21
Other interest-earning assets		39,605		19	0.20			25,901		14	0.22
Total interest-earning assets^(TE)		271,708		1,911	2.85			215,635		1,943	3.66
Non-interest-earning assets		14,938						14,039
Total assets	$	286,646					$	229,674
Interest-bearing liabilities:
Savings, NOW and money market accounts		81,885		24	0.12			73,444		32	0.18
Certificates of deposit		65,939		68	0.42			69,082		123	0.72
Total deposits		147,824		92	0.25			142,526		155	0.44
FHLB advances		9,034		68	3.02			8,854		68	3.07
Total interest-bearing liabilities		156,858		160	0.41			151,380		223	0.60
Non-interest-bearing liabilities		32,623						27,590
Total liabilities		189,481						178,970
Shareholders' equity		97,165						50,704
Total liabilities and shareholders' equity	$	286,646					$	229,674
Net interest-earning assets	$	114,850					$	64,255
Net interest income; average interest rate spread^(TE)			$	1,751	2.44	%			$	1,720	3.06	%
Net interest margin^(TE)(2)					2.61	%					3.24	%
Average interest-earning assets to average interest-bearing liabilities					173.22	%					142.45	%

(1)	Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts and loans in ~~process and allowance for loan losses.~~process.

(2)	Equals net interest income divided by average interest-earning assets. Taxable equivalent yields are calculated using a marginal tax rate of 21%.

~~Table of Contents~~

Six Months Ended June 30,

2021

2020

Average

Average

Average

Yield/

Average

Yield/

(Dollars in thousands)

Balance

Interest

Rate

Balance

Interest

Rate

Interest-earning assets:

Loans receivable⁽¹⁾

$
143,420

$
3,463

4.87
%
$
160,901

$
3,967

4.94
%
Investment securities

45,266

262

1.17

29,773

293

1.98

Other interest-earning assets

28,058

24

0.17

20,170

69

0.69

Total interest-earning assets

216,744

3,749

3.49

210,844

4,329

4.12

Non-interest-earning assets

17,313

15,054

Total assets

$
234,057

$
225,898

Interest-bearing liabilities:

Savings, NOW and money market accounts

76,037

58

0.15

63,953

111

0.35

Certificates of deposit

69,199

232

0.68

64,346

396

1.23

Total deposits

145,236

290

0.40

128,299

507

0.79

FHLB advances

8,876

136

3.07

25,003

397

3.18

Total interest-bearing liabilities

154,112

426

0.56

153,302

904

1.18

Non-interest-bearing liabilities

29,407

21,003

Total liabilities

183,519

174,305

Retained earnings

50,538

51,593

Total liabilities and retained earnings

$
234,057

$
225,898

Net interest-earning assets

$
62,632

$
57,542

Net interest income; average interest rate spread

$
3,323

2.93
%

$
3,425

2.94
%
Net interest margin⁽²⁾

3.09
%

3.26
%
Average interest-earning assets to average interest-bearing liabilities

140.64
%

137.54
%

~~(1)~~

~~Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for loan losses.~~

~~(2)~~

~~Equals net interest income divided by average interest-earning assets.~~

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Table of Contents

Rate/Volume Analysis. The following tables show the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities affected our interest income and expense during the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in rate, which is the change in rate multiplied by prior year volume, and (2) changes in volume, which is the change in volume multiplied by prior year rate. The combined effect of changes in both rate and volume has been allocated proportionately to the change due to rate and the change due to volume.

Three Months Ended June 30, 2021

compared to Three Months Ended

June 30, 2020

Increase (Decrease) Due to




Total Increase
(Dollars in thousands)

Rate

Volume

(Decrease)
Interest income:






Loans receivable

$
(25)

$
(247)

$
(272)
Investment securities

(102)

69

(33)
Other interest-earning assets

(7)

4

(3)
Total interest income

(134)

(174)

(308)
Interest expense:






Savings, NOW and money market accounts

(34)

8

(26)
Certificates of deposit

(99)

13

(86)
Total interest-bearing deposits

(133)

21

(112)
FHLB advances and other borrowings

(7)

(123)

(130)
Total interest expense

(140)

(102)

(242)
Increase (decrease) in net interest income

$
6

$
(72)

$
(66)


	Three Months Ended March 31, 2022
	compared to Three Months Ended March 31, 2021
	Increase (Decrease) Due to
(Dollars in thousands)	Rate		Volume		Total Increase (Decrease)
Interest income:
Loans receivable	$	(24)	$	(221)	$	(245)
Investment securities		12		196		208
Other interest-earning assets		(2)		7		5
Total interest income		(14)		(18)		(32)
Interest expense:
Savings, NOW and money market accounts		(11)		3		(8)
Certificates of deposit		(50)		(5)		(55)
Total deposits		(61)		(2)		(63)
FHLB advances and other borrowings		(1)		1		—
Total interest expense		(62)		(1)		(63)
Increase (decrease) in net interest income	$	48	$	(17)	$	31

Six Months Ended June 30, 2021

compared to Six Months Ended

June 30, 2020

Increase (Decrease) Due to




Total Increase
(Dollars in thousands)

Rate

Volume

(Decrease)
Interest income:

Loans receivable

$
(80)

$
(424)

$
(504)
Investment securities

(149)

118

(31)
Other interest-earning assets

(65)

20

(45)
Total interest income

(294)

(286)

(580)
Interest expense:






Savings, NOW and money market accounts

(71)

18

(53)
Certificates of deposit

(191)

27

(164)
Total interest-bearing deposits

(262)

45

(217)
FHLB advances and other borrowings

(16)

(245)

(261)
Total interest expense

(278)

(200)

(478)
Increase (decrease) in net interest income

$
(16)

$
(86)

$
(102)

~~Provision for Loan Losses.~~ We recorded a $286,000 reversal to the allowance for loan losses for the three months ended June 30, 2021, compared to no provision for the three months ended June 30, 2020. The reversal during the three months ended June 30, 2021 resulted from our analysis of the factors described in “– Critical Accounting Policies – Allowance for Loan Losses.” The ratio of non-accrual loans as a percent of total loans outstanding was 0.89% at June 30, 2021 compared to 1.03% at June 30, 2020, and the ratio of our allowance for loan losses to non-performing loans was 189.9% at June 30, 2021 compared to 90.9% at June 30, 2020.

~~Non-interest Income~~. Non-interest income increased $196,000, or 116.7%, to $364,000 for the three months ended June 30, 2021 from $168,000 for the three months ended June 30, 2020. The increase was primarily due to a $174,000 increase in other non-interest income, primarily related to an increase in SBA fee income during the quarter.

~~Table of Contents~~

In June 2021, the Bank was informed that it will be awarded a $1.8 million grant from the U.S. Treasury Department’s Community Development Financial Institution (“CDFI”) Rapid Response Program. The CDFI Rapid Response Program is designed to quickly deploy capital to community development financial institutions, such as the Bank, in order to provide them with resources to help counter the economic impact created by the COVID-19 pandemic in distressed and underserved communities. The grant is subject to certain performance goals and measures set forth in the program during an approximate 2.5 year period ending December 31 2023. The Bank anticipates that, subject to satisfying the Rapid Response Program performance goals and measures, it will record a significant portion of the grant amount as non-interest income over the next 12 months and that the remaining grant amount will be recorded as non-interest income by December 31, 2023.

~~Non-interest Expense.~~ Non-interest expense increased $443,000, or 29.1%, to $2.0 million for the three months ended June 30, 2021 from $1.5 million for the three months ended June 30, 2020. The increase was due primarily to a $309,000 increase in salaries and employee benefit expense, due in part to new employee hires, a $50,000 loss incurred due to a wire transfer fraud resulting from the hacking of a customer’s e-mail account, a $45,000 increase in legal and accounting expense, a $33,000 increase in occupancy and equipment expense, primarily reflecting expense related to the additional branch office that we opened in 2020, a $26,000 increase in computer services expense, primarily reflecting systems upgrades, and a $15,000 increase in net foreclosed assets expense, due primarily to a write-down of $40,000 on the carrying value of other real estate owned which was partially offset by a $25,000 reduction in other real estate owned expenses. These increases were partially offset by a $10,000 reduction in advertising and marketing expense in the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020.

Upon consummation of the Conversion and related stock offering, we expect non-interest expense to increase because of costs associated with operating as a public company, including the expected hiring of additional personnel, and the increased compensation expenses associated with the purchase of shares of common stock by our employee stock ownership plan and the possible implementation of a stock-based benefit plan, if approved by our shareholders.

~~Income Tax Expense.~~ Income tax expense decreased $27,000 to $62,000 for the three months ended June 30, 2021 compared to $89,000 for the three months ended June 30, 2020. The decrease resulted primarily from lower income before income taxes and increased non-taxable income.

~~Comparison of Results of Operations for the Six Months Ended June 30, 2021 and 2020.~~

~~General.~~ We had net income of $411,000 for the six months ended June 30, 2021 compared to $415,000 for the six months ended June 30, 2020. A reduction in net interest income and an increase in non-interest expenses during the six months period ended June 30, 2021 compared to the same period in 2020 were largely offset by a $286,000 reversal to the allowance for loan losses, increased non-interest income and lower income tax expense in the 2021 period.

~~Interest Income.~~ Total interest income decreased $580,000, or 13.4%, to $3.7 million for the six months ended June 30, 2021 from $4.3 million for the six months ended June 30, 2020. This decrease was primarily attributable to a $504,000 decrease in interest income on loans receivable. The decrease in interest income on loans was due to a reduction in the average balance of our loans of $17.5 million, or 10.9%, to $143.4 million for the six months ended June 30, 2021 from $160.9 million for the six months ended June 30, 2020, coupled with a decrease in the average yield on loans of seven basis points to 4.87% for the six months ended June 30, 2021 from 4.94% for the six months ended June 30, 2020.

Table of Contents

~~Interest Expense.~~ Total interest expense decreased $478,000, or 52.9%, to $426,000 for the six months ended June 30, 2021 from $904,000 for the six months ended June 30, 2020. The decrease was primarily due to a $261,000, or 65.7%, reduction in interest expense on FHLB advances to $136,000 in the six months ended June 30, 2021 compared to $397,000 in the six months ended June 30, 2020. As a result of the prepayment of FHLB advances in the fourth quarter of 2020, the average balance of our FHLB advances was $8.9 million during the six months ended June 30, 2021 compared to $25.0 million during the six months ended June 30, 2020. Interest expense on deposits was $290,000 during the six months ended June 30, 2021, a $217,000, or 42.8%, reduction compared to $507,000 of interest expense on deposits in the six months ended June 30, 2020. While the average balance of our total deposits increased by $16.9 million, or 13.2%, to $145.2 million in the six months ended June 30, 2021 compared to the six months ended June 30, 2020, the average rate paid on deposits decreased by 39 basis points to 0.40% in the first six months of 2021 compared to the first six months of 2020.

~~Net Interest Income.~~ Net interest income was $3.3 million for the six months ended June 30, 2021, a decrease of $102,000, or 3.0%, compared to the six months ended June 30, 2020. Our interest rate spread decreased to 2.93% for the six months ended June 30, 2021 from 2.94% for the six months ended June 30, 2020, and our net interest margin decreased to 3.09% for the six months ended June 30, 2021 from 3.26% for the six months ended June 30, 2020. The decreases in interest rate spread and net interest margin primarily reflect the effects of the continuing low interest rate environment.

Provision for Loan Losses. WeDuring the three months ended March 31, 2022, the Company recorded a ~~$286,000~~ reversal to the allowance for loan losses of $71,000 primarily due to continued improvement in our assessment of the impact of the COVID-19 pandemic on our borrowers. No provision for or reversal of loan losses was recorded for the ~~six~~three months ended ~~June 30, 2021, compared to a $65,000 provision to~~March 31, 2021. The ratio of the allowance for the six months ended June 30, 2020. The reversal during the six months ended June 30, 2021 resulted from our analysis of the factors described in “– Critical Accounting Policies – Allowance for Loan Losses.”loan losses to total loans was 1.65% at March 31, 2022.

Non-interest Income. Non-interest income increased ~~$230,000,~~$10,000, or ~~64.4%~~5.3%, to ~~$587,000~~$197,000 for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 from ~~$357,000~~$187,000 for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The increase was primarily due to an increase of $45,000 in income from service charges on deposit accounts, partially offset by the absence of gains on the sale of fixed assets during the three months ended March 31, 2022 and a ~~$208,000 increase~~decline in other non-interest income ~~primarily related to an increase in SBA fee income.~~over the comparable periods. Gains on the sale of fixed assets totaled $25,000 during the three months ended March 31, 2021.

Non-interest Expense. Non-interest expense increased ~~$529,000,~~$462,000, or ~~16.7%~~26.8%, to ~~$3.7~~$2.2 million for the ~~six~~three months ended ~~June 30, 2021 from $3.2~~March 31, 2022, compared to $1.7 million for the ~~six~~three months ended ~~June 30, 2020.~~ March 31, 2021. On October 12, 2021, the Company completed its initial public offering and the mutual-to-stock conversion of the Bank. The increase ~~was due~~in non-interest expense primarily toreflects the costs associated with operating as a ~~$389,000 increase in salaries~~public company and additional personnel.

Salaries and employee ~~benefit~~benefits expense totaled $1.3 million for the three months ended March 31, 2022, an increase of $194,000, or 18.2%, over the comparable period in 2021 primarily due to additional personnel and ESOP compensation expense of $72,000 recognized in ~~part to new employee hires, a $71,000 increase in occupancy~~the 2022 period. The Company’s ESOP commenced during the fourth quarter of 2021. Occupancy and equipment expense totaled $210,000 for the three months ended March 31, 2022, an increase of $28,000, or 15.4%, over the comparable period in 2021 primarily ~~reflecting expense~~due to expenses related to ~~the~~an additional branch ~~office that we~~location opened in ~~2020, a $66,000~~November 2021. Data processing and communication expense totaled $208,000 for the three months ended March 31, 2022, an increase of $34,000, or 19.5%, over the comparable period in ~~legal and accounting expense, a $50,000 increase in computer services expense,~~2021 primarily ~~reflecting systems upgrades, and a $50,000 loss incurred~~ due to ~~a wire transfer fraud resulting from~~ the ~~hacking~~cost of ~~a customer’s email account. These increases were partially offset by a $35,000 reduction~~technology resources for additional personnel and the new branch location. Professional fees totaled $140,000 for the three months ended March 31, 2022, an increase of $67,000, or 91.8%, over the comparable period in ~~advertising~~2021 primarily due to public company consulting and legal services. Advertising and marketing expense ~~and a $16,000 reduction in net foreclosed assets expense in~~totaled $42,000 for the ~~six~~three months ended ~~June 30,~~March 31, 2022, an increase of $33,000 over the comparable period in 2021 ~~compared~~primarily due to the ~~six~~costs incurred for the planned rebranding of the Bank. Franchise and shares tax expense totaled $58,000 for the three months ended ~~June 30, 2020.~~March 31, 2022. As a result of the mutual-to-stock conversion of the Bank and the establishment of Catalyst Bancorp as its holding company, the Company became subject to franchise tax and the Bank became subject to Louisiana shares tax for 2022.

Income Tax Expense. ~~Income~~The Company reported an income benefit of $38,000 for the three months ended March 31, 2022, compared to income tax expense ~~decreased $46,000 to $93,000~~of $30,000 for the ~~six~~three months ended ~~June 30, 2021 compared~~March 31, 2021. The change in income tax expense over the comparable three-month periods was primarily due to ~~$139,000 for~~ the ~~six months ended June 30, 2020. The decrease resulted primarily from lower income before income taxes and increased non-taxable income.~~change in taxable earnings.

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Liquidity and Capital Resources

~~St. Landry Homestead~~The Company maintains levels of liquid assets deemed adequate by management. We adjust our liquidity levels to fund deposit outflows, repay our borrowings, and to fund loan commitments. We also adjust liquidity, as appropriate, to meet asset and liability management objectives.

~~Table of Contents~~

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 FHLB. At ~~June 30, 2021,~~March 31, 2022, we had outstanding advances from the FHLB with a carrying value of ~~$8.9~~$9.1 million, and had the capacity to borrow approximately an additional ~~$52.8~~$47.5 million from the FHLB and an additional $17.8 million on a line of credit with First National Bankers Bank at such date.

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 are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash ~~provided by~~used in operating activities was ~~$459,000~~$123,000 for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. Net cash used in investing activities, which consists primarily of net change in loans receivable and net change in investment securities, was ~~$(9.9 million)~~$7.0 million for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. Net cash provided by financing activities, consisting primarily of the activity in deposit accounts and FHLB advances, was ~~$13.3~~$6.3 million for the ~~six~~three months ended ~~June 30, 2021, resulting from our ability to generate liquidity through our deposit base at lower interest rates to fund loan originations.~~March 31, 2022.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position ~~on a daily basis.~~daily. 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. We also anticipate continued use of FHLB advances.

~~At June 30, 2021, we~~The Bank exceeded all ~~of our~~ regulatory capital requirements ~~with a Tier 1 leverage capital level of $50.8 million, or 21.3% of adjusted total assets, which was above the well-capitalized required level of $11.9 million, or 5.0%,~~ and ~~total risk-based capital of $52.4 million, or 43.1% of risk-weighted assets, which was above the well-capitalized required level of $12.2 million, or 10.0%. Accordingly, St. Landry Homestead~~ was categorized as well-capitalized at ~~June 30,~~March 31, 2022 and December 31, 2021. Management is not aware of any conditions or events since the most recent notification that would change our category. The following table presents actual and required capital.


	Actual				To be Well Capitalized under the Prompt Corrective Action Provision
(Dollars in thousands)	Amount		Ratio		Amount		Ratio
As of March 31, 2022
Common Equity Tier 1 Capital	$	77,713	57.98	%	$	8,712	>6.5	%
Tier 1 Risk-Based Capital		77,713	57.98			10,723	>8.0
Total Risk-Based Capital		79,394	59.23			13,403	>10.0
Tier 1 Leverage Capital		77,713	28.39			13,689	>5.0

As of December 31, 2021
Common Equity Tier 1 Capital	$	77,819	63.51	%	$	7,965	>6.5	%
Tier 1 Risk-Based Capital		77,819	63.51			9,803	>8.0
Total Risk-Based Capital		79,360	64.77			12,253	>10.0
Tier 1 Leverage Capital		77,819	27.38			14,210	>5.0

~~Off-Balance~~

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Off-balance Sheet ~~Arrangements.~~ Arrangements and Other Commitments

At ~~June 30, 2021,~~March 31, 2022, we had ~~$1.5~~$1.0 million of remaining funds to be disbursed on construction loans in process and ~~$4.2~~$11.7 million of outstanding commitments to originate loans. Our total letters and lines of credit, unused overdraft privilege amounts and unused lines of credit totaled ~~$3.5~~$6.1 million at ~~June 30, 2021.~~March 31, 2022. Certificates of deposit that are scheduled to mature in less than one year from ~~June 30, 2021,~~March 31, 2022, totaled ~~$56.0 million at June 30, 2021.~~$51.4 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 utilize FHLB advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

~~Table of Contents~~

~~Commitments.~~ The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans at ~~June 30, 2021.~~March 31, 2022.

Amount of Commitment Expiration — Per Period


Total Amounts Committed

To

1 – 3

4 – 5

After 5
(Dollars in thousands)

at June 30, 2021

1 Year

Years

Years

Years
Letters of credit

$
502

$
502

$
—

$
—

$
—
Unused overdraft privilege amounts

968

968

—

—

—
Lines of credit

1,809

461

—

—

1,348
Unused lines of credit

206

201

5

—

—
Undisbursed portion of loans in process

1,481

1,481

—

—

—
Commitments to originate loans

4,210

4,210

—

—

—
Total commitments

$
9,176

$
7,823

$
5

$
—

$
1,348


			Amount of Commitment Expiration — Per Period
(Dollars in thousands)	Total Amounts Committed at March 31, 2022		To 1 Year		1 - 3 Years		4 - 5 Years		After 5 Years
Commitments to originate loans	$	11,747	$	11,747	$	-	$	-	$	-
Unused lines of credit		4,970		1,929		1,874		-		1,167
Undisbursed portion of construction loans in process		1,029		1,028		-		1		-
Unused overdraft privilege amounts		1,088		-		-		-		1,088
Letters of credit		2		2		-		-		-
Total commitments	$	18,836	$	14,706	$	1,874	$	1	$	2,255

~~Contractual Cash Obligations.~~

The following table summarizes our contractual cash obligations at ~~June 30, 2021.~~

Payments Due By Period


Total at

To

1 – 3

4 – 5

After 5
(Dollars in thousands)

June 30, 2021

1 Year

Years

Years

Years
Certificates of deposit

$
69,766

$
56,017

$
11,535

$
2,214

$
—
FHLB advances

10,000

—

—

3,000

7,000
Total long-term debt

79,766

56,017

11,535

5,214

7,000
Operating lease obligations

—

—

—

—

—
Total contractual obligations

$
79,766

$
56,017

$
11,535

$
5,214

$
7,000

~~Impact of Inflation~~

The effects of price changes and inflation can vary substantially for most financial institutions. While management believes that inflation affects the economic value of total assets, it believes that it is difficult to assess the overall impact. Management believes this to be the case due to the fact that generally neither the timing nor the magnitude of inflationary changes in the economy coincides with changes in interest rates. Since virtually all of our assets and liabilities are monetary in nature, interest rates generally have a more significant impact on our performance than does inflation.March 31, 2022.


			Payments Due By Period
(Dollars in thousands)	Total at March 31, 2022		To 1 Year		1 - 3 Years		4 - 5 Years		After 5 Years
Certificates of deposit	$	65,539	$	51,412	$	12,957	$	1,170	$	-
FHLB advances		10,000		-		-		3,000		7,000
Total long-term debt		75,539		51,412		12,957		4,170		7,000
Operating lease obligations		-		-		-		-		-
Total contractual obligations	$	75,539	$	51,412	$	12,957	$	4,170	$	7,000

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 3 of the notes to our financial statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~There has not been any material change in the market risk disclosures contained in our Prospectus.~~Not required.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Act”)) as of ~~June 30, 2021,~~March 31, 2022, was carried out under the supervision and with the participation of our Chief Executive Officer, Chief Financial Officer and several other members of our senior management. Our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures in effect as of ~~June 30, 2021,~~March 31, 2022, were effective. In addition, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quarter ended ~~June 30, 2021,~~March 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

We do not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all errors and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls may be circumvented by the individual acts of some persons, by collusion of two or more people, or by override of the control. The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

3435

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not involved in any pending legal proceedings as a plaintiff or defendant other than routine legal proceedings occurring in the ordinary course of business, and at ~~June 30, 2021,~~March 31, 2022, we were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed under the heading “Risk Factors” contained in the Prospectus. Our evaluation of the risk factors applicable to us has not changed materially from those disclosed in the Prospectus.Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Nothing to report.~~Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Nothing to report.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Nothing to report.

3536

Table of Contents

ITEM 6. EXHIBITS


~~3.1~~	~~Articles of Incorporation of Catalyst Bancorp, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-1 (Commission File No. 333-254200))~~

~~3.2~~	~~Bylaws of Catalyst Bancorp, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-1 (Commission File No. 333-254200))~~

31.1	Rule 13a-14(a) Certifications (Chief Executive Officer)

31.2	Rule 13a-14(a) Certifications (Chief Financial Officer)

32.0	Section 1350 Certifications

101.INS	XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB	XBRL Taxonomy Extension Label Linkbase Document

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document

104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

3637

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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.


	CATALYST BANCORP, INC.


Date: ~~September 17, 2021~~May 13, 2022	By:	/s/ Joseph B. Zanco
		Joseph B. Zanco
		President and Chief Executive Officer
		(Duly Authorized Officer)

Date: ~~September 17, 2021~~May 13, 2022	By:	/s/ ~~Jutta A. Codori~~Jacques L. J. Bourque
		~~Jutta A. Codori~~Jacques L. J. Bourque
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

3738


	Retained		Accumulated Other		Total
(Dollars in thousands)	Earnings		Comprehensive Income (Loss)		Equity
BALANCE, DECEMBER 31, 2019	$	51,129	$	(12)	$	51,117
Net income		415		—		415
Other comprehensive income		—		227		227
BALANCE, JUNE 30, 2020	$	51,544	$	215	$	51,759

BALANCE, DECEMBER 31, 2020	$	50,426	$	107	$	50,533
Net income		411		—		411
Other comprehensive income (loss)		—		(212)		(212)
BALANCE, JUNE 30, 2021	$	50,837	$	(105)	$	50,732


	As of June 30, 2021						As of December 31, 2020
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
(Dollars in thousands)	Impairment		Impairment		Total		Impairment		Impairment		Total
Allowance for Loan Losses Ending Balance
One- to four-family residential	$	556	$	1,073	$	1,629	$	599	$	1,311	$	1,910
Commercial real estate		—		713		713		—		744		744
Construction & land		—		55		55		—		81		81
Multi-family residential		—		61		61		—		68		68
Farmland		—		—		—		—		1		1
Consumer		—		61		61		—		78		78
Commercial and industrial		—		103		103		—		101		101
Unallocated		—		27		27		—		39		39
Total	$	556	$	2,093	$	2,649	$	599	$	2,423	$	3,022
Loans Receivable Ending Balance
One- to four-family residential	$	2,920	$	88,858	$	91,778	$	3,209	$	96,660	$	99,869
Commercial real estate		—		28,217		28,217		—		30,304		30,304
Construction & land		46		4,481		4,527		46		5,492		5,538
Multi-family residential		1,186		3,158		4,344		1,205		3,596		4,801
Farmland		—		27		27		—		53		53
Consumer		—		4,667		4,667		—		4,499		4,499
Commercial and industrial		3		7,036		7,039		4		6,732		6,736
Total	$	4,155	$	136,444	$	140,599	$	4,464	$	147,336	$	151,800


	As of June 30, 2021
	Past Due		Past Due		Past Due
	30-89 Days		Over 90 Days		Over 30 Days		Total Past		Current and		Current and Non-
(Dollars in thousands)	Accruing		and Accruing		Non-Accruing		Due		Accruing		Accruing		Total Loans
One- to four-family residential	$	1,664	$	132	$	238	$	2,034	$	88,779	$	965	$	91,778
Commercial real estate		54		—		—		54		28,163		—		28,217
Construction and land		26		—		46		72		4,455		—		4,527
Multi-family residential		—		—		—		—		4,344		—		4,344
Farmland		—		—		—		—		27		—		27
Consumer		24		11		—		35		4,632		—		4,667
Commercial & industrial		17		—		—		17		7,019		3		7,039
Total	$	1,785	$	143	$	284	$	2,212	$	137,419	$	968	$	140,599


		Pre-modification		Post-modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
(Dollars in thousands)	Contracts	Investment		Investment
June 30, 2021
One- to four-family residential	2	$	140	$	142
Total	2	$	140	$	142


	As of and for the Six Months Ended June 30, 2021
			Unpaid				Average		Interest		Interest
	Recorded		Principal		Related		Recorded		Income		Income
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Recognized		Collected
Real Estate
One- to four-family residential	$	2,920	$	3,270	$	556	$	2,962	$	39	$	38
Commercial real estate		—		—		—		—		—		—
Construction & land		46		46		—		46		—		—
Multi-family residential		1,186		1,186		—		1,195		28		28
Farmland		—		—		—		—		—		—
Total real estate loans		4,152		4,502		556		4,203		67		66
Consumer		—		—		—		—		—		—
Commercial & industrial		3		6		—		4		—		—
	$	4,155	$	4,508	$	556	$	4,207	$	67	$	66


	At June 30,			At December 31,
(Dollars in thousands)	2021			2020
Non-accruing loans:
One- to four-family residential	$	1,203		$	1,241
Commercial real estate		—			—
Construction and land		46			47
Multi-family residential		—			—
Farmland		—			—
Consumer		—			—
Commercial and industrial		3			4
Total non-accruing loans		1,252			1,292
Accruing loans 90 days or more past due:
One- to four-family residential		132			367
Commercial real estate		—			—
Construction and land		—			—
Multi-family residential		—			—
Farmland		—			—
Consumer		11			13
Commercial and industrial		—			—
Total accruing loans 90 days or more past due		143			380
Total non-performing loans		1,395			1,672
Real estate owned		590			415
Total non-performing assets		1,985			2,087
Performing troubled debt restructurings		3,241			3,625
Total non-performing assets and performing TDRs	$	5,226		$	5,712
Total loans outstanding	$	140,599		$	151,800
Total assets outstanding	$	238,640		$	224,688
Total non-accruing loans as a percentage of total loans outstanding		0.89	%		0.85	%
Total non-performing loans as a percentage of total loans outstanding		0.99	%		1.10	%
Total non-performing loans as a percentage of total assets		0.58	%		0.74	%
Total non-performing assets as a percentage of total assets		0.83	%		0.93	%


	Three Months Ended June 30,
	2021						2020
					Average						Average
	Average				Yield/		Average				Yield/
(Dollars in thousands)	Balance		Interest		Rate		Balance		Interest		Rate
Interest-earning assets:
Loans receivable⁽¹⁾	$	140,513	$	1,691	4.83	%	$	161,040	$	1,963	4.89	%
Investment securities		49,929		142	1.14			32,837		175	2.13
Other interest-earning assets		30,193		10	0.13			22,148		13	0.23
Total interest-earning assets		220,635		1,843	3.35			216,025		2,151	3.99
Non-interest-earning assets		17,595						15,138
Total assets	$	238,230					$	231,163
Interest-bearing liabilities:
Savings, NOW and money market accounts		78,600		26	0.13			66,190		52	0.32
Certificates of deposit		69,314		109	0.63			64,486		195	1.21
Total deposits		147,914		135	0.37			130,676		247	0.76
FHLB advances		8,898		69	3.07			25,000		199	3.18
Total interest-bearing liabilities		156,812		204	0.52			155,676		446	1.15
Non-interest-bearing liabilities		31,044						23,714
Total liabilities		187,856						179,390
Retained earnings		50,374						51,773
Total liabilities and retained earnings	$	238,230					$	231,163
Net interest-earning assets	$	63,823					$	60,349
Net interest income; average interest rate spread			$	1,639	2.83	%			$	1,705	2.84	%
Net interest margin⁽²⁾					2.98	%					3.17	%
Average interest-earning assets to average interest-bearing liabilities					140.70	%					138.77	%


	Six Months Ended June 30,
	2021						2020
					Average						Average
	Average				Yield/		Average				Yield/
(Dollars in thousands)	Balance		Interest		Rate		Balance		Interest		Rate
Interest-earning assets:
Loans receivable⁽¹⁾	$	143,420	$	3,463	4.87	%	$	160,901	$	3,967	4.94	%
Investment securities		45,266		262	1.17			29,773		293	1.98
Other interest-earning assets		28,058		24	0.17			20,170		69	0.69
Total interest-earning assets		216,744		3,749	3.49			210,844		4,329	4.12
Non-interest-earning assets		17,313						15,054
Total assets	$	234,057					$	225,898
Interest-bearing liabilities:
Savings, NOW and money market accounts		76,037		58	0.15			63,953		111	0.35
Certificates of deposit		69,199		232	0.68			64,346		396	1.23
Total deposits		145,236		290	0.40			128,299		507	0.79
FHLB advances		8,876		136	3.07			25,003		397	3.18
Total interest-bearing liabilities		154,112		426	0.56			153,302		904	1.18
Non-interest-bearing liabilities		29,407						21,003
Total liabilities		183,519						174,305
Retained earnings		50,538						51,593
Total liabilities and retained earnings	$	234,057					$	225,898
Net interest-earning assets	$	62,632					$	57,542
Net interest income; average interest rate spread			$	3,323	2.93	%			$	3,425	2.94	%
Net interest margin⁽²⁾					3.09	%					3.26	%
Average interest-earning assets to average interest-bearing liabilities					140.64	%					137.54	%


	Three Months Ended June 30, 2021
	compared to Three Months Ended
	June 30, 2020
	Increase (Decrease) Due to
					Total Increase
(Dollars in thousands)	Rate		Volume		(Decrease)
Interest income:
Loans receivable	$	(25)	$	(247)	$	(272)
Investment securities		(102)		69		(33)
Other interest-earning assets		(7)		4		(3)
Total interest income		(134)		(174)		(308)
Interest expense:
Savings, NOW and money market accounts		(34)		8		(26)
Certificates of deposit		(99)		13		(86)
Total interest-bearing deposits		(133)		21		(112)
FHLB advances and other borrowings		(7)		(123)		(130)
Total interest expense		(140)		(102)		(242)
Increase (decrease) in net interest income	$	6	$	(72)	$	(66)


	Six Months Ended June 30, 2021
	compared to Six Months Ended
	June 30, 2020
	Increase (Decrease) Due to
					Total Increase
(Dollars in thousands)	Rate		Volume		(Decrease)
Interest income:
Loans receivable	$	(80)	$	(424)	$	(504)
Investment securities		(149)		118		(31)
Other interest-earning assets		(65)		20		(45)
Total interest income		(294)		(286)		(580)
Interest expense:
Savings, NOW and money market accounts		(71)		18		(53)
Certificates of deposit		(191)		27		(164)
Total interest-bearing deposits		(262)		45		(217)
FHLB advances and other borrowings		(16)		(245)		(261)
Total interest expense		(278)		(200)		(478)
Increase (decrease) in net interest income	$	(16)	$	(86)	$	(102)


			Amount of Commitment Expiration — Per Period
	Total Amounts Committed		To		1 – 3		4 – 5		After 5
(Dollars in thousands)	at June 30, 2021		1 Year		Years		Years		Years
Letters of credit	$	502	$	502	$	—	$	—	$	—
Unused overdraft privilege amounts		968		968		—		—		—
Lines of credit		1,809		461		—		—		1,348
Unused lines of credit		206		201		5		—		—
Undisbursed portion of loans in process		1,481		1,481		—		—		—
Commitments to originate loans		4,210		4,210		—		—		—
Total commitments	$	9,176	$	7,823	$	5	$	—	$	1,348


			Payments Due By Period
	Total at		To		1 – 3		4 – 5		After 5
(Dollars in thousands)	June 30, 2021		1 Year		Years		Years		Years
Certificates of deposit	$	69,766	$	56,017	$	11,535	$	2,214	$	—
FHLB advances		10,000		—		—		3,000		7,000
Total long-term debt		79,766		56,017		11,535		5,214		7,000
Operating lease obligations		—		—		—		—		—
Total contractual obligations	$	79,766	$	56,017	$	11,535	$	5,214	$	7,000