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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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” or an “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of ~~August 10,~~November 8, 2022, there were ~~2,240,967~~2,238,902 outstanding shares of the issuer’s common stock.

Unaudited Consolidated Statements of Financial Condition as of ~~June~~September 30, 2022 and December 31, 2021 (Dollars in thousands, except share and per share data)

	At June 30,			At December 31,
	2022			2021			At September 30, 2022			At December 31, 2021
Assets
Cash and due from banks	$	4,966		$	3,635		$	4,141		$	3,635
Non interest-earning deposits with banks		487			2,858			1,749			2,858
Interest-earning deposits with banks		30,318			112,880			16,873			112,880
Federal funds sold		1,314			1,415			4,326			1,415
Cash and cash equivalents		37,085			120,788			27,089			120,788
Investment securities available-for-sale, at fair value		65,663			44,512			55,952			44,512
Investment securities held-to-maturity, at amortized cost		30,220			—			29,908			—
Equity securities		500			500			500			500
Loans held-for-sale, at fair value		18,864			40,480			15,624			40,480
Loans receivable, net of allowance for loan losses of $2,990 at June 30, 2022 and $2,368 at December 31, 2021		388,348			325,203
Loans receivable, net of allowance for loan losses of $3,389 at September 30, 2022 and $2,368 at December 31, 2021								444,379			325,203
Bank-owned life insurance		10,487			6,557			10,197			6,557
Restricted investment in bank stock		1,844			2,008			2,160			2,008
Premises and equipment, net		2,911			3,160			2,757			3,160
Operating lease right-of-use assets		8,257			8,669			8,049			8,669
Accrued interest receivable		1,651			1,340			1,993			1,340
Mortgage banking derivatives		999			1,458			1,014			1,458
Mortgage servicing rights		164			3,382			186			3,382
Other assets		3,654			2,067			3,446			2,067
Total Assets	$	570,647		$	560,124		$	603,254		$	560,124
Liabilities and Shareholders' Equity
Liabilities
Deposits	$	481,510		$	463,989		$	504,087		$	463,989
Advances from the Federal Home Loan Bank		26,511			26,431			36,552			26,431
Advances from the Federal Reserve's Paycheck Protection Program liquidity facility ("PPPLF")		—			3,119			—			3,119
Subordinated debt		9,996			9,996			9,997			9,996
Operating lease liabilities		8,640			9,030			8,438			9,030
Advances from borrowers for taxes and insurance		442			439			324			439
Other liabilities		2,330			4,484			2,446			4,484
Total Liabilities		529,429			517,488			561,844			517,488

Shareholders’ Equity
Preferred Stock, $0.01 par value, 2,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021		—			—
Common Stock, $0.01 par value, 20,000,000 shares authorized; 2,354,025 and 2,272,625 shares issued as of June 30, 2022 and December 31, 2021, respectively; 2,241,885 and 2,170,397 shares outstanding as of June 30, 2022 and December 31, 2021, respectively		23			23
Treasury Stock, at cost (112,140 shares at June 30, 2022 and 102,228 December 31, 2021)		(1,695	)		(1,483	)
Preferred Stock, $0.01 par value, 2,000,000 shares authorized; no shares issued and outstanding as of September 30, 2022 and December 31, 2021								—			—
Common Stock, $0.01 par value, 20,000,000 shares authorized; 2,354,025 and 2,272,625 shares issued as of September 30, 2022 and December 31, 2021, respectively; 2,239,053 and 2,170,397 shares outstanding as of September 30, 2022 and December 31, 2021, respectively								23			23
Treasury Stock, at cost (114,972 shares at September 30, 2022 and 102,228 December 31, 2021)								(1,756	)		(1,483	)
Additional paid-in capital		21,480			21,324			21,623			21,324
Retained earnings		26,034			24,793			26,739			24,793
Accumulated other comprehensive loss		(2,781	)		(148	)		(3,376	)		(148	)
Unearned Employee Stock Option Plan		(1,843	)		(1,873	)		(1,843	)		(1,873	)
Total Shareholders' Equity		41,218			42,636			41,410			42,636
Total Liabilities and Shareholders' Equity	$	570,647		$	560,124		$	603,254		$	560,124

Unaudited Consolidated Statements of Income for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021 (Dollars in thousands, except per share data)

		For the Three Months Ended June 30,						For the Six Months Ended June 30,							For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2022			2021			2022			2021				2022			2021			2022			2021
Interest Income
Interest and fees on loans		$	4,287		$	3,851		$	8,122		$	7,416			$	5,524		$	4,319		$	13,646		$	11,735
Interest and dividends on investments:
Taxable			425			147			624			274				458			147			1,082			421
Nontaxable			27			19			53			34				28			21			81			55
Interest on mortgage-backed securities and collateralized mortgage obligations			65			26			116			57				71			38			187			95
Interest on interest-earning deposits and federal funds sold			130			35			188			100				140			34			328			134
Total Interest Income			4,934			4,078			9,103			7,881				6,221			4,559			15,324			12,440
Interest Expense
Interest on deposits			331			378			654			784				621			350			1,275			1,134
Interest on advances from the Federal Home Loan Bank			99			99			196			196				130			99			326			295
Interest on advances from the Federal Reserve PPPLF			—			26			1			59				—			10			1			69
Interest on subordinated debt			112			43			225			43				113			114			338			157
Total Interest Expense			542			546			1,076			1,082				864			573			1,940			1,655
Net interest income			4,392			3,532			8,027			6,799				5,357			3,986			13,384			10,785
Provision for Loan Losses			638			267			751			415				608			229			1,359			644
Net interest income after provision for loan losses			3,754			3,265			7,276			6,384				4,749			3,757			12,025			10,141
Non-Interest Income
Fees for customer services			207			60			409			171				212			135			621			306
Increase in cash surrender value of bank-owned life insurance			66			37			102			74				70			37			172			111
Gain on sale of loans, net			1,733			3,243			4,090			8,135				1,467			3,035			5,557			11,170
(Loss) gain from derivative instruments, net			(338	)		713			(390	)		477
Gain on sale of mortgage servicing rights, net			—			—			1,029			—
Gain on sale of available-for-sale securities, net																16			96			16			96
Gain (loss) from derivative instruments, net																13			(422	)		(377	)		55
(Loss) gain on sale of mortgage servicing rights, net																(57	)		—			972			—
Change in fair value of loans held-for-sale			238			(355	)		(482	)		(1,064	)			(130	)		438			(612	)		(626	)
Other			278			164			569			172				89			—			658			172
Total Non-Interest Income			2,184			3,862			5,327			7,965				1,680			3,319			7,007			11,284
Non-Interest Expense
Salaries and employee benefits			3,132			3,190			6,873			6,700				3,535			3,527			10,408			10,227
Occupancy			595			554			1,182			1,077				556			588			1,738			1,665
Federal deposit insurance premiums			70			133			198			356				129			60			327			416
Data processing related operations			321			316			670			719				319			358			989			1,077
Professional fees			256			255			577			507				344			262			921			769
Other expenses			742			853			1,550			1,374				710			802			2,260			2,176
Total Non-Interest Expense			5,116			5,301			11,050			10,733				5,593			5,597			16,643			16,330
Income before income taxes			822			1,826			1,553			3,616				836			1,479			2,389			5,095
Income Tax Expense			182			544			312			1,032				131			362			443			1,394
Net Income		$	640		$	1,282		$	1,241		$	2,584			$	705		$	1,117		$	1,946		$	3,701
Net Income per share:
Basic		$	0.33		$	0.65		$	0.63		$	1.30			$	0.35		$	0.56		$	0.98		$	1.86
Diluted		$	0.31		$	0.63		$	0.60		$	1.27			$	0.34		$	0.54		$	0.94		$	1.82
See Notes to the Unaudited Consolidated Financial Statements	See Notes to the Unaudited Consolidated Financial Statements													See Notes to the Unaudited Consolidated Financial Statements

Unaudited Consolidated Statements of Comprehensive Income (Loss) ~~Income~~ for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 (Dollars in thousands)

For the Three Months Ended
June 30,

For the Six Months Ended
June 30,

2022

2021

2022

2021

Comprehensive (Loss) Income, Net of Taxes

Net Income

$
640

$
1,282

$
1,241

$
2,584

Other comprehensive (loss) income, net of tax:

Unrealized (loss) gain on available-for-sale securities (pre-tax ($1,189) and $283 and ($3,944) and ($46), respectively)

(917
)

199

(2,711
)

(33
)
Accretion of discount on securities transferred to held-to- maturity

78

—

78

—

Other comprehensive (loss) income

(839
)

199

(2,633
)

(33
)

Comprehensive (Loss) Income

$
(199
)

$
1,481

$
(1,392
)

$
2,551

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Comprehensive Income (Loss), Net of Taxes
Net Income	$	705		$	1,117		$	1,946		$	3,701
Other comprehensive loss, net of tax:
Unrealized loss on available-for-sale securities (pre-tax ($827) and ($162) and ($4,562) and ($208), respectively)		(825	)		(114	)		(3,536	)		(147	)
Accretion of discount on securities transferred to held-to- maturity		241			—			319			—
Reclassification for gains included in income (pre-tax ($16) and ($96) and ($16) and ($96), respectively) (1)		(11	)		(68	)		(11	)		(68	)
Other comprehensive loss		(595	)		(182	)		(3,228	)		(215	)

Comprehensive Income (Loss)	$	110		$	935		$	(1,282	)	$	3,486

Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021 (Dollars in thousands, except ~~per~~ share data)

	Common Stock Shares			Common Stock Amount		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income			Unearned ESOP Shares			Total			Common Stock Shares			Common Stock Amount		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Losse			Unearned ESOP Shares			Total
Balance, April 1, 2022		2,164,899		$	23	$	(1,630	)	$	21,420	$	25,394	$	(1,942	)	$	(1,843	)	$	41,422
Balance, July 1, 2022																							2,241,885		$	23	$	(1,695	)	$	21,480	$	26,034	$	(2,781	)	$	(1,843	)	$	41,218
Treasury stock purchased		(3,014	)		—		(65	)		—		—		—			—			(65	)		(2,832	)		—		(61	)		—		—		—			—			(61	)
Stock option expense		—			—		—			14		—		—			—			14			—			—		—			33		—		—			—			33
Restricted stock expense		—			—		—			46		—		—			—			46			—			—		—			110		—		—			—			110
Net income		—			—		—			—		640		—			—			640			—			—		—			—		705		—			—			705
Other comprehensive loss		—			—		—			—		—		(839	)		—			(839	)		—			—		—			—		—		(595	)		—			(595	)
Restricted stock awards		80,000			—		—			—		—		—			—			—
Balance, June 30, 2022		2,241,885		$	23	$	(1,695	)	$	21,480	$	26,034	$	(2,781	)	$	(1,843	)	$	41,218
Balance, September 30, 2022																							2,239,053		$	23	$	(1,756	)	$	21,623	$	26,739	$	(3,376	)	$	(1,843	)	$	41,410

	Common Stock Shares			Common Stock Amount		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Unearned ESOP Shares			Total				Common Stock Shares			Common Stock Amount		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income			Unearned ESOP Shares			Total
Balance, April 1, 2021		2,175,548		$	23	$	(1,355	)	$	21,100	$	22,043	$	6	$	(1,965	)	$	39,852
Balance, July 1, 2021																							2,175,874		$	23	$	(1,359	)	$	21,178	$	23,325	$	205		$	(1,935	)	$	41,437
ESOP shares committed to be released		—			—		—			11		—		—		30			41				—			—		—			13		—		—			31			44
Treasury stock purchased		(174	)		—		(4	)		—		—		—		—			(4	)			(344	)		—		(7	)		—		—		—			—			(7	)
Stock option exercise		500			—		—			7		—		—		—			7
Stock option expense		—			—		—			15		—		—		—			15				—			—		—			15		—		—			—			15
Restricted stock expense		—			—		—			45		—		—		—			45				—			—		—			45		—		—			—			45
Net income		—			—		—			—		1,282		—		—			1,282				—			—		—			—		1,117		—			—			1,117
Other comprehensive loss		—			—		—			—		—		199		—			199				—			—		—			—		—		(182	)		—			(182	)
Balance, June 30, 2021		2,175,874		$	23	$	(1,359	)	$	21,178	$	23,325	$	205	$	(1,935	)	$	41,437
Balance, September 30, 2021																							2,175,530		$	23	$	(1,366	)	$	21,251	$	24,442	$	23		$	(1,904	)	$	42,469

See Notes to the Unaudited Consolidated Financial Statements																					See Notes to the Unaudited Consolidated Financial Statements

Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (Dollars in thousands, except share data)


	Common Stock Shares			Common Stock Amount		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Unearned ESOP Shares			Total			Common Stock Shares			Common Stock Amount		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Unearned ESOP Shares			Total
Balance, January 1, 2022		2,170,397		$	23	$	(1,483	)	$	21,324	$	24,793	$	(148	)	$	(1,873	)	$	42,636			2,170,397		$	23	$	(1,483	)	$	21,324	$	24,793	$	(148	)	$	(1,873	)	$	42,636
ESOP shares committed to be released		—			—		—			16		—		—			30			46			—			—		—			16		—		—			30			46
Treasury stock purchased		(9,912	)		—		(212	)		—		—		—			—			(212	)		(12,744	)		—		(273	)		—		—		—			—			(273	)
Stock option exercise		1,400			—		—			21		—		—			—			21			1,400			—		—			21		—		—			—			21
Stock option expense		—			—		—			28		—		—			—			28			—			—		—			61		—		—			—			61
Restricted stock expense		—			—		—			91		—		—			—			91			—			—		—			201		—		—			—			201
Net income		—			—		—			—		1,241		—			—			1,241			—			—		—			—		1,946		—			—			1,946
Other comprehensive loss		—			—		—			—		—		(2,633	)		—			(2,633	)		—			—		—			—		—		(3,228	)		—			(3,228	)
Restricted stock awards		80,000			—		—					—		—			—			—			80,000			—		—					—		—			—			—
Balance, June 30, 2022		2,241,885		$	23	$	(1,695	)	$	21,480	$	26,034	$	(2,781	)	$	(1,843	)	$	41,218
Balance, September 30, 2022																							2,239,053		$	23	$	(1,756	)	$	21,623	$	26,739	$	(3,376	)	$	(1,843	)	$	41,410


	Common Stock Shares			Common Stock Amount		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income			Unearned ESOP Shares			Total			Common Stock Shares			Common Stock Amount		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income			Unearned ESOP Shares			Total
Balance, January 1, 2021		2,189,408		$	23	$	(1,092	)	$	21,011	$	20,741	$	238		$	(1,994	)	$	38,927			2,189,408		$	23	$	(1,092	)	$	21,011	$	20,741	$	238		$	(1,994	)	$	38,927
ESOP shares committed to be released		—			—		—			18		—		—			59			77			—			—		—			31		—		—			90			121
Treasury stock purchased		(15,434	)		—		(267	)		—		—		—			—			(267	)		(15,778	)		—		(274	)		—		—		—			—			(274	)
Stock option exercise		1,900			—		—			28		—		—			—			28			1,900			—		—			28		—		—			—			28
Stock option expense		—			—		—			30		—		—			—			30			—			—		—			45		—		—			—			45
Restricted stock expense		—			—		—			91		—		—			—			91			—			—		—			136		—		—			—			136
Net income		—			—		—			—		2,584		—			—			2,584			—			—		—			—		3,701		—			—			3,701
Other comprehensive loss		—			—		—			—		—		(33	)		—			(33	)		—			—		—			—		—		(215	)		—			(215	)
Balance, June 30, 2021		2,175,874		$	23	$	(1,359	)	$	21,178	$	23,325	$	205		$	(1,935	)	$	41,437
Balance, September 30, 2021																							2,175,530		$	23	$	(1,366	)	$	21,251	$	24,442	$	23		$	(1,904	)	$	42,469

Six Months Ended June 30,		2022			2021
Nine Months Ended September 30,									2022			2021
Cash Flows from Operating Activities
Net income		$	1,241		$	2,584			$	1,946		$	3,701
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			359			320				520			508
Accretion of net deferred loan fees			(631	)		(1,116	)			(935	)		(2,031	)
Amortization of net securities premiums			111			38				171			67
Amortization of operating lease right-of-use assets			412			421				620			639
Amortization of Federal Home Loan Bank premium			80			80
Amortization of advances from Federal Home Loan Bank premium										121			121
Loss (gain) from derivative instruments, net			390			(477	)			377			(55	)
Provision for loan losses			751			415				1,359			644
Deferred income taxes			(229	)		(230	)			(415	)		(309	)
Earnings on bank-owned life insurance			(102	)		(74	)			(172	)		(111	)
Gain on sale of available-for-sale securities										(16	)		(96	)
Gain on settlement of bank-owned life insurance			(209	)		—				(352	)		—
Gain on sale of mortgage servicing rights, net			(1,029	)		—				(972	)		—
Stock based compensation expense			119			121				262			181
ESOP compensation expense			46			77				46			121
Loans held for sale:
Originations, net of prepayments			(150,318	)		(332,807	)			(321,680	)		(479,224	)
Proceeds from sales			175,542			354,038				351,481			504,724
Gain on sales			(4,090	)		(8,135	)			(5,557	)		(11,170	)
Change in fair value of loans held for sale			482			1,064				612			626
Changes in assets and liabilities which provided by (used in) cash:
Accrued interest receivable			(311	)		(13	)			(653	)		34
Other assets			3,991			(1,665	)			3,583			(2,263	)
Other liabilities			(2,473	)		(1,906	)			(1,592	)		(2,699	)
Net cash provided by operating activities			24,132			12,735				28,754			13,408
Cash Flows from Investing Activities
Net increase in loans receivable			(63,265	)		(21,015	)			(119,600	)		1,763
Activity in available-for-sale securities:
Proceeds from sales										9,982			2,668
Maturities and repayments			5,168			3,974				5,510			5,102
Purchases			(60,385	)		(14,274	)			(61,885	)		(23,867	)
Activity in held-to-maturity securities:
Maturities and repayments										312			—
Proceeds from settlement of bank-owned life insurance			881			—				1,384			—
Purchase of bank-owned life insurance			(4,500	)		—				(4,500	)		—
Purchases of restricted investment in bank stock			(510	)		(523	)			(1,527	)		(891	)
Redemption of restricted investment in bank stock			674			397				1,375			690
Purchases of premises and equipment			(110	)		(805	)			(116	)		(990	)
Net cash used in investing activities			(122,047	)		(32,246	)			(169,065	)		(15,525	)
Cash Flows from Financing Activities
Net increase (decrease) increase in deposits			17,521			(293,396	)
Net increase (decrease) in advances from borrowers for taxes and insurance			3			(808	)
Net increase (decrease) in deposits										40,098			(290,938	)
Net decrease in advances from borrowers for taxes and insurance										(115	)		(1,714	)
Net proceeds from issuance of subordinated debt			—			9,996				—			9,997
Net increase in short-term borrowing from Federal Home Loan Bank										10,000			—
Repayment of borrowings from the FRB PPPLF			(3,119	)		(31,114	)			(3,119	)		(44,889	)
Proceeds from stock option exercise			21			28				21			28
Purchase of treasury stock			(212	)		(267	)			(273	)		(274	)
Net cash provided by (used in) financing activities			14,214			(315,561	)			46,612			(327,790	)
Decrease in Cash and Cash Equivalents			(83,701	)		(335,072	)			(93,699	)		(329,907	)
Cash and Cash Equivalents, beginning of year			120,788			414,590				120,788			414,590
Cash and Cash Equivalents, end of year		$	37,087		$	79,518			$	27,089		$	84,683
Supplementary Disclosure of Cash Flow Information
Cash paid during the year of interest		$	560		$	1,128			$	1,946		$	1,749
Cash paid during the year for income taxes		$	1,387		$	2,438			$	1,387		$	2,708
Recognition of operating lease right-of-use assets		$	—		$	1,864			$	—		$	1,864
Recognition of operating lease obligations		$	—		$	1,864			$	—		$	1,864
Transfer of securities from available-to-sale to held-to-maturity		$	30,220		$	—			$	30,220		$	—
See Notes to Unaudited Consolidated Financial Statements	See Notes to Unaudited Consolidated Financial Statements							See Notes to Unaudited Consolidated Financial Statements

HV Bancorp, Inc., a Pennsylvania Corporation (the “Company”), is the holding company of Huntingdon Valley Bank (the “Bank”) and was formed in connection with the conversion of the Bank from the mutual to the stock form of organization. On January 11, 2017, the mutual to stock conversion of the Bank was completed and the Company became the parent holding company for the Bank. Shares of the Company began trading on the Nasdaq Capital Market on January 12, 2017. The Company is subject to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve Bank”).

The Bank is a stock savings bank organized under the laws of the Commonwealth of Pennsylvania and is subject to comprehensive regulation and examination by the Federal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking and Securities (“PADOBs”). The Bank was organized in 1871, and currently provides residential and commercial loans to its general service area (Montgomery, Bucks and Philadelphia Counties of Pennsylvania, Burlington County, New Jersey and New Castle County, Delaware) as well as offering a wide variety of savings, checking and certificate of deposit accounts to its retail and business customers. In November 2020, the Bank formed a wholly-owned subsidiary, HVB Investment Management Inc., under the laws of the state of Delaware, as an investment company subsidiary to hold and manage certain investments. HVB Investment Management Inc., became operational in January 2021.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim information and with the instructions to the Quarterly Report on Form 10-Q, as applicable to a smaller reporting company. Accordingly, they do not include all the information and footnotes required by US GAAP for complete financial statements.

The financial statements are unaudited; but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation thereof. The balances as of December 31, 2021 have been derived from the audited consolidated financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto contained in the Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission on March 28, 2022. The results of operations for the ~~six~~nine months ended ~~June~~September 30, 2022 are not necessarily indicative of the results that may be expected for the year-ending December 31, 2022.

The Company has evaluated subsequent events through the date of issuance of the financial statements included herein. See Footnote 15, Subsequent Events for further discussion.

The unaudited interim consolidated financial statements include accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany transactions and balances have been eliminated in consolidation.

In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Statement of Financial Condition and reported amounts of revenues and expenses during the reporting

period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, other-than-temporary impairments of securities (“OTTI”), interest rate lock commitments (“IRLCs”), mandatory sales commitments, the valuation of mortgage loans held-for-sale and the valuation of deferred tax assets.

In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (“CECL”) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument.

The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same as the expected loss model described above.

Further, the ASU made certain targeted amendments to the existing impairment model for available-for-sale (“AFS”) debt securities. For an AFS debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis. ~~ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018.~~ With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ~~Since the Company currently meets the SEC definition of a smaller reporting company, the delay will be applicable to the Company.~~ In anticipation of the ASU, the Company has entered into a contract with a third party, compiled data for the modeling and is working on developing an estimate using historically and qualitative data based on the requirements of ASU 2016-13. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Derivatives, and Hedging (Topic 815); and Financial Instruments (Topic 825), which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. ASU 2019-04 makes clarifying amendments to certain financial instrument standards. For entities that have not yet adopted ASU 2016-13, the effective dates for the amendments related to ASU 2016-13 are the same as the effective dates in ASU 2016-13. For entities that have ~~adopted ASU 2016-13, the amendments related to ASU 2016-13 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For entities that have~~ not yet adopted ASU 2017-12 as of April 25, 2019, the effective dates for the amendments to Topic 815 are the same as the effective dates in ASU 2017-12. ~~For entities that have adopted ASU 2017-12 as of April 25, 2019, the effective date is as of the beginning of the first annual period beginning~~

~~after April 25, 2019. The amendments related to ASU 2016-13 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.~~ The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326), which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard

and eligible for applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted the credit losses standard, the ASU is effective when they implement the credit losses standard. ~~For entities that already have adopted the credit losses standard, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.~~ The Company qualifies as a smaller reporting company and have not adopted ASU 2016-13.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. For entities that have not yet adopted ASU 2016-13 as of November 26, 2019, the effective dates for ASU 2019-11 are the same as the effective dates and transition requirements in ASU 2016-13. ~~For entities that have adopted ASU 2016-13, ASU 2019-11 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.~~ The Company qualifies as a smaller reporting company and have not adopted ASU 2016-13.

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Other amendments are effective upon issuance of this ASU. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s consolidated financial statements

In January 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 2022. The Company ~~is currently evaluating the new rate index replacement and the~~ anticipates that adoption of the ASU will not have a material impact on the Company’s consolidated financial statements.

~~In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments.~~ This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU

~~clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825,~~ ~~Financial Instruments~~, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Other amendments are effective upon issuance of this ASU. ~~The Company is currently evaluating the impact the adoption of the standard will have on the Company’s consolidated financial statements.~~

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which provides optional temporary guidance for entities transitioning away from the London Interbank Offered Rate (LIBOR) and other interbank offered rates (IBORs) to new references rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions within Topic 848. ASU 2021-01 clarifies that the derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848. ASU 2021-01 is effective immediately for all entities. Entities may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The amendments in this update do not apply to contract modifications made, as well as new hedging relationships entered into, after December 31, 2022, and to existing hedging relationships evaluated for effectiveness for periods after December 31, 2022, except for certain hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship. The Company ~~is currently evaluating the impact the~~ anticipates that adoption of the ~~standard~~ASU will not have a material impact on the Company’s consolidated financial ~~statements.~~statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross write-offs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. The Company is currently evaluating the impact of the ASU on the Company's consolidated financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842), which amends ASC 842 so that lessors are no longer required to recognize a selling loss upon commencement of a lease with variable lease payments that, prior to the amendments, would have been classified as a sales-type or direct financing lease. Furthermore, a lessor must classify as an operating lease any lease that would otherwise be classified as a sales-type or direct financing lease and that would result in the recognition of a selling loss at lease commencement, provided that the lease includes variable lease payments that do not depend on an index or rate. For public business entities and certain not-for-profit entities and employee benefit plans that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within those fiscal years. For all other entities that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022. All entities that have adopted ASC 842 are permitted to early adopt the amendments in ASU 2021-05. The amendments in ASU 2021-05 are effective as of the same date as the guidance in ASC 842 for entities that have not adopted ASC 842. The Company adopted the accounting standard on January 1, 2022 and it did not have a material impact on the Company’s consolidated financial statements.

	June 30, 2022									September 30, 2022
			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized					Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value
U.S. Governmental securities	$	2,510	$	—	$	(59	)	$	2,451	$	3,010	$	—	$	(116	)	$	2,894
U.S. Treasury securities		49,621		7		(476	)		49,152		39,817		—		(1,260	)		38,557
Corporate notes		11,660		11		(411	)		11,260		12,561		—		(685	)		11,876
Collateralized mortgage obligations - agency residential		1,973		—		(19	)		1,954		1,893		—		(49	)		1,844
Mortgage-backed securities - agency residential		622		—		(25	)		597		581		—		(47	)		534
Bank CDs		249		—		—			249		249		—		(2	)		247
	$	66,635	$	18	$	(990	)	$	65,663	$	58,111	$	—	$	(2,159	)	$	55,952

Investment securities held-to-maturity ~~at June 30, 2022~~ was comprised of the following:

	June 30, 2022									September 30, 2022
			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized					Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value
U.S. Governmental securities	$	2,259	$	—	$	(16	)	$	2,243	$	2,210	$	—	$	(119	)	$	2,091
Corporate notes		7,599		—		(199	)		7,400		7,750		—		(617	)		7,133
Collateralized mortgage obligations - agency residential		7,651		1		(95	)		7,557		7,392		—		(436	)		6,956
Mortgage-backed securities - agency residential		7,037		—		(99	)		6,938		6,843		—		(514	)		6,329
Municipal securities		5,674		—		(124	)		5,550		5,713		—		(516	)		5,197
	$	30,220	$	1	$	(533	)	$	29,688	$	29,908	$	—	$	(2,202	)	$	27,706

In June 2022, the Company transferred approximately $30.8 million at amortized cost of available-for-sale securities to the held-to maturity category. At ~~June~~September 30, 2022, there was ~~$3.0~~$2.2 million in unrealized losses associated with those securities that were transferred from ~~available for sale~~available-for-sale to held-to-maturity.

The scheduled maturities of securities at ~~June~~September 30, 2022 were as follows:

	June 30, 2022								September 30, 2022
	Available-for-Sale				Held-to-Maturity				Available-for-Sale				Held-to-Maturity
	Amortized				Amortized				Amortized				Amortized
(Dollars in thousands)	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	1,749	$	1,744	$	—	$	—	$	1,749	$	1,736	$	—	$	—
Due from one to five years		56,186		55,547		4,666		4,540		46,876		45,330		5,252		4,809
Due from after five to ten years		7,302		6,994		8,152		8,007		8,182		7,641		8,820		8,163
Due after ten years		1,398		1,378		17,402		17,141		1,304		1,245		15,836		14,734
	$	66,635	$	65,663	$	30,220	$	29,688	$	58,111	$	55,952	$	29,908	$	27,706

Securities with a fair value of ~~$53.8~~$43.1 million and $5.6 million at ~~June~~September 30, 2022, and December 31, 2021, respectively, were pledged to secure public deposits, increase our maximum borrowing capacity with the ~~FHLB~~Federal Home Loan Bank (“FHLB”) and for other purposes as required by law. During the quarter ended ~~June~~September 30, 2022, the Company pledged ~~$49.2~~$38.6 million of U.S. ~~treasury~~Treasury securities to the FHLB to increase our maximum borrowing capacity.

There were ~~0 sales~~$10.0 million in proceeds from the sale of available-for-sale securities for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and there were $16,000 in gross realized gains for the three and nine months ended September 30, 2022.

There were $2.7 million in proceeds from the sale of available-for-sale securities for the three and nine months ended September 30, 2021 and there were $96,000 in gross realized gains for the three and nine months ended September 30, 2021.

The following tables summarize the unrealized loss positions of securities available-for-sale and held-to-maturity as of ~~June~~September 30, 2022 and December 31, 2021:

	June 30, 2022															September 30, 2022
	Less than 12 Months					12 Months or Longer					Total					Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized			Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Loss			Value		Loss			Value		Loss			Value		Loss			Value		Loss			Value		Loss
Available-for-sale:
U.S. Governmental securities	$	2,451	$	(59	)	$	—	$	—		$	2,451	$	(59	)	$	2,894	$	(116	)	$	—	$	—		$	2,894	$	(116	)
U.S. Treasury securities		39,314		(476	)		—		—			39,314		(476	)		38,557		(1,260	)		—		—			38,557		(1,260	)
Corporate notes		9,850		(411	)		—		—			9,850		(411	)		11,876		(685	)		—		—			11,876		(685	)
Collateralized mortgage obligations		1,954		(19	)		—		—			1,954		(19	)		1,524		(47	)		320		(2	)		1,844		(49	)
Mortgage-backed securities		597		(25	)		—		—			597		(25	)		534		(47	)		—		—			534		(47	)
	$	54,166	$	(990	)	$	—	$	—		$	54,166	$	(990	)		247		(2	)		—		—			247		(2	)
																$	55,632	$	(2,157	)	$	320	$	(2	)	$	55,952	$	(2,159	)
Held-to-Maturity:
U.S. Governmental securities	$	420	$	(3	)	$	1,823	$	(13	)	$	2,243	$	(16	)	$	—	$	—		$	2,091	$	(119	)	$	2,091	$	(119	)
Corporate notes		5,714		(164	)		1,686		(35	)		7,400		(199	)		3,070		(196	)		4,063		(421	)		7,133		(617	)
Collateralized mortgage obligations		7,060		(95	)		—		—			7,060		(95	)		4,033		(262	)		2,442		(174	)		6,475		(436	)
Mortgage-backed securities		3,582		(56	)		3,356		(43	)		6,938		(99	)		1,851		(142	)		4,478		(372	)		6,329		(514	)
Municipal securities		3,983		(71	)		1,567		(53	)		5,550		(124	)		1,724		(172	)		3,473		(344	)		5,197		(516	)
	$	20,759	$	(389	)	$	8,432	$	(144	)	$	29,191	$	(533	)	$	10,678	$	(772	)	$	16,547	$	(1,430	)	$	27,225	$	(2,202	)

At ~~June~~September 30, 2022 and December 31, 2021, the investment portfolio included 7eight and four U.S. ~~Government and Agency~~Governmental securities with total fair values of ~~$4.7~~$5.0 million and $3.5 million, respectively. As of ~~June~~September 30, 2022 and December 31, 2021, there were 7eight and 4four securities in an unrealized loss position. The U.S ~~Government~~Governmental securities are zero risk weighted for capital purposes and are guaranteed for repayment of principal and interest. As of ~~June~~September 30, 2022 and December 31, 2021, management found no evidence of other-than-temporary impairment (“OTTI”) on any of the U.S. Governmental ~~and Agency~~ securities in an unrealized loss position held in the investment securities portfolio. The Company has the ability to hold to maturity and more likely than not, will not be required to sell the securities before a recovery of the cost has occurred.

At ~~June~~September 30, 2022, the investment portfolio included 10eight U.S. Treasury securities with total fair values of ~~$49.2~~$38.6 million. As of ~~June~~September 30, 2022, 8eight securities were in an unrealized loss position. The U.S Treasury securities are zero risk weighted for capital purposes. As of ~~June~~September 30, 2022, management found no evidence of OTTI on any of the U.S. Treasury securities in an unrealized loss position held in the investment securities portfolio. The Company has the ability to hold to maturity and more likely than not, will not be required to sell the securities before a recovery of the cost has occurred.

At ~~June~~September 30, 2022 and December 31, 2021, the investment portfolio included ~~NaN~~thirty and ~~NaN~~twenty-six corporate notes, respectively with total fair values of ~~$18.7~~$19.0 million and $18.9 million. Of these securities,

~~NaN~~ thirty and 15fifteen were in an unrealized loss position as of ~~June~~September 30, 2022 and December 31, 2021, respectively. As of ~~June~~September 30, 2022 and December 31, 2021, management found no evidence of OTTI on any of the corporate notes held in the investment securities portfolio. The Company has the ability to hold to maturity and more likely than not, will not be required to sell the securities before a recovery of the cost has occurred.

At ~~June~~September 30, 2022 and December 31, 2021, the investment portfolio included 18eighteen and 12twelve collateralized mortgage obligations (“CMOs”) with total fair values of ~~$9.5~~$8.8 million and $7.7 million, respectively. Of these securities, 17seventeen and 9nine were in an unrealized loss position as of ~~June~~September 30, 2022 and December 31, 2021, respectively. The CMO portfolio is comprised of 100% agency (FHLMC, FNMA and GNMA) investment grade bonds. As of ~~June~~September 30, 2022 and December 31, 2021, management found no evidence of OTTI on any of the CMOs held in the investment securities portfolio. The Company has the ability to hold to maturity and more likely than not, will not be required to sell the securities before a recovery of the cost has occurred.

At ~~June~~September 30, 2022 and December 31, 2021, the investment portfolio included 14fourteen and 11eleven mortgage backed securities (“MBS”) with a total fair value of ~~$7.5~~$6.9 million and $7.5 million, respectively. As of ~~June~~September 30, 2022 and December 31, 2021, there were 14fourteen and 10ten securities in an unrealized loss position. The MBS portfolio is comprised of 100% agency (FHLMC, FNMA and GNMA) investment grade bonds. As of ~~June~~September 30, 2022 and December 31, 2021, management found no evidence of OTTI on any of the MBS held in the investment securities portfolio. The Company has the

ability to hold to maturity and more likely than not, will not be required to sell the securities before a recovery of the cost has occurred.

At ~~June~~September 30, 2022 and December 31, 2021, the investment portfolio included 12twelve and 11eleven municipal securities for both periods with a total fair value of ~~$5.6~~$5.2 million and $6.4 million, respectively. Of these securities, 12twelve and 6six were in an unrealized loss position as of ~~June~~September 30, 2022 and December 31, 2021. The Company’s municipal portfolio issuers are located in Pennsylvania and at the time of purchase, and as of ~~June~~September 30, 2022 and December 31, 2021, continue to maintain investment grade ratings. As of ~~June~~September 30, 2022 and December 31, 2021, management found no evidence of OTTI on any of the municipal securities held in the investment securities portfolio. The Company has the ability to hold to maturity and more likely than not, will not be required to sell the securities before a recovery of the cost has occurred.

At ~~June~~September 30, 2022 and December 31, 2021, the investment portfolio included Bank Certificates of Deposit (“CDs”) with a total fair value of ~~$249,000~~$247,000 and $507,000, respectively. As of ~~June~~September 30, 2022, the 1one security was in an unrealized loss position. As of December 31, 2021, there were 0no securities in an unrealized loss position. The CDs are fully insured by the FDIC. As of ~~June~~September 30, 2022 and December 31, 2021, management found no evidence of OTTI on any of the CDs held in the investment securities portfolio. The Company has the ability to hold to maturity and more likely than not, will not be required to sell the securities before a recovery of the cost has occurred.

The Company maintains an equity security portfolio that consists of $500,000 at ~~June~~September 30, 2022, and December 31, 2021. As of ~~June~~September 30, 2022 and December 31, 2021 the Company determined that the equity investment did not have a readily determinable fair value measure and is carrying the equity investment at cost, less impairment, adjusted for changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The following table presents the carrying amount of the Company’s equity investment at ~~June~~September 30, 2022, and December 31, 2021:

	June 30, 2022				September 30, 2022
(dollars in thousands)	Year-to-date		Life-to-date		Year-to-date		Life-to-date
Amortized cost	$	500	$	500	$	500	$	500
Impairment		—		—		—		—
Observable price changes		—		—		—		—
Carrying value	$	500	$	500	$	500	$	500

At ~~June~~September 30, 2022 and December 31, 2021, the Company performed a qualitative assessment considering impairment indictors to evaluate whether the investment was impaired and determined the investment was not impaired.

	June 30,			December 31,			September 30,			December 31,
(Dollars in thousands)	2022			2021			2022			2021
Residential:
One-to-four family	$	134,272		$	106,335		$	145,047		$	106,335
Home equity and HELOCs		2,168			3,172			2,213			3,172
Commercial:
Commercial real estate		143,697			116,882			177,501			116,882
Commercial business		50,765			30,164			52,710			30,164
SBA PPP loans		5,451			22,912			1,963			22,912
Main Street Lending Program		1,565			1,605			1,565			1,605
Construction		49,939			42,866			63,140			42,866
Consumer:
Medical education		4,062			4,409			3,749			4,409
Other		95			17			433			17

		392,014			328,362			448,321			328,362

Unearned discounts, origination and commitment fees and costs		(676	)		(791	)		(553	)		(791	)
Allowance for loan losses		(2,990	)		(2,368	)		(3,389	)		(2,368	)

	$	388,348		$	325,203		$	444,379		$	325,203

In November 2017, the Bank entered into a loan purchase agreement with a broker to purchase a portfolio of private education loans made to American citizens attending American Medical Association (“AMA”) approved medical schools in Caribbean Nations. The broker serves as a lender, holder, program designer and developer, administrator, and secondary market for the loan portfolios they generate. At ~~June~~September 30, 2022, the balance of the private education loans was ~~$4.1~~$3.7 million. The private

student loans were made following a proven credit criteria and were underwritten in accordance with the Bank’s policies. At ~~June~~September 30, 2022, there were 4 two loans with a total balance of approximately $~~299,000~~$49,000 past due 90 days or more.

In April 2020, we began accepting and processing applications for loans under the Paycheck Protection Program (“PPP”) implemented by the SBA with support from the Department of Treasury under the enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Company participated in round 1 and 2 of PPP, processing over 800 applications totaling approximately $126.9 million. As of ~~June~~September 30, 2022, the Company had a total outstanding balance of approximately ~~$5.5~~$2.0 million for round 1 and 2 of ~~PPP.~~PPP compared to total outstanding balance of approximately $22.9 million as of December 31, 2021. Through ~~June~~September 2022, the Company received approximately ~~$121.4~~$124.9 million in PPP forgiveness from the SBA and customer pay downs.

Overdraft deposits are reclassified as other consumer and are included in the total loans on the statements of financial condition. Overdrafts were ~~$4,000~~$281,000 and $17,000 at ~~June~~September 30, 2022, and December 31, 2021, respectively. Included in the other consumer at ~~June~~September 30, 2022, was ~~$91,000~~$152,000 related to other consumer loans offered to customers to assist with funeral expenses.

The following tables summarize the activity in the allowance for loan losses by loan class for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021:

Allowance for Loan Losses	For the three months ended June 30, 2022																For the three months ended September 30, 2022
(Dollars in thousands)	Beginning Balance		Charge- offs			Recoveries		(Credit) Provisions			Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairment		Beginning Balance		Charge- offs			Recoveries		(Credit) Provisions			Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairment
Residential:
One-to-four family	$	345	$	—		$	—	$	64		$	409	$	—	$	409	$	409	$	—		$	—	$	30		$	439	$	—	$	439
Home equity and HELOCs		7		—			—		(1	)		6		—		6		6		—			—		—			6		—		6
Commercial:
Commercial real estate		773		—			—		200			973		—		973		973		—			—		248			1,221		—		1,221
Commercial business		437		(75	)		—		329			691		—		691		691					—		(36	)		655		—		655
SBA PPP loans		—		—			—		—			—		—		—		—		—			—					—		—		—
Main Street Lending Program		27		—			—		—			27		—		27		27		—			—					27		—		27
Construction		495		—			—		64			559		—		559		559		—			—		152			711		—		711
Consumer:
Medical education		362		(31	)		12		(19	)		324		—		324		324		(247	)		38		213			328		—		328
Other		—		—			—		1			1		—		1		1		—			—		1			2		—		2
Unallocated		—		—			—		—			—		—		—		—		—			—		—			—		—		—

	$	2,446	$	(106	)	$	12	$	638		$	2,990	$	—	$	2,990	$	2,990	$	(247	)	$	38	$	608		$	3,389	$	—	$	3,389

Allowance for Loan Losses	For the three months ended June 30, 2021															For the three months ended September 30, 2021
(Dollars in thousands)	Beginning Balance		Charge- offs		Recoveries		(Credit) Provisions			Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairment		Beginning Balance		Charge- offs			Recoveries		(Credit) Provisions			Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairment
Residential:
One-to-four family	$	565	$	—	$	—	$	(43	)	$	522	$	—	$	522	$	522	$	—		$	—	$	(42	)	$	480	$	—	$	480
Home equity and HELOCs		13		—		—		(1	)		12		—		12		12		—			—		(2	)		10		—		10
Commercial:
Commercial real estate		557		—		—		134			691		—		691		691		—			—		189			880		—		880
Commercial business		293		—		—		(13	)		280		—		280		280		—			—		13			293		—		293
SBA PPP loans		—		—		—		—			—						—		—			—		—			—
Main Street Lending Program		27		—		—		—			27		—		27		27		—			—		—			27		—		27
Construction		149		—		—		197			346		—		346		346		—			—		36			382		—		382
Consumer:
Medical education		389		—		—		(7	)		382		—		382		382		(38	)		8		35			387		—		387
Other		—		—		—		—			—		—		—		—		—			—		—			—		—		—
Unallocated		—		—		—		—			—		—		—		—		—			—		—			—		—		—


	$	1,993	$	—	$	—	$	267		$	2,260	$	—	$	2,260	$	2,260	$	(38	)	$	8	$	229		$	2,459	$	—	$	2,459

Allowance for Loan Losses	For the six months ended June 30, 2022																For the nine months ended September 30, 2022
(Dollars in thousands)	Beginning Balance		Charge- offs			Recoveries		(Credit) Provisions			Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairments		Beginning Balance		Charge- offs			Recoveries		(Credit) Provisions			Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairments

Residential:					��
One-to-four family	$	322	$	—		$	—	$	87		$	409	$	—	$	409	$	322	$	—		$	—	$	117		$	439	$	—	$	439
Home equity and HELOCs		8		—			—		(2	)		6		—		6		8		—			—		(2	)		6		—		6
Commercial:
Commercial real estate		819		—			—		154			973		—		973		819		—			—		402			1,221		—		1,221
Commercial business		341		(75	)		—		425			691		—		691		341		(75	)		—		389			655		—		655
SBA PPP loans		—		—			—		—			—		—		—		—										—		—		—
Main Street Lending Program		27		—			—		—			27		—		27		27		—			—		—			27		—		27
Construction		460		—			—		99			559		—		559		460		—			—		251			711		—		711
Consumer:
Medical education		391		(67	)		13		(13	)		324		—		324		391		(314	)		51		200			328		—		328
Other		—		—			—		1			1		—		1		—		—			—		2			2		—		2
Unallocated		—		—			—		—			—		—		—		—		—			—		—			—		—		—

	$	2,368	$	(142	)	$	13	$	751		$	2,990	$	—	$	2,990	$	2,368	$	(389	)	$	51	$	1,359		$	3,389	$	—	$	3,389

Allowance for Loan Losses	For the six months ended June 30, 2021																For the nine months ended September 30, 2021
(Dollars in thousands)	Beginning Balance		Charge- offs			Recoveries		(Credit) Provisions			Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairments		Beginning Balance		Charge- offs			Recoveries		(Credit) Provisions			Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairments

Residential:
One-to-four family	$	637	$	—		$	—	$	(115	)	$	522	$	—	$	522	$	637	$	—		$	—	$	(157	)	$	480	$	—	$	480
Home equity and HELOCs		15		—			—		(3	)		12		—		12		15		—			—		(5	)		10		—		10
Commercial:
Commercial real estate		519		—			—		172			691		—		691		519		—			—		361			880		—		880
Commercial business		280		—			—		—			280		—		280		280		—			—		13			293		—		293
SBA PPP loans		—		—			—		—			—		—		—		—		—			—		—			—		—		—
Main Street Lending Program		27		—			—		—			27				27		27		—			—		—			27				27
Construction		74		—			—		272			346		—		346		74		—			—		308			382		—		382
Consumer:
Medical education		367		(172	)		—		187			382		—		382		367		(210	)		8		222			387		—		387
Other		—		—			—		—			—		—		—		—		—			—		—			—		—		—
Unallocated		98		—			—		(98	)		—		—		—		98		—			—		(98	)		—		—		—

	$	2,017	$	(172	)	$	—	$	415		$	2,260	$	—	$	2,260	$	2,017	$	(210	)	$	8	$	644		$	2,459	$	—	$	2,459

The Company maintains a general allowance for loan losses based on evaluating known and inherent risks in the loan portfolio, including management’s continuing analysis of the factors underlying the quality of the loan portfolio. These factors include changes in the size and composition of the loan portfolio, actual loan loss experience, and current and anticipated economic conditions. The reserve is an estimate based upon factors and trends identified by management at the time the financial statements are prepared.

The following tables summarize information with respect to the recorded investment in loans receivable by loan class as of ~~June~~September 30, 2022, and December 31, 2021:

June 30, 2022
September 30, 2022								September 30, 2022
Loans Receivable	Loans Receivable							Loans Receivable
(Dollars in thousands)		Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairment			Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairment
Residential
One-to-four family		$	134,272	$	1,257	$	133,015		$	145,047	$	2,010	$	143,037
Home equity and HELOCs			2,168		—		2,168			2,213		—		2,213
Commercial
Commercial real estate			143,697		118		143,579			177,501		115		177,386
Commercial business			50,765		57		50,708			52,710		48		52,662
SBA PPP loans			5,451		—		5,451			1,963		—		1,963
Main Street Lending Program			1,565		—		1,565			1,565		—		1,565
Construction			49,939		192		49,747			63,140		192		62,948
Consumer:
Medical education			4,062		—		4,062			3,749		—		3,749
Other			95		—		95			433		—		433

		$	392,014	$	1,624	$	390,390		$	448,321	$	2,365	$	445,956

The following table summarizes information about impaired loans by loan portfolio class as of ~~June~~September 30, 2022, and December 31, 2021:

	June 30, 2022						December 31, 2021						September 30, 2022						December 31, 2021
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded
Residential:
One-to-four family	$	1,257	$	1,395	$	—	$	1,064	$	1,223	$	—	$	2,010	$	2,200	$	—	$	1,064	$	1,223	$	—
Home equity and HELOCs		—		—		—		—		—		—		—		—		—		—		—		—
Commercial:
Commercial real estate		118		118		—		181		181		—		115		115		—		181		181		—
Commercial business		57		57		—		71		71		—		48		48		—		71		71		—
SBA PPP loans		—		—		—		—		—		—		—		—		—		—		—		—
Main Street Lending Program		—		—		—		—		—		—		—		—		—		—		—		—
Construction		192		192		—		1,168		1,168		—		192		192		—		1,168		1,168		—
Consumer:
Medical education		—		—		—		—		—		—		—		—		—		—		—		—
		1,624		1,762		—		2,484		2,643		—
Other														—		—		—		—		—		—
														2,365		2,555		—		2,484		2,643		—
With an allowance recorded
Residential:
One-to-four family		—		—		—		—		—		—		—		—		—		—		—		—
Home equity and HELOCs		—		—		—		—		—		—		—		—		—		—		—		—
Commercial:
Commercial real estate		—		—		—		—		—		—		—		—		—		—		—		—
Commercial business		—		—		—		—		—		—		—		—		—		—		—		—
SBA PPP loans		—		—		—		—		—		—		—		—		—		—		—		—
Main Street Lending Program		—		—		—		—		—		—		—		—		—		—		—		—
Consumer:
Medical education		—		—		—		—		—		—		—		—		—		—		—		—
Other														—		—		—		—		—		—
		—		—		—		—		—		—		—		—		—		—		—		—
	$	1,624	$	1,762	$	—	$	2,484	$	2,643	$	—	$	2,365	$	2,555	$	—	$	2,484	$	2,643	$	—

The following table presents additional information regarding the impaired loans for the three months ended ~~June~~September 30, 2022, and ~~June~~September 30, 2021:

	Three Months Ended June 30,								Three Months Ended September 30,
	2022				2021				2022				2021
(Dollars in thousands)	Average Record Investment		Interest Income Recognized		Average Record Investment		Interest Income Recognized		Average Record Investment		Interest Income Recognized		Average Record Investment		Interest Income Recognized
With no related allowance recorded
Residential:
One-to-four family	$	1,179	$	—	$	1,108	$	—	$	1,633	$	—	$	1,019	$	—
Home equity and HELOCs		—		—		—		—		—		—		—		—
Commercial:
Commercial real estate		147		2		926		25		117		2		186		3
Commercial business		61		1		87		1		52		1		80		1
SBA PPP loans		—		—		—		—		—		—		—		—
Main Street Lending Program		—		—		—		—		—		—		—		—
Construction		192		—		—		—		192		—		961		—
Consumer:
Medical education		—		—		—		—		—		—		—		—
		1,579		3		2,121		26		1,994		3		2,246		4
With an allowance recorded
Residential:
One-to-four family		—		—		—		—		—		—		—		—
Home equity and HELOCs		—		—		—		—		—		—		—		—
Commercial:
Commercial real estate		—		—		—		—		—		—		—		—
Commercial business		—		—		—		—		—		—		—		—
SBA PPP loans		—		—		—		—		—		—		—		—
Main Street Lending Program		—		—		—		—		—		—		—		—
Consumer:
Medical education		—		—		—		—		—		—		—		—
		—		—		—		—		—		—		—		—
	$	1,579	$	3	$	2,121	$	26	$	1,994	$	3	$	2,246	$	4

If these loans were performing under the original contractual rate, interest income on such loans would have increased approximately ~~$20,000~~$25,000 and ~~$18,000~~$37,000 for the three months ended ~~June~~September 30, 2022, and 2021, respectively.

The following table presents additional information regarding the impaired loans for the ~~six~~nine months ended ~~June~~September 30, 2022, and September ~~June~~ 30, 2021:

	Six Months Ended June 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
(Dollars in thousands)	Average Record Investment		Interest Income Recognized		Average Record Investment		Interest Income Recognized		Average Record Investment		Interest Income Recognized		Average Record Investment		Interest Income Recognized
With no related allowance recorded
Residential:
One-to-four family	$	1,141	$	—	$	1,049	$	—	$	1,358	$	—	$	971	$	—
Home equity and HELOCs		—		—		—		—		—		—		—		—
Commercial:
Commercial real estate		159		4		718		30		148		6		584		33
Commercial business		64		2		90		2		60		3		87		3
SBA PPP loans		—		—		—		—		—		—		—		—
Main Street Lending Program		—		—		—		—		—		—		—		—
Construction		517		—		—		—		436		—		480		—
Consumer:
Medical education		—		—		—		—		—		—		—		—
Other										—		—		—		—
		1,881		6		1,857		32		2,002		9		2,122		36
With an allowance recorded
Residential:
One-to-four family		—		—		—		—		—		—		—		—
Home equity and HELOCs		—		—		—		—		—		—		—		—
Commercial:
Commercial real estate		—		—		—		—		—		—		—		—
Commercial business		—		—		—		—		—		—		—		—
SBA PPP loans		—		—		—		—		—		—		—		—
Main Street Lending Program		—		—		—		—		—		—		—		—
Consumer:
Medical education		—		—		—		—		—		—		—		—
Other										—		—		—		—
		—		—		—		—	$	2,002	$	9	$	2,122	$	36
	$	1,881	$	6	$	1,857	$	32

If these loans were performing under the original contractual rate, interest income on such loans would

have increased approximately ~~$42,000~~$67,000 and ~~$32,000~~$69,000 for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, respectively.

The following table presents non-accrual loans by classes of the loan portfolio as of ~~June~~September 30, 2022, and December 31, 2021:

	June 30,		December 31,		September 30,		December 31,
(Dollars in thousands)	2022		2021		2022		2021
Residential:
One-to-four family	$	1,257	$	1,064	$	2,010	$	1,064
Home equity and HELOCs		64		68		63		68
Commercial:
Commercial real estate		—		—		—		—
Commercial business		—		95		—		95
SBA PPP loans		—		—		—		—
Main Street Lending Program						—		—
Construction		192		1,168		192		1,168
Consumer:
Medical education		1,087		1,358		880		1,358
Other		—		—		—		—

	$	2,600	$	3,753	$	3,145	$	3,753

Credit quality risk ratings include regulatory classifications of Special Mention, Substandard, Doubtful and Loss. Loans classified as Special Mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of prospects for repayment. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as doubtful have all the weaknesses inherent in loans classified as substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass. Included in the non-performing medical education loans are non-accrual loans that have been brought current through a status change to deferred status. The deferred status generally means the student is in medical residency. Generally, the loan may be restored to accrual status when the obligation is in accordance with the contractual terms for a reasonable period of time, generally ~~six~~nine months.

The following tables summarize the aggregate Pass and criticized categories of Special Mention, Substandard and Doubtful within the Company’s internal risk rating system as of ~~June~~September 30, 2022, and December 31, 2021:

	June 30, 2022										September 30, 2022
			Special										Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total		Pass		Mention		Substandard		Doubtful		Total
Residential:
One-to-four family	$	133,015	$	—	$	1,257	$	—	$	134,272	$	143,037	$	—	$	2,010	$	—	$	145,047
Home equity and HELOCs		2,104		—		64		—		2,168		2,150		—		63		—		2,213
Commercial:
Commercial real estate		142,068		1,511		118		—		143,697		175,888		1,498		115		—		177,501
Commercial business		50,708		—		57		—		50,765		52,662		—		48		—		52,710
SBA PPP Loans		5,451		—		—		—		5,451		1,963		—		—		—		1,963
Main Street Lending Program		1,565		—		—		—		1,565		1,565		—		—		—		1,565
Construction		49,747		—		192		—		49,939		62,948		—		192		—		63,140
Consumer:
Medical education		2,975		—		1,087		—		4,062		2,869		—		880		—		3,749
Other		95		—		—		—		95		433		—		—		—		433
	$	387,728	$	1,511	$	2,775	$	—	$	392,014	$	443,515	$	1,498	$	3,308	$	—	$	448,321

The following tables present the segments of the loan portfolio summarized by aging categories as of ~~June~~September 30, 2022, and December 31, 2021:

	June 30, 2022														September 30, 2022
(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable >90 Days and Accruing		30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable >90 Days and Accruing
Residential:
One-to-four family	$	611	$	459	$	939	$	2,009	$	132,263	$	134,272	$	0	$	671	$	56	$	1,334	$	2,061	$	142,986	$	145,047	$	—
Home equity and HELOCs		—		—		—		—		2,168		2,168		0		—		—		—		—		2,213		2,213		—
Commercial:
Commercial real estate		—		—		—		—		143,697		143,697		0		457		—		—		457		177,044		177,501		—
Commercial business		60		—		—		60		50,705		50,765		0		—		—		—		—		52,710		52,710		—
SBA PPP loans		—		—		—		—		5,451		5,451		0		78		130		—		208		1,755		1,963		—
Main Street Lending Program		—		—		—		—		1,565		1,565		0		—		—		—		—		1,565		1,565		—
Construction		—		—		192		192		49,747		49,939		0		—		—		192		192		62,948		63,140		—
Consumer:
Medical education		294		—		299		593		3,469		4,062		0		342		166		49		557		3,192		3,749		—
Other		—		—		—		—		95		95		0		—		8		—		8		425		433		—

	$	965	$	459	$	1,430	$	2,854	$	389,160	$	392,014	$	0	$	1,548	$	360	$	1,575	$	3,483	$	444,838	$	448,321	$	—

	December 31, 2021														December 31, 2021
(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable >90 Days and Accruing		30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable >90 Days and Accruing
Residential:
One-to-four family	$	1,292	$	137	$	680	$	2,109	$	104,226	$	106,335	$	0	$	1,292	$	137	$	680	$	2,109	$	104,226	$	106,335	$	—
Home equity and HELOCs		—		—		68		68		3,104		3,172		0		—		—		68		68		3,104		3,172		—
Commercial:
Commercial real estate		—		—		—		—		116,882		116,882		0		—		—		—		—		116,882		116,882		—
Commercial business		95		—		—		95		30,069		30,164		0		95		—		—		95		30,069		30,164		—
SBA PPP loans		—		—		—		—		22,912		22,912		0		—		—		—		—		22,912		22,912		—
Main Street Lending Program		—		—		—		—		1,605		1,605		0		—		—		—		—		1,605		1,605		—
Construction		—		—		1,168		1,168		41,698		42,866		0		—		—		1,168		1,168		41,698		42,866		—
Consumer:
Medical education		452		605		39		1,096		3,313		4,409		0		452		605		39		1,096		3,313		4,409		—
Other		—		—		—		—		17		17		0		—		—		—		—		17		17		—

	$	1,839	$	742	$	1,955	$	4,536	$	323,826	$	328,362	$	0	$	1,839	$	742	$	1,955	$	4,536	$	323,826	$	328,362	$	—

The Company may grant a concession or modification for economic or legal reasons related to a borrower's financial condition that it would not otherwise consider resulting in a modified loan that is then identified as a troubled debt restructuring (“TDR”). The Company may modify loans through rate reductions, extensions of maturity, interest only payments, or payment modifications to better match the timing of cash flows due under the modified terms with the cash flows from the borrowers' operations.

Loan modifications are intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. TDRs are considered impaired loans for purposes of calculating the Company's allowance for loan losses. TDRs are restored to accrual status when the obligation is brought current, has performed in accordance with the modified contractual terms for a reasonable period of time, generally ~~six~~nine months, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

The Company may identify loans for potential restructure primarily through direct communication with the borrower and evaluation of the borrower's financial statements, revenue projections, tax returns, and credit reports. Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions and negative trends may result in a payment default in the near future.

As of ~~June~~September 30, 2022, and December 31, 2021, the Company had 2two loans identified as TDRs totaling $~~175,000~~$163,000 and $~~193,000~~,$193,000, respectively. At ~~June~~September 30, 2022, and December 31, 2021, the two TDRs were performing in compliance with their restructured terms and on accrual status. There were 0no modifications to loans classified as TDRs during the three and nine months ended ~~June~~September 30, 2022 and 2021. ~~NaN~~No additional loan commitments were outstanding to these borrowers at ~~June~~September 30, 2022, and December 31, 2021. At ~~June~~September 30, 2022, and December 31, 2021, there was 0no specific reserves related to the TDRs.

The following table details the Company’s TDRs that are on accrual status and non-accrual status at ~~June~~September 30, 2022:

	As of June 30, 2022								As of September 30, 2022
	Number		Accrual		Non-Accrual				Number		Accrual		Non-Accrual
(Dollars in thousands)	Of Loans		Status		Status		Total TDRs		Of Loans		Status		Status		Total TDRs
Commercial real estate		1	$	118	$	—	$	118		1	$	115	$	—	$	115
Commercial business		1		57		—		57		1		48		—		48
Total		2	$	175	$	—	$	175		2	$	163	$	—	$	163

The following table details the Company’s TDRs that are on accrual status and non-accrual status at December 31, 2021:

The carrying amount of residential mortgage loans in the process of foreclosure was ~~$143,000~~$140,000 and $89,000 at ~~June~~September 30, 2022 and December 31, 2021, respectively.

During 2020, the Company began selling residential mortgage loans to a third party, while retaining the rights to service the loans. As of ~~June~~September 30, 2022, the book value of the mortgage servicing rights (“MSRs”) associated with the loan sales totaled ~~$164,000.~~$186,000. These retained servicing rights were recorded as a servicing asset and were initially recorded at fair value and changes to the balance of mortgage servicing rights are recorded in non-interest income on loans in the Company’s consolidated statements of income. Servicing income, which includes late and ancillary fees, was ~~$109,000~~$(55,000) and ~~$337,000~~$282,000 for the three and ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$118,000~~$212,000 and ~~$328,000~~

$548,000 for the three and ~~six~~nine months ended ~~June~~September 30, 2021. During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company had a bulk sale of MSRs with an underlying unpaid principal balance of $360 million in loans to an unrelated party.

For the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, the change in the carrying value of the Company’s MSRs accounted for under the amortization method was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)	2022			2021			2022			2021			2022			2021			2022			2021
Balance at Beginning of Period	$	155		$	2,801		$	3,382		$	2,041		$	164		$	3,104		$	3,382		$	2,041
Servicing Rights retained from loans sold		20			496			155			1,393			32			546			187			1,939
Amortization and other		(11	)		(193	)		(183	)		(330	)		(10	)		(210	)		(193	)		(540	)
Mortgage servicing rights sold		—			—			(3,190	)		—			—			—			(3,190	)		—
Valuation Allowance Provision		—			—			—			—			—			—			—			—
Balance at End of Period	$	164		$	3,104		$	164		$	3,104		$	186		$	3,440		$	186		$	3,440
Fair value, End of Period	$	206		$	3,656		$	206		$	3,656		$	234		$	4,052		$	234		$	4,052

The key data and assumptions used in estimating the fair value of the Company’s MSRs as of ~~June~~September 30, 2022 and December 31, 2021 were as follows:

	June 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
Long run Constant Prepayment Rate	7.67		%	7.67		%	7.67		%	7.67		%
Weighted-Average Life (in years)		27.4			27.4			27.4			27.4
Weighted-Average Note Rate	2.924		%	2.924		%	2.924		%	2.924		%
Weighted-Average Discount Rate		9.00	%		9.00	%		9.00	%		9.00	%

The Company did not have any derivative instruments designated as hedging instruments or subject to master netting and collateral agreements as of ~~June~~September 30, 2022, and December 31, 2021. The following tables summarize the amounts recorded in the Company’s consolidated statements of financial condition for derivatives not designated as hedging instruments as of ~~June~~September 30, 2022, and December 31, 2021 (in thousands):

June 30, 2022
September 30, 2022
Asset Derivatives
	Balance Sheet			Notional		Balance Sheet			Notional
	Presentation	Fair Value		Amount		Presentation	Fair Value		Amount
Interest rate lock commitments	Mortgage banking derivatives	$	990	$	58,618	Mortgage banking derivatives	$	942	$	62,671
Forward loan sales commitments	Mortgage banking derivatives		4		324	Mortgage banking derivatives		2		755
To Be Announced securities ("TBAs")	Mortgage banking derivatives		5		1,250	Mortgage banking derivatives		70		1,750


Liability Derivatives
	Balance Sheet			Notional		Balance Sheet			Notional
	Presentation	Fair Value		Amount		Presentation	Fair Value		Amount
Interest rate lock commitments	Other liabilities	$	1	$	531	Other liabilities	$	3	$	293
Forward loan sales commitments	Other liabilities		1		1,025	Other liabilities		1		533
TBA securities	Other liabilities		—		—	Other liabilities		—		—

The following table summarizes the amounts recorded in the Company’s consolidated statements of income for derivative instruments not designated as hedging instruments for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 (in thousands) :

		Gain/(Loss)							Gain/(Loss)
	Consolidated Statements of Income	Three Months Ended						Consolidated Statements of Income	Three Months Ended
	Presentation	June 30, 2022			June 30, 2021			Presentation	September 30, 2022			September 30, 2021
Interest rate lock commitments	Gain from derivative instruments	$	28		$	172		Loss from derivative instruments	$	(50	)	$	(244	)
Forward loan sales commitments	(Loss) gain from derivative instruments		(10	)		661		Loss from derivative instruments		(2	)		(394	)
TBA securities	(Loss) gain from derivative instruments		(356	)		(120	)	Gain from derivative instruments		65			216
	Total loss (gain) from derivative instruments	$	(338	)	$	713		Total gain (loss) from derivative instruments	$	13		$	(422	)

		Gain/(Loss)							Gain/(Loss)
	Consolidated Statements of Income	Six Months Ended						Consolidated Statements of Income	Nine Months Ended
	Presentation	June 30, 2022			June 30, 2021			Presentation	September 30, 2022			September 30, 2021
Interest rate lock commitments	(Loss) gain from derivative instruments	$	(357	)	$	15		Loss from derivative instruments	$	(407	)	$	(229	)
Forward loan sales commitments	(Loss) gain from derivative instruments		(37	)		484		(Loss) gain from derivative instruments		(39	)		90
TBA securities	Gain (loss) from derivative instruments		4			(22	)	Gain from derivative instruments		69			194
	Total loss (gain) from derivative instruments	$	(390	)	$	477		Total (loss) gain from derivative instruments	$	(377	)	$	55

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. 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. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is determined at a reasonable point within the range that is most representative of fair value under current market conditions. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period-ends, and have not been reevaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.

In accordance with this guidance, the 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 unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity 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 within 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 of the asset or liability.

Level 3 – Valuation is based on unobservable 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.

The following tables provide the fair value for assets required to be measured and reported at fair value on a recurring basis as of ~~June~~September 30, 2022, and December 31, 2021:

	June 30, 2022								September 30, 2022
(Dollars in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Investment securities available-for-sale:
U.S. Governmental securities	$	—	$	2,451	$	—	$	2,451	$	—	$	2,894	$	—	$	2,894
U.S. Treasury securities		49,152		—		—		49,152		38,557		—		—		38,557
Corporate notes		—		11,260		—		11,260		—		11,876		—		11,876
Collateralized mortgage obligations - agency residential		—		1,954		—		1,954		—		1,844		—		1,844
Mortgage-backed securities - agency residential		—		597		—		597		—		534		—		534
Municipal securities		—		—		—		—
Bank CDs		—		249		—		249		—		247		—		247
Loans held for sale		—		18,864		—		18,864		—		15,624		—		15,624
Interest rate lock commitments		—		—		990		990		—		—		942		942
Forward loan sales commitments		—		4		—		4		—		2		—		2
TBA securities		—		5		—		5		—		70		—		70
	$	49,152	$	35,384	$	990	$	85,526	$	38,557	$	33,091	$	942	$	72,590

The following tables provide the fair value for liabilities required to be measured and reported at fair value on a recurring basis as of ~~June~~September 30, 2022, and December 31, 2021:

	June 30, 2022								September 30, 2022
(Dollars in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest rate lock commitments	$	—	$	—	$	1	$	1	$	—	$	—	$	3	$	3
Forward loan sales commitments		—		1		—		1		—		1		—		1
TBA securities		—		—		—		—		—		—		—		—
	$	—	$	1	$	1	$	2	$	—	$	1	$	3	$	4

The following tables represent the change in the assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and ~~six~~nine months ended ~~June~~September 30, 2022:

(Dollars in thousands)	Corporate notes			IRLC- Asset			IRLC- Liability			Corporate notes			IRLC- Asset			IRLC- Liability
Beginning Balance: April 1, 2022	$	2,951		$	970		$	(9	)
Beginning Balance: July 1, 2022										$	—		$	990		$	(1	)
Total unrealized losses:
Included in other comprehensive loss		(16	)		—			—			—			—			—
Total gains included in earnings and held at reporting date		—			20			8
Total losses included in earnings and held at reporting date											—			(48	)		(2	)
Purchases, sales and settlements		(2,000	)		—			—			—			—			—
Transfers in and/or out of Level 3		(935	)		—			—			—			—			—
Ending Balance: June 30, 2022	$	—		$	990		$	(1	)
Change in unrealized gains for the period included in earnings (or changes in net assets) for assets held as of June 30, 2022	$	—		$	20		$	8
Change in unrealized loss for the period included other comprehensive loss for assets held as of June 30, 2022	$	(16	)	$	—		$	—
Ending Balance: September 30, 2022										$	—		$	942		$	(3	)
Change in unrealized gains for the period included in earnings (or changes in net assets) for assets held as of September 30, 2022										$	—		$	—		$	—
Change in unrealized loss for the period included other comprehensive loss for assets held as of September 30, 2022										$	—		$	(48	)	$	(2	)


(Dollars in thousands)	Corporate notes			IRLC- Asset			IRLC- Liability			Corporate notes			IRLC- Asset			IRLC- Liability
Beginning Balance: January 1, 2022	$	3,042		$	1,382		$	(36	)	$	3,042		$	1,382		$	(36	)
Total unrealized losses:
Included in other comprehensive loss		(107	)		—			—			(107	)		—			—
Total (losses) or gains included in earnings and held at reporting date		—			(392	)		35			—			(440	)		33
Purchases, sales and settlements		(2,000	)		—			—			(2,000	)		—			—
Transfers in and/or out of Level 3		(935	)		—			—			(935	)		—			—
Ending Balance: June 30, 2022	$	—		$	990		$	(1	)
Change in unrealized (losses) or gains for the period included in earnings (or changes in net assets) for assets held as of June 30, 2022	$	—		$	(392	)	$	35
Change in unrealized loss for the period included other comprehensive loss for assets held as of June 30, 2022	$	(107	)	$	—		$	—
Ending Balance: September 30, 2022										$	—		$	942		$	(3	)
Change in unrealized (losses) gains for the period included in earnings (or changes in net assets) for assets held as of September 30, 2022										$	—		$	(440	)	$	33
Change in unrealized loss for the period included other comprehensive loss for assets held as of September 30, 2022										$	(107	)	$	—		$	—

(Dollars in thousands)	Corporate notes		IRLC- Asset		IRLC- Liability			Corporate notes			IRLC- Asset			IRLC- Liability
Beginning Balance: April 1, 2021	$	8,027	$	2,456	$	(72	)
Beginning Balance: July 1, 2021								$	12,027		$	2,657		$	(101	)
Total unrealized losses:
Included in other comprehensive income		104		—		—			4			—			—
Total gains or (losses) included in earnings and held at reporting date		—		201		(29	)
Total (losses) or gains included in earnings and held at reporting date									—			(286	)		42
Purchases, sales and settlements		3,896		—		—			(1,319	)		—			—
Transfers in and/or out of Level 3		—		—		—			—			—			—
Ending Balance: June 30, 2021	$	12,027	$	2,657	$	(101	)
Change in unrealized gains or (losses) for the period included in earnings (or changes in net assets) for assets held as of June 30 2021	$	—	$	201	$	(29	)
Change in unrealized gain for the period included other comprehensive loss for assets held as of June 30, 2021	$	104	$	—	$	—
Ending Balance: September 30, 2021								$	10,712		$	2,371		$	(59	)
Change in unrealized (losses) or gains for the period included in earnings (or changes in net assets) for assets held as of September 30, 2021								$	—		$	(286	)	$	42
Change in unrealized gain for the period included other comprehensive income (loss) for assets held as of September 30, 2021								$	4		$	—		$	—

(Dollars in thousands)	Corporate notes		IRLC- Asset		IRLC- Liability			Corporate notes			IRLC- Asset			IRLC- Liability
Beginning Balance: January 1, 2021	$	8,068	$	2,647	$	(106	)	$	8,068		$	2,647		$	(106	)
Total unrealized losses:
Included in other comprehensive income		63		—		—			66			—			—
Total (losses) or gains included in earnings and held at reporting date		—		10		5			—			(276	)		47
Purchases, sales and settlements		3,896		—		—			2,578			—			—
Transfers in and/or out of Level 3		—		—		—			—			—			—
Ending Balance: June 30, 2021	$	12,027	$	2,657	$	(101	)
Change in unrealized gains for the period included in earnings (or changes in net assets) for assets held as of June 30, 2021	$	—	$	10	$	5
Change in unrealized gain for the period included other comprehensive income (loss) for assets held as of June 30, 2021	$	63	$	—	$	—
Ending Balance: September 30, 2021								$	10,712		$	2,371		$	(59	)
Change in unrealized (losses) or gains for the period included in earnings (or changes in net assets) for assets held as of September 30, 2021								$	—		$	(276	)	$	47
Change in unrealized gain for the period included other comprehensive income (loss) for assets held as of September 30, 2021								$	66		$	—		$	—

At ~~June~~September 30, 2022, there were 0no corporate notes measured at fair value on a recurring basis. At December 31, 2021, the Company has classified $3.0 million of corporate notes as Level 3. The Company’s methodology to value the three sub-debt bonds was to obtain fair values of similar sub-debt bonds issuances over the past twelve months from a broker/investment firm. At December 31, 2021, the weighted average of the market quotes applied is 102.1%. Since the Corporate notes are not widely traded, the Company considered the inputs as unobservable.

At ~~June~~September 30, 2022, and December 31, 2021, the Company had classified ~~$989,000~~$939,000 and $1.3 million of net derivative assets and liabilities related to IRLC as Level 3. The fair value of IRLCs is based on prices obtained for loans with similar characteristics from third parties, adjusted by the pull-through rate, which represents the Company’s best estimate of the probability that a committed loan will fund. The weighted average pull-through rates applied ranged from ~~65.5%~~71.61% to ~~100.0%~~100.00% at ~~June~~September 30, 2022.

Significant unobservable inputs for assets and liabilities measured at fair value on a recurring basis at ~~June~~September 30, 2022 and December 31, 2021:

Quantitative Information about Level 3 Fair Value Measurements at June 30, 2022

Quantitative Information about Level 3 Fair Value Measurements at September 30, 2022

(Dollars in thousands)

Fair Value

Valuation Technique

Significant Unobservable Input

Range

Weighted Average

Fair Value

Valuation Technique

Significant Unobservable Input

Range

Weighted Average

Measured at Fair Value on a Recurring Basis:

Net derivative asset and liability:

IRLC

989

Discounted cash flows

Pull-through rates

65.50%-100.00%

85.08%

939

Discounted cash flows

Pull-through rates

71.61%-100.00%

93.89%

There were 0no assets measured at fair value on a nonrecurring basis at ~~June~~September 30, 2022 and December 31, 2021.

The following tables provide the carrying amount for each class of assets and liabilities and the fair value for certain financial instruments that are not required to be measured or reported at fair value on the Consolidated Statements of Financial Condition as of ~~June~~September 30, 2022 and December 31, 2021:

					Quoted										Quoted
					Prices in										Prices in
					Active		Significant								Active		Significant
					Markets for		Other		Significant						Markets for		Other		Significant
					Identical		Observable		Unobservable						Identical		Observable		Unobservable
June 30, 2022	Carrying		Estimated		Assets		Inputs		Inputs
September 30, 2022											Carrying		Estimated		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Fair Value		Level 1		Level 2		Level 3		Amount		Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	37,085	$	37,085	$	37,085	$	—	$	—	$	27,089	$	27,089	$	27,089	$	—	$	—
Investments securities, held-to-maturity		30,220		29,688		—		28,760		928		29,908		27,706		—		26,801		905
Equity securities		500		500		—		—		500		500		500		—		—		500
Loans receivable, net		388,348		394,839		—		—		394,839		444,379		429,261		—		—		429,261
Bank-owned life insurance		10,487		10,487		10,487		—		—		10,197		10,197		10,197		—		—
Restricted investment in bank stock		1,844		1,844		1,844		—		—		2,160		2,160		2,160		—		—
Accrued interest receivable		1,651		1,651		1,651		—		—		1,993		1,993		1,993		—		—
Mortgage servicing rights		164		206		—		—		206		186		234		—		—		234
Liabilities:

Deposits	$	481,510	$	480,628	$	442,641	$	37,987	$	—	$	504,087	$	502,838	$	454,283	$	48,555	$	—
Advances from the FHLB		26,511		24,658		—		24,658		—		36,552		33,548		—		33,548		—
Federal Reserve PPPLF advances		—		—		—		—		—
Subordinated debt		9,996		9,103		—		—		9,103		9,997		8,798		—		—		8,798
Advances from borrowers for taxes and insurance		442		442		442		—		—		324		324		324		—		—
Accrued interest payable		55		55		55		—		—		67		67		67		—		—
Off-balance sheet:
Commitment to extend credit	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

					Quoted
					Prices in
					Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
December 31, 2021	Carrying		Estimated		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	120,788	$	120,788	$	120,788	$	—	$	—
Equity securities		500		500		—		—		500
Loans receivable, net		325,203		328,676		—		—		328,676
Bank-owned life insurance		6,557		6,557		6,557		—		—
Restricted investment in bank stock		2,008		2,008		2,008		—		—
Accrued interest receivable		1,340		1,340		1,340		—		—
Mortgage servicing rights		3,382		4,249		—		—		4,249
Liabilities:
Deposits	$	463,989	$	464,164	$	431,815	$	32,349	$	—
Advances from the FHLB		26,431		26,492		—		26,492		—
Federal Reserve PPPLF advances		3,119		3,119		—		3,119		—
Subordinated debt		9,996		10,436		—		—		10,436
Advances from borrowers for taxes and insurance		439		439		439		—		—
Accrued interest payable		73		73		73		—		—
Off-balance sheet:
Commitment to extend credit	$	—	$	—	$	—	$	—	$	—

8. CHANGES IN AND RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following tables present the changes in the balances of each component of accumulated other comprehensive (loss) income (“AOCI”) for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and ~~June~~September 30, 2021. All amounts are presented net of ~~tax.~~tax (1).


						For the three months ended September 30, 2022					For the nine months ended September 30, 2022
(Dollars in thousands)	For the three months ended June 30, 2021		For the six months ended June 30, 2021			Net Unrealized Gains and Losses on available-for-sales securities			Net Unrealized Gains and Losses on held-to-maturity securities		Net Unrealized Gains and Losses on available-for-sales securities			Net Unrealized Gains and Losses on held-to-maturity securities
Balance at beginning period	$	6	$	238		$	(2,859	)	$	78	$	(148	)	$	—
Unrealized holding gains (losses) on available-for-sale securities before reclassification		199		(33	)
Unrealized holding losses on available-for-sale securities before reclassification							(825	)		—		(3,536	)		—
Accretion of discount on securities transferred to held-to-maturity							—			241		—			319
Amount reclassified for investment securities gains included in net income		—		—			(11	)		—		(11	)		—
Net current-period other comprehensive income (loss)		199		(33	)
Net current-period other comprehensive loss							(836	)		241		(3,547	)		319
Balance at ending period	$	205	$	205		$	(3,695	)	$	319	$	(3,695	)	$	319

~~There were 0 amounts reclassified for investment securities gains included in net income~~The following table present reclassifications out of AOCI by component for the three and ~~six~~nine months ended ~~June~~September 30, ~~2022,~~2022.

The following table present reclassifications out of AOCI by component for the three and ~~June~~nine months ended September 30, 2021.

Earnings per share ("EPS") consist of two separate components: basic EPS and diluted EPS. Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding for each period presented. The diluted EPS calculation reflects the EPS if all outstanding instruments convertible to common stock were exercised. The computation of diluted earnings per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect. At ~~June~~September 30, 2022, there were 244,600 stock options outstanding of which 116,640 of the stock options were vested and exercisable at ~~June~~September 30, 2022. At ~~June~~September 30, 2022, there 167,000 restricted stock shares outstanding of which 48,500 restricted stock shares were vested and exercisable at ~~June~~September 30, 2022. Of the 244,600 stock options outstanding, 209,600 stock options outstanding were included in the computation of diluted net income per share for the three and ~~six~~nine months ended ~~June~~September 30, 2022 as their effect was not anti-dilutive. The 167,000 restricted stock shares outstanding were included in the computation of diluted net income per share for the three and ~~six~~nine months ended ~~June~~September 30, 2022 as their effect was not anti-dilutive.At ~~June~~September 30, 2021, there were ~~214,500~~211,000 stock options outstanding of which 88,220 of the stock options were vested and exercisable at~~June~~

September 30, 2021. At ~~June~~September 30, 2021, there 87,000 restricted stock shares outstanding of which 36,320 restricted stock shares were vested and exercisable at ~~June~~September 30, 2021.The ~~214,500~~211,000 stock options outstanding and ~~36,320~~50,680 restricted stock shares outstanding were included in the computation of diluted net income per share for the three and ~~six~~nine months ended ~~June~~September 30, 2021 as their effect was not ~~anti-dilutive~~anti-dilutive..

The calculation of basic and diluted EPS for the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021 is as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021			2022			2021
Net income	$	640,000		$	1,282,000		$	1,241,000		$	2,584,000		$	705,000		$	1,117,000		$	1,946,000		$	3,701,000
Weighted average number of shares issued		2,287,212			2,272,207			2,280,075			2,271,702			2,354,025			2,272,625			2,304,996			2,272,013
Less weighted average number of treasury shares		(110,596	)		(96,610	)		(107,995	)		(94,500	)		(113,279	)		(96,608	)		(109,776	)		(95,271	)
Less weighted average number of unearned ESOP shares		(128,751	)		(136,043	)		(129,125	)		(137,128	)		(128,751	)		(133,869	)		(128,999	)		(136,030	)
Less weighted average number of unvested restricted stock awards		(84,030	)		(51,754	)		(84,310	)		(53,269	)		(117,940	)		(48,720	)		(84,310	)		(51,736	)
Basic weighted average shares outstanding		1,963,835			1,987,800			1,958,645			1,986,805			1,994,055			1,993,428			1,981,911			1,988,976
Add dilutive effect of stock options		43,318			44,905			44,870			34,369			37,784			54,940			45,514			41,112
Add dilutive effect of restricted stock awards		51,226			9,535			50,461			6,407			17,699			10,630			53,351			6,000
Diluted weighted average shares outstanding		2,058,379			2,042,240			2,053,976			2,027,581			2,049,538			2,058,998			2,080,776			2,036,088

Net income per share:
Basic	$	0.33		$	0.65		$	0.63		$	1.30		$	0.35		$	0.56		$	0.98		$	1.86
Diluted	$	0.31		$	0.63		$	0.60		$	1.27		$	0.34		$	0.54		$	0.94		$	1.82

The Company’s shareholders approved the HV Bancorp, Inc. 2018 Equity Incentive Plan (the “2018 Equity Incentive Plan”) at a Special Meeting of shareholders on June 13, 2018. An aggregate of 305,497 shares of authorized but unissued common stock of the Company was reserved for future grants of incentive and non-qualified stock options, restricted stock awards and restricted stock units under the

2018 Equity Incentive Plan. Of the 305,497 authorized shares, the maximum number of shares of the Company’s common stock that may be issued under the 2018 Equity Incentive Plan pursuant to the exercise of stock options is 218,212 shares, and the maximum number of shares of the Company’s common stock that may be issued as restricted stock awards or restricted stock units is 87,285 shares.

The product of the number of shares granted and the grant date market price of the Company’s common stock determine the fair value of restricted stock under the Company’s 2018 Equity Incentive plan.

Management recognizes compensation expense for the fair value of restricted stock on a straight-line basis over the requisite service period for the entire award. As of ~~June~~September 30, 2022, there were 3,997 shares available for future awards under this plan, which includes 3,712 shares available for incentive and non-qualified stock options and 285 shares available for restricted stock awards. The restricted shares and stock options vest over a seven year period.

The Company’s shareholders approved the HV Bancorp, Inc. 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”) at the Annual Meeting of shareholders on May 19, 2021. The 2021 Equity Incentive Plan authorizes the issuance or delivery to participants of up to 175,000 shares of Company common stock pursuant to grants of incentive and non-qualified stock options, restricted stock awards and restricted stock units. As of ~~June~~September 30, 2022, there were 115,000 grants issued under the 2021 Equity Incentive Plan with 60,000 shares available for future awards under this plan. During June 2022, 80,000 shares of restricted stock awards were granted which vest over a seven year period. Management recognizes compensation expense for the fair value of restricted stock on a straight-line basis over the requisite service period for the entire award. In addition, during June 2022, 35,000 shares of stock options were granted which vest 20% per year over a five year period.

Stock option expense was ~~$14,000~~$33,000 and ~~$28,000~~$61,000 for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and $15,000 and ~~$30,000~~$45,000 for the three months and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. At ~~June~~September 30, 2022, total unrecognized compensation cost related to stock options was ~~$554,000.~~$521,000.

A summary of the Company’s stock option activity and related information for the ~~six~~nine months ended ~~June~~September 30, 2022, and ~~June~~September 30, 2021 was as follows:

	June 30, 2022									June 30, 2021									September 30, 2022									September 30, 2021
	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)		Average Intrinsic Value		Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)		Average Intrinsic Value		Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)		Average Intrinsic Value		Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)		Average Intrinsic Value
Outstanding, Jan 1		211,000		$	14.92		6.6	$	1,451,680		216,400		$	14.93		7.6	$	484,736		211,000		$	14.92		6.6	$	1,451,680		216,400		$	14.93		7.6	$	484,736
Granted		35,000			20.11		5.0		—		—			—		—		—		35,000			20.11		5.0		—		—			—		—		—
Exercised		(1,400	)		14.80		—		—		(1,900	)		14.80		—		—		(1,400	)		14.80		—		—		(1,900	)		14.80		—		—
Forfeited		—			—		—		—		—			—		—		—		—			—		—		—		(3,500	)		15.35		—		—
Outstanding, June 30		244,600		$	15.66		6.7	$	1,061,564		214,500		$	14.93		7.1	$	1,505,790
Exercisable, June 30		116,640		$	14.90		6.1	$	594,864		88,220		$	14.89		7.1	$	622,833
Outstanding, September 30																				244,600		$	15.66		6.4	$	1,249,906		211,000		$	14.92		6.9	$	1,483,330
Exercisable, September 30																				116,640		$	14.90		5.8	$	684,677		88,220		$	14.89		6.8	$	622,833

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option

	Six Months Ended June 30, 2022		Nine Months Ended September 30, 2022
Dividend yield	0.00%		0.00%
Expected life	10 years		10 years
Expected volatility	36.41%		36.41%
Risk-free interest rate	3.33%		3.33%
Weighted average grant date fair value	$	10.62	$	10.62

The expected life is an estimate based on management review of the various factors. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

Restricted stock expense was ~~$46,000~~$110,000 and $45,000 for the three months ended ~~June~~September 30, 2022 and 2021, respectively. Restricted stock expense was ~~$91,000~~$201,000 and $136,000 for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. At ~~June~~September 30, 2022, the expected future compensation expense relating to non-vested restricted stock outstanding was ~~$2.2~~$2.1 million.

A summary of the Company’s restricted stock activity and related information for the ~~six~~nine months ended ~~June~~September 30, 2022, and ~~June~~September 30, 2021 was as follows:

	June 30, 2022					June 30, 2021					September 30, 2022					September 30, 2021
	Number of Shares			Weighted- Average Grant Date Fair Value		Number of Shares			Weighted- Average Grant Date Fair Value		Number of Shares			Weighted- Average Grant Date Fair Value		Number of Shares			Weighted- Average Grant Date Fair Value
Non-vested, Jan 1		50,680		$	14.98		62,860		$	14.97		50,680		$	14.98		62,860		$	14.97
Vested		(12,180	)		14.95		(12,180	)		14.82		(12,180	)		14.95		(12,180	)		14.82
Granted		80,000			20.11		—			—		80,000			20.11		—			—
Forfeited		—			—		—			—		—			—		—			—
Non-vested at June 30		118,500		$	18.45		50,680		$	14.98
Non-vested at September 30												118,500		$	18.45		50,680		$	14.98

In November 2017, the Company engaged a third party to provide services for certain customers with large deposit balances, by offering both a competitive rate of return and FDIC insurance. Related party balances in this program totaled ~~$5.3~~$4.8 million at ~~June~~September 30, 2022, for which the Company received 0no fees for customer services for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively.

The Company adopted ASU No. 2014-09 “Revenue from Contracts with Customers” (Topic 606) and all

subsequent ASUs that modified Topic 606. The following is a discussion of key revenues of fees for customer services that are within the scope of the revenue guidance:

The following table presents non-interest income for the three and ~~six~~nine months ended ~~June~~September 30, 2022, and ~~June~~September 30, 2021:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2022			2021			2022			2021			2022			2021			2022			2021
Non-Interest Income
In-scope of Topic 606:
Fee income	$	130		$	16		$	262		$	88		$	114		$	82		$	376		$	170
Insufficient fund fees		26			17			47			35			25			19			72			54
Other service charges		47			24			92			42			68			31			160			73
ATM interchange fee income		4			3			8			6			5			3			13			9
Other income		1			2			4			3			1			—			5			3
Total Non-Interest Income (in-scope of Topic 606)	$	208		$	62		$	413		$	174		$	213		$	135		$	626		$	309

Out-of-scope of Topic 606:
Increase in cash surrender value of bank-owned life insurance	$	66		$	37		$	102		$	74		$	70		$	37		$	172		$	111
Gain on sale of loans, net		1,733			3,243			4,090			8,135			1,467			3,035			5,557			11,170
Gain on sale of available-for-sale securities														16			96			16			96
(Loss) gain from derivative instruments		(338	)		713			(390	)		477			13			(422	)		(377	)		55
Gain on sale of mortgage servicing rights, net		—			—			1,029			—
Gain (loss) on sale of mortgage servicing rights, net														(57	)		—			972			—
Change in fair value for loans held-for-sale		238			(355	)		(482	)		(1,064	)		(130	)		438			(612	)		(626	)
Other		277			162			565			169			88			—			653			169
Total Non-Interest Income (out-scope of Topic 606)		1,976			3,800			4,914			7,791			1,467			3,184			6,381			10,975
Total Non-Interest Income (in-scope of Topic 606)		208			62			413			174			213			135			626			309
Total Noninterest Income	$	2,184		$	3,862		$	5,327		$	7,965		$	1,680		$	3,319		$	7,007		$	11,284

The majority of the Company’s leases are comprised of operating leases for real estate property for branches and office spaces with terms extending through 2039. The operating lease agreements are recognized on the consolidated statements of financial condition as a right-of-use (“ROU”) asset and a corresponding lease liability. The Company elected not to include short-term leases with initial terms of twelve months or less on the Consolidated Statements of Financial Condition.

The following table represents the classification of the Company’s ROU assets and lease liabilities in the Consolidated Statements of Financial Condition:

		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Lease Right-of-Use Assets	Classification					Classification
Operating lease right-of-use assets	Operating lease right-of-use assets	$	8,257	$	8,669	Operating lease right-of-use assets	$	8,049	$	8,669
Total Lease Right-of-Use Assets		$	8,257	$	8,669		$	8,049	$	8,669

		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Lease Liabilities	Classification					Classification
Operating lease liabilities	Operating lease liabilities	$	8,640	$	9,030	Operating lease liabilities	$	8,438	$	9,030
Total Lease Liabilities		$	8,640	$	9,030		$	8,438	$	9,030

The Company’s lease agreements frequently include one or more options to renew at the Company’s discretion. If at the beginning of the lease, the Company is reasonably certain that the renewal option will

be exercised, the Company will include the extended term in the calculation of the ROU asset and lease liability. For the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. If the rate is not readily determinable in the lease, the Company used its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

	June 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
Weighted-average remaining lease term
Operating leases	10.5 years			11.0 years			10.3 years			11.0 years
Weighted-average discount rate
Operating leases		2.04	%		2.04	%		2.05	%		2.04	%

(dollars in thousands)	For the three months ended June 30, 2022		For the six months ended June 30, 2022		For the three months ended June 30, 2021		For the six months ended June 30, 2021		For the three months ended September 30, 2022		For the nine' months ended September 30, 2022		For the three months ended September 30, 2021		For the nine' months ended September 30, 2021
Operating lease cost	$	207	$	412	$	218	$	421	$	208	$	620	$	218	$	639
Short-term lease cost		28		33		1		8		15		48		6		14
Total	$	235	$	445	$	219	$	429	$	223	$	668	$	224	$	653

Future minimum payments for operating leases as of ~~June~~September 30, 2022, and December 31, 2021 were as follows:

(dollars in thousands)	June 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
Twelve Months Ended:
Within one year	$	988		$	971		$	988		$	971
After one but within two years		985			987			989			987
After two but within three years		960			988			946			988
After three but within four years		942			937			945			937
After four but within five years		957			949			913			949
After five years		4,836			5,315			4,642			5,315
Total Future Minimum Lease Payments		9,668			10,147			9,423			10,147
Amounts Representing Interest		(1,028	)		(1,117	)		(985	)		(1,117	)
Present Value of Net Future Minimum Lease Payments	$	8,640		$	9,030		$	8,438		$	9,030

The Company has identified 4four reportable segments: retail banking; mortgage banking; business banking and the bank holding company. Revenue from the retail banking activities consists primarily

of interest earned on investment securities and loans and service charges on deposit accounts. Revenue from the mortgage banking and business banking activities are comprised of interest earned on loans and fees received as a result of the mortgage loan origination process. The Mortgage Banking Segment originates residential mortgage loans which are sold into the secondary market along with the loans’ servicing rights. Revenue from bank holding company activities is mainly comprised of interest earned on investment securities and intercompany income.

The following tables presents summary financial information for the reportable segments (in thousands):

For the three months ended June 30, 2022

Retail Banking

Mortgage Banking

Business Banking

Holding Company

Intercompany Eliminations

Consolidated

Total Interest Income
$
1,710

$
189

$
3,034

$
3

$
(2
)

$
4,934

Total Interest Expense

144

23

265

112

(2
)

542

Net Interest Income

1,566

166

2,769

(109
)

—

4,392

Provision for Loan losses

52

—

586

—

—

638

Net interest income after provision for loan losses

1,514

166

2,183

(109
)

—

3,754

Total non-interest income

158

1,733

305

—

(12
)

2,184

Non-interest Expense:

Salaries and employee benefits

1,152

1,174

806

—

—

3,132

Other expenses

925

647

353

71

(12
)

1,984

Total non-interest expenses

2,077

1,821

1,159

71

(12
)

5,116

Income (loss) before income taxes

(405
)

78

1,329

(180
)

—

822

Income tax expense (benefit)

(100
)

31

289

(38
)

—

182

Net income (loss)
$
(305
)

$
47

$
1,040

$
(142
)

$
—

$
640

Total assets as of June 30, 2022
$
300,344

$
20,162

$
249,405

$
51,290

$
(50,554
)

$
570,647

	For the three months ended September 30, 2022
	Retail Banking			Mortgage Banking			Business Banking		Holding Company			Intercompany Eliminations			Consolidated

Total Interest Income	$	1,939		$	249		$	4,033	$	2		$	(2	)	$	6,221
Total Interest Expense		232			14			507		113			(2	)		864
Net Interest Income		1,707			235			3,526		(111	)		—			5,357
Provision for Loan losses		236			—			372		—			—			608
Net interest income after provision (credit) for loan losses		1,471			235			3,154		(111	)		—			4,749

Total Non-Interest Income		338			1,232			123		—			(13	)		1,680

Non-Interest Expense:
Salaries and employee benefits		1,518			1,007			1,010		—			—			3,535
Other Non-Interest expense		994			671			330		76			(13	)		2,058
Total Non-Interest expense		2,512			1,678			1,340		76			(13	)		5,593
Income (Loss) before income taxes		(703	)		(211	)		1,937		(187	)		—			836
Income Tax Expense (Benefit)		(116	)		(52	)		338		(39	)		—			131
Net Income (Loss)	$	(587	)	$	(159	)	$	1,599	$	(148	)	$	—		$	705

Total Assets as of September 30, 2022	$	289,471		$	16,824		$	296,205	$	51,566		$	(50,812	)	$	603,254

For the three months ended June 30, 2021

Retail Banking

Mortgage Banking

Business Banking

Holding Company

Intercompany Eliminations

Consolidated

Total Interest Income
$
1,238

$
351

$
2,472

$
38

$
(21
)

$
4,078

Total Interest Expense

130

95

282

43

(4
)

546

Net Interest Income

1,108

256

2,190

(5
)

(17
)

3,532

Provision for Loan losses

(55
)

—

322

—

—

267

Net interest income after provision for loan losses

1,163

256

1,868

(5
)

(17
)

3,265

Total non-interest income

95

3,577

203

—

(13
)

3,862

Non-interest Expense:

Salaries and employee benefits

1,221

1,510

481

—

(22
)

3,190

Other expenses

890

835

309

85

(8
)

2,111

Total non-interest expenses

2,111

2,345

790

85

(30
)

5,301

Income (loss) before income taxes

(853
)

1,488

1,281

(90
)

—

1,826

Income tax expense (benefit)

(360
)

552

371

(19
)

—

544

Net income (loss)
$
(493
)

$
936

$
910

$
(71
)

$
—

$
1,282

Total assets as of June 30, 2021
$
254,015

$
75,832

$
214,412

$
51,427

$
(47,125
)

$
548,561

	For the three months ended September 30, 2021
	Retail Banking			Mortgage Banking		Business Banking		Holding Company			Intercompany Eliminations			Consolidated

Total Interest Income	$	1,207		$	410	$	2,918	$	46		$	(22	)	$	4,559
Total Interest Expense		127			90		248		114			(6	)		573
Net Interest Income		1,080			320		2,670		(68	)		(16	)		3,986
Provision (Credit) for Loan Losses		(9	)		—		238		—			—			229
Net interest income after provision (credit) for loan losses		1,089			320		2,432		(68	)		(16	)		3,757

Total Non-Interest Income		183			3,065		66		18			(13	)		3,319

Non-Interest Expense:
Salaries and employee benefits		1,389			1,261		894		—			(17	)		3,527
Other Non-Interest expense		925			793		289		75			(12	)		2,070
Total Non-Interest Expense		2,314			2,054		1,183		75			(29	)		5,597
Income (Loss) before income taxes		(1,042	)		1,331		1,315		(125	)		—			1,479
Income Tax Expense (Benefit)		(154	)		211		331		(26	)		—			362
Net Income (Loss)	$	(888	)	$	1,120	$	984	$	(99	)	$	—		$	1,117

Total Assets as of September 30, 2021	$	255,131		$	74,834	$	202,030	$	52,555		$	(48,233	)	$	536,317

For the six months ended June 30, 2022

Retail Banking

Mortgage Banking

Business Banking

Holding Company

Intercompany Eliminations

Consolidated

Total Interest Income
$
3,005

$
367

$
5,710

$
43

$
(22
)

$
9,103

Total Interest Expense

296

40

521

225

(6
)

1,076

Net Interest Income

2,709

327

5,189

(182
)

(16
)

8,027

Provision for Loan losses

69

—

682

—

—

751

Net interest income after provision for loan losses

2,640

327

4,507

(182
)

(16
)

7,276

Total non-interest income

489

4,406

457

—

(25
)

5,327

Non-interest Expense:

Salaries and employee benefits

2,519

2,450

1,920

—

(16
)

6,873

Other expenses

1,949

1,410

702

141

(25
)

4,177

Total non-interest expenses

4,468

3,860

2,622

141

(41
)

11,050

Income (loss) before income taxes

(1,339
)

873

2,342

(323
)

—

1,553

Income tax expense (benefit)

(271
)

177

474

(68
)

—

312

Net income (loss)
$
(1,068
)

$
696

$
1,868

$
(255
)

$
—

$
1,241

Total assets as of June 30, 2022
$
300,344

$
20,162

$
249,405

$
51,290

$
(50,554
)

$
570,647

	For the nine months ended September 30, 2022
	Retail Banking			Mortgage Banking		Business Banking		Holding Company			Intercompany Eliminations			Consolidated

Total Interest Income	$	4,944		$	616	$	9,743	$	45		$	(24	)	$	15,324
Total Interest Expense		528			54		1,028		338			(8	)		1,940
Net Interest Income		4,416			562		8,715		(293	)		(16	)		13,384

Provision for Loan losses		305			—		1,054		—			—			1,359
Net interest income after provision (credit) for loan losses		4,111			562		7,661		(293	)		(16	)		12,025

Total Non-Interest Income		827			5,638		580		—			(38	)		7,007

Non-Interest Expense:
Salaries and employee benefits		4,037			3,457		2,930		—			(16	)		10,408
Other Non-Interest expense		2,943			2,081		1,032		217			(38	)		6,235
Total Non-Interest Expense		6,980			5,538		3,962		217			(54	)		16,643
Income (Loss) before income taxes		(2,042	)		662		4,279		(510	)		—			2,389
Income Tax Expense (Benefit)		(387	)		125		812		(107	)		—			443
Net Income (Loss)	$	(1,655	)	$	537	$	3,467	$	(403	)	$	—		$	1,946

Total Assets as of September 30, 2022	$	289,471		$	16,824	$	296,205	$	51,566		$	(50,812	)	$	603,254

For the six months ended June 30, 2021

Retail Banking

Mortgage Banking

Business Banking

Holding Company

Intercompany Eliminations

Consolidated

Total Interest Income
$
2,653

$
728

$
4,466

$
72

$
(38
)

$
7,881

Total Interest Expense

298

168

577

43

(4
)

1,082

Net Interest Income

2,355

560

3,889

29

(34
)

6,799

Provision for Loan losses

(30
)

—

445

—

—

415

Net interest income after provision for loan losses

2,385

560

3,444

29

(34
)

6,384

Total non-interest income

192

7,523

275

—

(25
)

7,965

Non-interest Expense:

Salaries and employee benefits

2,391

3,149

1,194

—

(34
)

6,700

Other expenses

1,890

1,509

509

150

(25
)

4,033

Total non-interest expenses

4,281

4,658

1,703

150

(59
)

10,733

Income (loss) before income taxes

(1,704
)

3,425

2,016

(121
)

—

3,616

Income tax expense (benefit)

(590
)

1,077

570

(25
)

—

1,032

Net income (loss)
$
(1,114
)

$
2,348

$
1,446

$
(96
)

$
—

$
2,584

Total assets as of June 30, 2021
$
254,015

$
75,832

$
214,412

$
51,427

$
(47,125
)

$
548,561

	For the nine months ended September 30, 2021
	Retail Banking			Mortgage Banking		Business Banking		Holding Company			Intercompany Eliminations			Consolidated

Total Interest Income	$	3,859		$	1,138	$	7,385	$	118		$	(60	)	$	12,440
Total Interest Expense		425			258		825		157			(10	)		1,655
Net Interest Income		3,434			880		6,560		(39	)		(50	)		10,785
Provision (Credit) for Loan Losses		(40	)		—		684		—			—			644
Net interest income after provision (credit) for loan losses		3,474			880		5,876		(39	)		(50	)		10,141

Total Non-Interest Income		375			10,588		341		18			(38	)		11,284

Non-Interest Expense:
Salaries and employee benefits		3,780			4,409		2,088		—			(50	)		10,227
Other Non-Interest expense		2,815			2,302		799		225			(38	)		6,103
Total Non-Interest Expense		6,595			6,711		2,887		225			(88	)		16,330
Income (Loss) before income taxes		(2,746	)		4,757		3,330		(246	)		—			5,095
Income Tax Expense (Benefit)		(743	)		1,287		902		(52	)		—			1,394
Net income (Loss)	$	(2,003	)	$	3,470	$	2,428	$	(194	)	$	—		$	3,701

Total Assets as of September 30, 2021	$	255,131		$	74,834	$	202,030	$	52,555		$	(48,233	)	$	536,317

On October 18, 2022, the Company, the Bank, Citizens Financial Services, Inc. (“Citizens Financial”), First Citizens Community Bank (“FCCB”) and CZFS Acquisition Company, LLC entered into a merger agreement that provides that the Company will merge with and into Citizens Financial, with Citizens Financial remaining as the surviving corporation (the “Merger”). Following the Merger, the Bank will merge with and into FCCB, with FCCB remaining as the surviving bank (the “Bank Merger”).

At the effective time of the Merger, each outstanding share of Company common stock will be converted into the right to receive, at the election of such holder, either (i) 0.4000 shares of Citizens Financial common stock, or (ii) $30.50 in cash, together with cash in lieu of fractional shares, if any. All such elections are subject to adjustment on a pro rata basis, so that 80% of the aggregate merger consideration paid to the Company stockholders will be the stock consideration and the remaining 20% will be the cash consideration.

The completion of the Merger and the Bank Merger are subject to customary closing conditions, including approval by the Company’s stockholders and the receipt of regulatory approvals from the Board of Governors of the Federal Reserve System and the Pennsylvania Department of Banking and Securities.The Merger is expected to close in the first half of 2023.

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

This Quarterly Report on Form 10-Q contains certain forward-looking statements and information relating to the Company within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on the beliefs of management as well as assumptions made by and information currently available to management. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “should,” “could,” or “may” and similar expressions or the negative thereof. Certain factors that could cause actual results to differ materially from expected results include, the negative impact of severe, wide-ranging and continuing disruptions caused by the spread of coronavirus COVID-19 and any other pandemic, epidemic or health-related crisis on our operations, current customers and the economy in general, inflation and monetary fluctuations and volatility, changes in the interest rate environment, increases in nonperforming loans, legislative and regulatory changes that adversely affect the business of the Company, and changes in the securities markets. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. We caution readers not to place undue reliance on forward-looking statements. The Company disclaims any obligation to revise or update any forward-looking statements contained in this Form 10-Q to reflect future events or developments.

HV Bancorp, Inc. provides financial services to individuals and businesses from our main office in Doylestown, Pennsylvania, and from our seven full-service banking offices located in Plumsteadville, Philadelphia, Warrington and Huntingdon Valley, Pennsylvania and Mount Laurel, New Jersey. We also operate a limited service branch in Philadelphia, Pennsylvania. Our administrative offices and executive offices are located in Doylestown, Pennsylvania. Our Business Banking office is located in Philadelphia, Pennsylvania. We have loan production and sales offices located in Mount Laurel, New Jersey, Doylestown, Pennsylvania, Huntingdon Valley, Pennsylvania and Wilmington, Delaware; and a loan origination office in Montgomeryville, Pennsylvania. Our primary market area includes Montgomery, Bucks and Philadelphia Counties in Pennsylvania, Burlington County in New Jersey and New Castle County in Delaware. Our principal business consists of attracting retail deposits from the general public in our market area and investing those deposits, together with funds generated from operations and borrowings, primarily in one-to-four family residential mortgage loans, commercial real estate loans (including multi-family loans), construction loans, home equity loans and lines of credit and, to a lesser extent, consumer loans. We retain our loans in portfolio depending on market conditions, but we primarily sell our fixed-rate one-to-four family residential mortgage loans in the secondary market. We also invest in various investment securities. Our revenue is derived principally from interest on loans and investments and loan sales. Our primary sources of funds are deposits, Federal Home Loan Bank (“FHLB”) advances and principal and interest payments on loans and securities.

Our results of operations depend primarily on our net interest income which is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations also are affected by our provision for loan losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of gains recognized from the sale of residential mortgage loans in the secondary market, fees for customer services, gain (loss) from derivative instruments, gain on sale of mortgage servicing rights, net, change in fair value of loans held-for-sale and sales of securities. Non-interest expense currently consists primarily of expenses related to salaries and employee benefits, occupancy, data processing related operations, professional fees and other expenses.

Our results of operations also may be affected significantly by general, regional, and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

The accounting and financial reporting policies of the Company 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. Critical 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 current period or in future periods.

Our critical accounting policies involving significant judgments and assumptions used in the preparation of the consolidated financial statements as of ~~June~~September 30, 2022, have remained unchanged from the disclosures presented in our Annual Report on Form 10-K, for the year ended December 31, 2021. The complete list of Critical Accounting Policies are described in the Annual Report on Form 10-K, for the year ended December 31, 2021.

Comparison of Statements of Financial Condition at ~~June~~September 30, 2022 and at December 31, 2021

Total assets increased ~~$10.5~~$43.2 million to ~~$570.6~~$603.3 million at ~~June~~September 30, 2022, from $560.1 million at December 31, 2021. The increase was primarily the result of increases of ~~$63.1~~$119.2 million in loans receivable, net, ~~$51.4~~$41.4 million in investment securities, ~~and $3.9~~$3.6 million in bank-owned life insurance and $1.4 million in other assets which were offset by decreases of ~~$83.7~~$93.7 million in cash and cash equivalents, ~~$21.6~~$24.9 million in loans held-for-sale and $3.2 million in mortgage servicing rights.

Cash and cash equivalents decreased ~~$83.7~~$93.7 million to ~~$37.1~~$27.1 million at ~~June~~September 30, 2022, from $120.8 million at December 31, 2021, primarily as a result of funding of loans and purchases of investment securities.

Investment securities increased ~~$51.4~~$41.4 million or ~~115.5%~~93.0%, to ~~$95.9~~$85.9 million at ~~June~~September 30, 2022, from $44.5 million at December 31, 2021. The increase was primarily due to purchases of $~~60.4~~61.9 million of U.S. ~~treasury~~Treasury securities, mortgage-backed, collateralized mortgage obligations and corporate notes offset by ~~$5.2~~$15.8 million in proceeds from sales and maturities and principal repayments during the ~~six~~nine months ended ~~June~~September 30, 2022 and a ~~$2.6~~$4.6 million net unrealized loss on available-for-sale securities. The increase in comprehensive loss in the ~~available for sale~~available-for-sale portfolio reflects recent increases in market interest rates.

At ~~June~~September 30, 2022, our held-to-maturity portion of the securities portfolio, at amortized cost, was ~~$30.2~~$29.9 million, and our available-for-sale portion of the securities portfolio, at fair value, was ~~$65.7~~$56.0 million compared to $44.5 million available-for-sale portion of the securities portfolio at December 31, 2021. During the quarter ending June 30 2022, the Company transferred $30.2 million of investment securities ~~to held-to-maturity~~ from available-to-sale ~~with an amortized cost of $30.2 million at June 30, 2022.~~to held-to-maturity.

Net loans increased ~~$63.1~~$119.2 million to ~~$388.3~~$444.4 million at ~~June~~September 30, 2022, from $325.2 million at December 31, 2021. ~~One-to-four family residential real estate loans increased~~ ~~$28.0 million~~ ~~from $106.3 million at December 31, 2021, to $134.3 million at June 30, 2022. In addition, commercial~~Commercial real estate loans increased by ~~$26.8~~$60.6 million to ~~$143.7~~$177.5 million at ~~June~~September 30, 2022, from $116.9 million at December 31, 2021 and there was a $~~20.6~~22.5 million increase in commercial business loans to ~~$50.8~~$52.7 million at ~~June~~September 30, 2022, from $30.2 million at December 31, 2021. In addition, one-to-four family residential real estate loans increased $38.7 million from $106.3 million at December 31, 2021, to $145.0 million at September 30, 2022. Finally, construction loans increased ~~$7.0~~$20.2 million to ~~$49.9~~$63.1 million at ~~June~~September 30, 2022, from $42.9 million at December 31, 2021. Offsetting these increases, was a ~~$17.4~~$20.9 million decrease in SBA Paycheck Protection Program (“PPP”) loans from Rounds 1 and 2 to ~~$5.5~~$2.0 million at ~~June~~September 30, 2022 from $22.9 million at December 31, 2021 as a result of PPP loan forgiveness from the SBA. Finally, there was a $1.0 million decrease in home equity and HELOC loans from $3.2 million at December 31, 2021, to $2.2 million at ~~June~~September 30, 2022.

In November 2017, the Bank entered into a loan purchase agreement with a broker to purchase a portfolio of private education loans made to American citizens attending AMA-approved medical schools in Caribbean nations. The broker serves as a lender, holder, program designer and developer, administrator, and secondary market for the loan portfolios they generate. At ~~June~~September 30, 2022, the balance of the private education loans was ~~$4.1~~$3.7 million. The private student loans were made following a proven credit criteria and were underwritten in accordance with the Bank’s policies. At ~~June~~September 30, 2022, there were ~~four~~two loans with a balance of approximately ~~$299,000~~$49,000 that were past due 90 days or more.

Loans held for sale decreased ~~$21.6~~$24.9 million to ~~$18.9~~$15.6 million at ~~June~~September 30, 2022 from $40.5 million at December 31, 2021 as a result of originations of ~~$150.3~~$321.7 million of one-to-four family residential real estate loans during the ~~six~~nine months ended ~~June~~September 30, 2022, and net of principal sales of ~~$175.5~~$351.5 million of loans in the secondary market during this same period.

Total liabilities increased $44.3 million to $561.8 million at September 30, 2022 from $517.5 million at December 31, 2021 primarily as a result of a $40.1 million increase in deposits and $10.1 million increase in advances from the FHLB, which were offset by a $3.1 million decrease in advances from the Federal Reserve’s Paycheck Protection Program liquidity facility (“PPPLF”) and $2.0 million decrease in other liabilities.

Deposits increased ~~$17.5~~$40.1 million to ~~$481.5~~$504.1 million at ~~June~~September 30, 2022 from $464.0 million at December 31, 2021. Our core deposits (consisting of demand deposits, money market, passbook and statement and checking accounts) increased ~~$10.8~~$22.5 million to ~~$442.6~~$454.3 million at ~~June~~September 30, 2022 from $431.8 million at December 31, 2021. Certificates of deposit increased ~~$6.7~~$17.6 million to ~~$38.9~~$49.8 million at ~~June~~September 30, 2022 from $32.2 million at December 31, 2021. The increase in certificate of deposits was the result of a ~~$9.5~~$23.0 million increase of certificates of deposit issued through brokers ~~and~~offset by a ~~$2.8~~$5.4 million decrease in retail growth of certificates of deposit.

Advances from the FHLB increased $10.1 million from $26.4 million at December 31, 2021 to $36.5 million at September 30, 2022 primarily to fund our loan growth.

Advances from the Federal Reserve ~~Paycheck Protection Program Liquidity Facility (“PPPLF”)~~PPPLF

As of ~~June~~September 30, 2022, there were no advances from the Federal Reserve PPPLF as a result of repayments of $3.1 million from PPP loan forgiveness from the SBA compared to $3.1 million at December 31, 2021.

On May 28, 2021, the Company issued a $10.0 million subordinated note. This note has a maturity date of May 28, 2031, and bears interest at a fixed rate of 4.50% per annum through May 28, 2026. Thereafter, the note rate is adjustable and resets quarterly based on the then current 90-day average Secured Overnight Financing Rate (“SOFR”) plus 325 basis points for U.S. dollar denominated loans as published by the Federal Reserve Bank of New York. The Company may, at its option, at any time on an interest payment date, on or after May 28, 2026, redeem the note, in whole or in part, at par plus

accrued interest to the date of redemption. The balance of subordinated debt, net of unamortized debt issuance costs, was $10.0 million at ~~June~~September 30, 2022 and December 31, 2021.

Total shareholders’ equity decreased ~~$1.4~~$1.2 million to ~~$41.2~~$41.4 million at ~~June~~September 30, 2022, compared to $42.6 million at December 31, 2021. This decrease is primarily as a result of comprehensive losses of ~~$2.6~~$3.2 million due to the fair value adjustments, net of deferred tax, on the investment securities available-for-sale portfolio which reflects recent increases in market interest rates and ~~$212,000~~$273,000 in treasury stock repurchases primarily as part of the stock repurchase plan. Offsetting these decreases was net income of ~~$1.2~~$1.9 million for the ~~six~~nine months ended ~~June~~September 30, 2022, share based compensation expense of ~~$119,000,~~$262,000, ESOP shares committed to be released of $46,000 and a stock option exercise of $21,000.

Comparison of Statements of Income for the Three Months Ended ~~June~~September 30, 2022 and ~~June~~September 30, 2021

Net income decreased ~~$642,000~~$412,000 to ~~$640,000~~$705,000 for the three months ended ~~June~~September 30, 2022, from ~~$1.3~~$1.1 million for the three months ended ~~June~~September 30, 2021. The decrease in net income for the three months ended ~~June~~September 30, 2022, was primarily due to a decrease of ~~$1.7~~$1.6 million in non-interest income and ~~$371,000~~$379,000 increase in provision for loan losses offset by ~~an $860,000~~a $1.4 million increase in net interest income, a ~~$362,000~~$231,000 decrease in income ~~taxes~~taxes.Non-interest expense was $5.6 million for both of the three months ended September 30, 2022 and ~~an $185,000 decrease in non-interest expense.~~2021.

Total interest income increased ~~$856,000,~~$1.6 million, or ~~21.0`~~34.8`%, to ~~$4.9~~$6.2 million for the three months ended ~~June~~September 30, 2022, from ~~$4.1~~$4.6 million for the three months ended ~~June~~September 30, 2021. The increase was primarily the result of increases in interest and fees on loans of ~~$436,000,~~$1.2 million, interest on investment securities of ~~$329,000~~$339,000 and ~~$95,000~~$106,000 in interest on interest-earning deposits with banks. The average yield on our interest-earning assets increased 8095 basis points to ~~3.75%~~4.51% for the three months ended ~~June~~September 30, 2022, as compared to ~~2.95%~~3.56% for the three months ended ~~June~~September 30, 2021. Total average interest-earning assets ~~decreased $26.6~~increased $39.2 million to ~~$525.9~~$551.2 million for the three months ended ~~June~~September 30, 2022, from ~~$552.5~~$512.0 million for the three months ended ~~June~~September 30, 2021. The ~~decrease~~increase was primarily the result of ~~decreases~~increases in 55.3 million in the average balance of investment securities and the average balance of ~~$41.8~~loans of $31.6 million offset by a decrease of $47.8 million in average balance of interest-earning deposits with ~~banks, and~~ banks.~~in the average balance of loans of $33.7 million offset by an increase of $48.8 million in the~~ a~~verage balance of investment securities.~~

Interest and fees on loans increased ~~$436,000~~$1.2 million to ~~$4.3~~$5.5 million for the three months ended ~~June~~September 30, 2022, from ~~$3.9~~$4.3 million for the same period in 2021. This increase was primarily due to an increase in the average yield on loans which increased 85 basis point to 4.78% for the three months ended June 30, 2022, versus 3.93% for the three months ended June 30, 2021. Offsetting this increase, was a decrease in the average loans outstanding of ~~$33.7~~$31.6 million, which ~~decreased~~increased to ~~$358.7~~$423.8 million for the three months ended ~~June~~September 30, 2022, from ~~$392.4~~$392.2 million for the three months ended ~~June~~September 30, 2021. In addition, there was an increase in the average yield on loans which increased 80 basis point to 5.21%

for the three months ended September 30, 2022, versus 4.41% for the three months ended September 30, 2021. The ~~decrease~~increase in average loans was primarily a result of increases in the average balances of commercial real estate, other commercial business and construction loans offset by a decrease in the average balances of PPP loans and loans held for ~~sale off set by growth in the average balances of construction loans, commercial real estate and other commercial business.~~ sale.

Interest income on interest-earning deposits increased by ~~$95,000~~$106,000 to ~~$130,000~~$140,000 for the three months ended ~~June~~September 30, 2022, from ~~$35,000~~$34,000 for the three months ended ~~June~~September 30, 2021, primarily due to an increase of 49147 basis points in the average yield on interest-earning deposits with banks to ~~0.60%~~1.64% for the three months ended ~~June~~September 30, 2022, from ~~0.11%~~0.17% for the three months ended ~~June~~September 30, 2021. Offsetting this increase, was a decrease in the average balance of interest-earning deposits of ~~$41.8~~$47.8 million to ~~$86.1~~$34.1 million for the three months ended ~~June~~September 30, 2022, from ~~$127.9~~$81.9 million for the three months ended ~~June~~September 30, 2021.

Interest on investment securities increased by ~~$329,000~~$339,000 to ~~$495,000~~$527,000 for the three months ended ~~June~~September 30, 2022, from ~~$166,000~~$188,000 for the three months ended ~~June~~September 30, 2021, respectively as the average balance of investment securities increased by ~~$48.8~~$55.3 million to ~~$79.2~~$91.4 million for the three months ended ~~June~~September 30,

2022, from ~~$30.4~~$36.1 million for the three months ended ~~June~~September 30, 2021. Interest on investment securities increased as a result of a ~~$290,000~~$306,000 increase in income on taxable and non-taxable interest and dividend investments to ~~$430,000~~$456,000 for the three months ended ~~June~~September 30, 2022 from ~~$140,000~~$150,000 for the three months ended ~~June~~September 30, 2021. In addition, interest income on mortgage backed securities and collateralized mortgage obligation securities increased ~~$39,000~~$33,000 to ~~$65,000~~$71,000 for the three months ended ~~June~~September 30, 2022, from ~~$26,000~~$38,000 for the three months ended ~~June~~September 30, 2021. The average yield on total securities increased to ~~2.50%~~2.31% for the three months ended ~~June~~September 30, 2022, from ~~2.18%~~2.08% for the three months ended ~~June~~September 30, 2021.

Total interest expense ~~decreased $4,000~~increased $291,000 to ~~$542,000~~$864,000 for the three months ended ~~June~~September 30, 2022, from ~~$546,000~~$573,000 for the three months ended ~~June~~September 30, 2021, primarily due to a ~~$47,000 decrease~~$271,000 increase in interest expense on deposits and a ~~$26,000~~$31,000 increase in interest expense on advances from the FHLB offset by a $10,000 decrease in interest expense on advances from the ~~PPPLF offset by an increase of $69,000 interest expense on subordinated debt.~~PPPLF.

Interest expense on deposits ~~decreased $47,000~~increased $271,000 to ~~$331,000~~$621,000 for the three months ended ~~June~~September 30, 2022, from ~~$378,000~~$350,000 for the three months ended ~~June~~September 30, 2021, primarily as a result of ~~a decrease~~an increase in the average cost of deposits of 26 basis points to 0.64% for the three months ended September 30, 2022 from 0.38% for the three months ended September 30, 2021. In addition, the average balance of interest bearing deposits ~~of $24.2~~increased $18.5 million from ~~$399.4~~$372.2 million for the three months ended ~~June~~September 30, 2021, to ~~$375.2~~$390.7 million for the three months ended ~~June~~September 30, 2022. This ~~decrease~~increase was primarily the result of a ~~$24.4~~$24.9 million increase in the average balance of our core deposits (consisting of demand deposits, money market, passbook and statement and checking accounts) from the three months ended September 30, 2021, to the three months ended September 30, 2022. The average rate paid on money market deposits increased to 0.66% for the three months ended September 30, 2022, from 0.57% for the three months ended September 30, 2021. Offsetting this increase, was a decrease of $6.4 million in the average balance of our certificates of ~~deposit~~deposits from the three months ended June 30, 2021, to the three months ended June 30, 2022. The average cost of deposits was 0.35% for the three months ended June 30, 2022, compared to 0.38% for the three months ended June 30, 2021. The average rate paid on money market deposits decreased to 0.49% for the three months ended June 30, 2022, from 0.59% for the three months ended June 30, 2021. The balance of our certificates of deposits decreased $24.4 million from $55.7$42.0 million for the three months ended ~~June~~September 30, 2021, to ~~$31.3~~$35.6 million for the three months ended ~~June~~September 30, 2022. This was primarily the result of decrease of ~~$17.8~~$13.9 million in the average balance in retail certificate of deposits ~~and~~offset by a ~~$6.6~~$7.5 million ~~decrease~~increase in the average balance of certificates of deposit issued through brokers ~~from $6.8 million for~~compared to the three months ended ~~June~~September 30, ~~2021 to $156,000 for three months ended June 30, 2022.~~2021. The average cost of certificates of deposit was ~~0.68%~~1.02% for the three months ended ~~June~~September 30, 2022, as compared to ~~0.90%~~0.80% for the three months ended ~~June~~September 30, 2021.

Interest expense on advances from the PPPLF decreased from ~~$26,000~~$10,000 for the three months ended ~~June~~September 30, 2021 as compared to no expense for the three months ended ~~June~~September 30, 2022. ~~The average balance in~~There were no advances from the PPPLF ~~decreased $31.3 million to $105,000~~ for the three months ~~June~~September 30, 2022 as compared to $14.9 million in average balances for the three months September 30, 2021.

Interest expense on advances from ~~$31.4~~the FHLB increased $31,000 to $130,000 for three months ended September 30, 2022, compared to $99,000 for the three months ended September 30, 2021. The average balance increased $3.4 million to $29.8 million for the three months ~~June~~ended September 30, 2022 from $26.4 million for the three months ended September 30, 2021. The average rate on FHLB advances increased 24 basis points to 1.74% for the three months ended September 30, 2022 from 1.50% for the three months ended September 30, 2021.

Interest expense on ~~advances from the Federal Home Loan Bank~~subordinated debt was ~~$99,000 for three months ended June 30, 2022, and~~$113,000 for the three months ended ~~June~~September 30, 2022 and $114,000 for the three months ended September 30, 2021. The average balance ~~increased $159,000 to $26.5 million for the three months ended June 30, 2022 from $26.3 million for the three months ended June 30, 2021. The average rate on Federal Home Loan Bank advances~~ was ~~1.50% for the three months ended June 30, 2022 and 2021.~~

Interest expense on subordinated debt increased $69,000 to $112,000 for the three months ended June 30, 2022 compared to $43,000 for the three months ended June 30, 2021. The average balance increased $7.2 million to $10.0 million for the three months ended ~~June~~September 30, 2022 ~~from $2.8 million for the three months ended June 30, 2021. Offsetting this increase, was a decrease in the~~and 2021, respectively. The average rate on subordinated debt of ~~169 basis points to 4.48%~~was 4.52% for the three months ended ~~June~~September 30, 2022 ~~from 6.17%~~compared to 4.56% for the three months ended ~~June~~September 30, 2021. As previously discussed, on May 28, 2021, the Company issued a $10.0 million principal amount 4.50% fixed to floating rate subordinated note due 2031.

Net interest income increased ~~$860,000~~$1.4 million to ~~$4.4~~$5.4 million for the three months ended ~~June~~September 30, 2022, from ~~$3.5~~$4.0 million for the three months ended ~~June~~September 30, 2021. Our net interest-earning assets increased ~~$21.4~~

$32.2 million to ~~$114.1~~$120.8 million for the three months ended ~~June~~September 30, 2022, from ~~$92.7~~$88.6 million for the three months ended ~~June~~September 30, 2021. Our interest rate spread increased by 7569 basis points to ~~3.23%~~3.71% for the three months ended ~~June~~September 30, 2022, from ~~2.48%~~3.02% for the three months ended ~~June~~September 30, 2021. Our net interest margin increased 78 basis points to ~~3.34%~~3.89% for the three months ended ~~June~~September 30, 2022, from ~~2.56%~~3.11% for the three months ended ~~June~~September 30, 2021.

The following table shows 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. All average balances are based on daily balances.

	For the Three Months Ended June 30,														For the Three Months Ended September 30,
	2022							2021							2022							2021
	Average Balance		Interest Income/ Expense		Yield/ Cost (5)			Average Balance		Interest Income/ Expense		Yield/ Cost (5)			Average Balance		Interest Income/ Expense		Yield/ Cost (5)			Average Balance		Interest Income/ Expense		Yield/ Cost (5)
	(Dollars in thousands)														(Dollars in thousands)
Interest-earning assets:
Loans (1)	$	358,711	$	4,287		4.78	%	$	392,409	$	3,851		3.93	%	$	423,801	$	5,524		5.21	%	$	392,174	$	4,319		4.41	%
Interest-earning deposits with banks		86,095		130		0.60	%		127,907		35		0.11	%		34,066		140		1.64	%		81,920		34		0.17	%
Investment securities		79,173		495		2.50	%		30,392		166		2.18	%		91,408		527		2.31	%		36,093		188		2.08	%
Restricted investment in bank stock		1,915		22		4.60	%		1,835		26		5.67	%		1,973		30		6.08	%		1,854		18		3.88	%
Total interest-earning assets		525,894		4,934		3.75	%		552,543		4,078		2.95	%		551,248		6,221		4.51	%		512,041		4,559		3.56	%
Non-interest-earning assets		32,104							25,409							28,799							31,167
Total assets	$	557,998						$	577,952						$	580,047						$	543,208

Interest-bearing liabilities:
Demand deposits	$	135,137		77		0.23	%	$	169,974		68		0.16	%	$	145,748		196		0.54	%	$	148,058		74		0.20	%
Money market deposit accounts		108,393		133		0.49	%		87,690		129		0.59	%		118,408		194		0.66	%		95,370		137		0.57	%
Passbook and statement savings accounts		39,093		11		0.11	%		33,773		13		0.15	%		39,862		12		0.12	%		34,186		12		0.14	%
Checking accounts-Municipal		61,269		57		0.37	%		52,240		42		0.32	%		51,087		128		1.00	%		52,641		43		0.33	%
Certificates of deposit		31,345		53		0.68	%		55,734		126		0.90	%		35,562		91		1.02	%		41,963		84		0.80	%
Total deposits		375,237		331		0.35	%		399,411		378		0.38	%		390,667		621		0.64	%		372,218		350		0.38	%
Federal Home Loan Bank advances		26,478		99		1.50	%		26,319		99		1.50	%		29,822		130		1.74	%		26,359		99		1.50	%
Federal Reserve PPPLF advances		105		—		0.00	%		31,372		26		0.33	%		—		—		0.00	%		14,857		10		0.27	%
Subordinated debt		9,996		112		4.48	%		2,786		43		6.17	%		9,997		113		4.52	%		9,996		114		4.56	%
Total interest-bearing liabilities		411,816		542		0.53	%		459,888		546		0.47	%		430,486		864		0.80	%		423,430		573		0.54	%
Non-interest-bearing liabilities:
Checking		94,706							64,787							98,119							65,829
Other		10,395							13,107							11,094							13,493
Total liabilities		516,917							537,782							539,699							502,752
Shareholders' Equity		41,081							40,170							40,348							40,456
Total liabilities and Shareholders' equity	$	557,998						$	577,952						$	580,047						$	543,208

Net interest income			$	4,392						$	3,532						$	5,357						$	3,986
Interest rate spread (2)						3.23	%						2.48	%						3.71	%						3.02	%
Net interest-earning assets (3)	$	114,078						$	92,655						$	120,762						$	88,611
Net interest margin (4)						3.34	%						2.56	%						3.89	%						3.11	%
Average interest-earning assets to average interest-bearing liabilities						127.70	%						120.15	%						128.05	%						120.93	%

The following table presents the effects of changing rates and volumes on net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns.

For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on the changes due to rate and the changes due to volume.

	For the Three Months Ended June 30, 2022 vs 2021									For the Three Months Ended September 30, 2022 vs 2021
	Increase (Decrease) Due to						Total Increase			Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)			Volume			Rate			(Decrease)
	(In thousands)									(In thousands)
Interest-earning assets:
Loans	$	(563	)	$	999		$	436		$	119		$	1,086		$	1,205
Interest-earning deposits with banks		(21	)		116			95			(37	)		143			106
Investment securities		242			87			329			265			74			339
Restricted investment in bank stock		2			(6	)		(4	)		—			12			12
Total interest-earning assets		(340	)		1,196			856			347			1,315			1,662
Interest-bearing liabilities:
Demand deposits		(24	)		33			9			(2	)		124			122
Money market deposit accounts		46			(42	)		4			17			40			57
Passbook and statement savings accounts		3			(5	)		(2	)		3			(3	)		—
Checking accounts-Municipal		3			12			15			(2	)		87			85
Certificates of deposit		(22	)		(51	)		(73	)		(22	)		29			7
Total deposits		6			(53	)		(47	)		(6	)		277			271
Federal Home Loan Bank advances		1			(1	)		—			5			26			31
Federal Reserve PPPLF		(5	)		(21	)		(26	)		(2	)		(8	)		(10	)
Subordinated debt		111			(42	)		69			114			(115	)		(1	)
Total interest-bearing liabilities		113			(117	)		(4	)		111			180			291
Change in net interest income	$	(453	)	$	1,313		$	860		$	236		$	1,135		$	1,371

We establish a provision for loan losses, which is charged to operations, in order to maintain the allowance for loan losses at a level we consider necessary to absorb credit losses incurred in the loan portfolio that are both probable and reasonably estimated at the balance sheet date. In determining the level of the allowance for loan losses, we consider past and current loss experience, evaluations of real estate collateral, current economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of non-performing loans. The amount of the allowance is based on estimates, and actual losses may vary from such estimates, as more information becomes available or economic conditions change. However, due to the uncertainty of the impact, the Company will continue to monitor and additional adjustment to the allowance for loan losses may be necessary.

This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as circumstances change as more information becomes available. The allowance for loan losses is assessed on a quarterly basis and provisions are made for loan losses as required in order to maintain the allowance for loan losses.

Provision for loan losses increased by ~~$371,000~~$379,000 to ~~$638,000~~$608,000 for the three months ended ~~June~~September 30, 2022, from ~~$267,000~~$229,000 for the three months ended ~~June~~September 30, 2021. Non-performing loans decreased ~~$1.2 million,~~$608,000, or ~~31.6%~~16.2% from $3.8 million at December 31, 2021, to ~~$2.6~~$3.1 million as of ~~June~~September 30, 2022, as a result of a decrease in one construction loan totaling $1.0 million and ~~$271,000~~$478,000 decrease in medical education loans offset by a $946,000 increase in one-to four-family compared to December 31, 2021. During the three months ended ~~June~~September 30, 2022, there were net charge-offs of ~~$94,000~~$209,000 recorded compared to no net charge-offs of $30,000 recorded during the three months ended ~~June~~September 30, 2021.

Non-interest income decreased ~~$1.7~~$1.6 million or ~~43.5%~~48.5% to ~~$2.2~~$1.7 million for the three months ended ~~June~~September 30, 2022, from ~~$3.9~~$3.3 million for the three months ended ~~June~~September 30, 2021. Non-interest income decreased ~~$1.7~~$1.6 million compared to the same period in 2021 primarily due to a $1.5 million decrease in the gain on sale of loans, and a decrease of ~~$1.0 million in loss of derivative instruments, net offset by $593,000 increase~~$568,000 in change in fair value of loans held for ~~sale.~~sale offset by an increase of $435,000 in gain of derivative instruments, net. The gain on sale of loans, net decreased $1.5 million to ~~$1.7~~$1.5 million for the three months ended ~~June~~September 30, 2022 compared to ~~$3.2~~$3.0 million for the three months ended ~~June~~September 30, 2021 primarily as a result of lower loan sales which decreased $79.4 million from $149.1 million for the three months ended June 30, 2021 to $69.7 million for the three months ended June 30, 2022. Additionally, the gain on derivative instruments decreased $1.0 million from a gain on derivative instrumentsreduced volumes of ~~$713,000 for the three months ended June 30, 2021 to a loss on derivative instruments of ($338,000) for the three months ended June 30, 2022 as a result of decreased volume of locked~~ loans ~~associated with hedging. Offsetting these decreases,~~sold. In addition, there was a ~~$593,000 increase~~$568,000 decrease in the change in fair value to ~~$238,000~~($130,000) for the three months ended ~~June~~September 30, 2022 from ~~($355,000)~~$438,000 for the three months ended ~~June~~September 30, 2021 resulting from the reduction in inventory of loans held for sale. Offsetting these decreases was a gain on derivative instruments, which increased $435,000 to a gain on derivative instruments of $13,000 for the three months ended September 30, 2022 from a loss on derivative instruments of ($422,000) for the three months ended September 30, 2021.

Non-interest expense ~~decreased $185,000 or 3.5% to $5.1~~was $5.6 million for each of the three months ended ~~June~~September 30, 2022 ~~from $5.3 million for the three months ended June 30,~~and 2021. The decrease for the three months ended June 30, 2022, compared to the three months of June 30, 2021, was primarily a result of decreases of $111,000 in other expenses and $63,000 in federal deposit insurance premiums. ~~Other expenses decreased $111,000 or 13.0%, to $742,000 for the three months ended June 30, 2022 from $853,000 for the three months ended June 30, 2021. Federal deposit insurance premiums~~ ~~decreased $63,000 or 47.4%, to $70,000 for the three months ended June 30, 2022, from $133,000 for the three months ended June 30, 2021.~~

Income tax expense was ~~$182,000~~$131,000 for the three months ended ~~June~~September 30, 2022, compared to expense of ~~$544,000~~$362,000 in expense for the three months ended ~~June~~September 30, 2021. Federal income taxes included in total taxes for the three months ended ~~June~~September 30, 2022 and 2021 was ~~$131,000~~$136,000 and ~~$338,000,~~$276,000, respectively, with effective federal tax rates of ~~15.9%~~16.3% and ~~18.5%~~18.7%. The decrease in the effective tax rate for the three months ended ~~June~~September 30, 2022, compared to the same period a year ago reflected a decrease in income before taxes.

For the three months ended ~~June~~September 30, 2022, Pennsylvania state tax was a benefit of ~~($16,000)~~$5,000 for the three months ended ~~June~~September 30, 2022 compared to expense of ~~$118,000,~~$78,000, with effective rate of ~~6.5%~~5.3% for the three months ended ~~June~~September 30, 2021. The decrease in the effective tax rate for the three months ended ~~June~~September 30, 2022, compared to the same period a year ago reflected a decrease in income before taxes. In addition, there was no New Jersey state tax ~~was $67,000 and $88,000~~expense for the three months ended ~~June~~September 30, 2022 ~~and 2021, respectively.~~compared to $8,000 for the three months ended September 30, 2021.

Comparison of Statements of Income for the ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and ~~June~~September 30, 2021

Net income decreased ~~$1.4~~$1.8 million to ~~$1.2~~$1.9 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$2.6~~$3.7 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The decrease in net income for the ~~six~~nine months ended ~~June~~September 30, 2021, was primarily due to a decrease of ~~$2.7~~$4.3 million in non-interest income, ~~$317,000~~$313,000 increase in non-interest expenses and an increase of ~~$336,000~~$715,000 in provision for loan losses offset by increases of ~~$1.2~~$2.6 million in net interest income and a decrease of ~~$720,000~~$1.0 in income tax expense.

Total interest income increased ~~$1.2~~$2.9 million, or ~~15.5%~~23.4% to ~~$9.1~~$15.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022 from ~~$7.9~~$12.4 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The increase was primarily the result of an increase in interest and fees on loans of ~~$706,000 and $432,000~~$1.9 million, $771,000 in interest on investment ~~securities.~~securities and $194,000 in interest income on interest-earning deposits. The average yield on our interest-earning assets increased 8391 basis points to ~~3.44%~~3.80% for the ~~six~~nine months ended ~~June~~September 30, 2022, as compared to ~~2.61%~~2.89% for the ~~six~~nine months ended ~~June~~September 30, 2021. Total average interest-earning assets decreased ~~$74.1~~$35.6 million from ~~$602.9~~$573.5 million for the ~~six~~nine months ended ~~June~~September 30, 2021, to ~~$528.8~~$537.9 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The decrease was primarily a result of a decrease in the average balance of interest-earning deposits with banks of ~~$73.5~~$65.3 million and a decrease of ~~$37.1~~$12.2 million in the average balance of loans offset by a ~~$36.6~~$41.7 million increase in the average balance of investment securities.

Interest and fees on loans increased ~~$706,000~~$1.9 million to ~~$8.1~~$13.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$7.4~~$11.7 million for the ~~six~~nine months ended ~~June~~September 30, 2021. This increase was primarily due to an increase the average yield on loans of 7980 basis point to ~~4.55%~~4.78% for the ~~six~~nine months ended ~~June~~September 30, 2022, versus ~~3.76%~~3.98% for the ~~six~~nine months ended ~~June~~September 30, 2021. The average loans outstanding decreased ~~$37.1~~$12.2 million to ~~$356.9~~$380.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$394.0~~$392.9 million for the ~~six~~nine months ended ~~June~~September 30, 2021 primarily as a result of a decrease in the average balance of PPP loans ~~loans held for~~and loans-held-for sale, at fair value offset by increases in the average balances of construction loans, commercial real estate and other commercial business.

Interest on investment securities increased by $771,000 to $1.3 million for the nine months ended September 30, 2022, from $505,000 for the nine months ended September 30, 2021, respectively. Interest on investment securities increased as a result of a $679,000 increase in income on taxable and non-taxable interest and dividend investments and a $92,000 increase in interest income on mortgage backed securities and collateralized mortgage obligation securities. The average balance of investment securities increased by $41.7 million to $72.5 million for the nine months ended September 30, 2022, from $30.8 million for the nine months ended September 30, 2021. The average yield on total securities increased to 2.35% for the nine months ended September 30, 2022, from 2.18% for the nine months ended September 30, 2021.

Interest income on interest-earning deposits increased by ~~$88,000~~$194,000 to ~~$188,000~~$328,000 for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$100,000~~$134,000 for the ~~six~~nine months ended ~~June~~September 30, 2021. The increase was primarily due to an increase in average yield on interest-earning deposits with banks, which increased 2541 basis points, to ~~0.36%~~0.53% for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~0.11%~~0.12% for the ~~six~~nine months ended ~~June~~September 30, 2021. Offsetting this increase, was a decrease in the average balance of interest-earning deposits of ~~$73.5~~$65.3 million to ~~$105.4~~$82.7 million for the ~~six~~nine months ended ~~June~~September 30, ~~2021,~~2022, from ~~$178.9~~$148.0 million for the ~~six~~nine months ended ~~June~~September 30, 2021.

Interest on investment securities increased by $432,000 to $749,000 for the six months ended June 30, 2022, from $317,000 for the six months ended June 30, 2021, respectively. Interest on investment securities increased as a result of a $373,000 increase in income on taxable and non-taxable interest and dividend investments and a $59,000 increase in interest income on mortgage backed securities and collateralized mortgage obligation securities. The average balance of investment securities increased by $36.6 million to $64.7 million for the six months ended June 30, 2022, from $28.1 million for the six months ended June 30, 2021. The average yield on total securities increased to 2.32% for the six months ended June 30, 2022, from 2.26% for the six months ended June 30, 2021.

Total interest expense ~~was $1.1~~increased $285,000 to $1.9 million for the ~~six~~nine months ended ~~June~~September 30, 2022, ~~and~~from $1.7 million for the nine months ended September 30, 2021 ~~respectively. Interest~~primarily due to a $181,000 increase in interest expense on subordinated debt, $142,000 increase in interest expense on deposits ~~decreased $130,000~~ and a $30,000 increase in interest expense on advances from the ~~PPPLF decreased $58,000. These decreases were~~FHLB offset by ~~an increase of $182,000~~a $68,000 decrease in interest ~~expense on subordinated debt.~~

~~Interest expense on deposits decreased $130,000 to $654,000 for the six months ended June 30, 2022, from $784,000 for the six months ended June 30, 2021, primarily from a decrease in the average~~

balance of interest bearing deposits of $68.8 million from $448.3 million in the average balance of interest bearing deposits from June 30, 2021 to $379.5 in million in the average balance of interest bearing deposits for the six months ended June 30, 2022. The average cost of deposits was 34 basis points for the six months ended June 30, 2022 compared to 35 basis points for the six months ended June 30, 2021. The decrease in the average balance of interest bearing deposits of $68.8 million from $448.3 million as of June 30, 2021, to $379.5 million as of June 30, 2022, was primarily as a result of a $42.1 million decrease in the average balance of our core deposit accounts and a decrease of $26.7 million in the average balance of our certificates of deposit. The average rate paid on money market deposits decreased 10 basis points to 0.49% for the six months ended June 30, 2022, from 0.59% for the six months ended June 30, 2021. The decrease in the balance of our certificates of deposits of $26.7 million from $58.4 million for the six months ended June 30, 2021, to $31.7 million for the six months ended June 30, 2022, was primarily the result of a decrease of $18.7 million in the average balance in retail certificate of deposits and a $8.0 million decrease in the average balance of certificates of deposit issued through brokers of $8.1 million for the six months ended June 30, 2021 compared to $90,000 for the six months ended June 30, 2022. The average cost of certificates of deposit was 0.68% for the six months ended June 30, 2022, as compared to 0.98% for the six months ended June 30, 2021.

~~Interest~~ expense on advances from the FHLB was $196,000 for the six months ended June 30, 2022 and 2021. The average rate on advances from the FHLB was 1.48% for the six months ended June 30, 2022 and 1.49% for the six months ended June 30, 2021 and the average balance increased $160,000 to $26.5 million for the six months ended June 30, 2022 from $26.3 million for the six months ended June 30, 2021.

Interest expense on advances from the PPPLF decreased $58,000 to $1,000 for the six months ended June 30, 2022, from $59,000 for the six months ended June 30, 2021. The decrease was primarily the result of a $37.3 million decrease in the average balance in advances from the PPPLF to $924,000 for the six months ended June 30, 2022 from $38.2 million for the six months ended June 30, 2021.PPPLF.

Interest expense on subordinated debt increased ~~$182,000~~$181,000 to ~~$225,000~~$338,000 for the ~~six~~nine months ended ~~June~~September 30, 2022 from ~~$43,000~~$157,000 for the ~~six~~nine months ended ~~June~~September 30, ~~2021. The increase was~~2021 primarily the result of an ~~$8.4~~increase of $5.9 million ~~increase~~ in the average balance inof subordinated debt to $10.0 million for the ~~six~~nine months ended ~~June~~September 30, 2022 from ~~$1.6~~$4.1 million ~~for~~or the ~~six~~nine months ended ~~June~~September 30, ~~2021 offset by~~2021. Offsetting this increase was a decrease in the ~~average~~ rate of 8654 basis points from ~~5.36%~~5.05% for the ~~six~~nine months ended ~~June~~September 30, 2021, to ~~4.50%~~4.51% for the ~~six~~nine months ended ~~June~~September 30, 2022. As previously discussed, on May 28, 2021, the Company sold and issued a $10.0 million in aggregate principal amount 4.50% fixed to floating rate subordinated note due 2031.

Interest expense on deposits increased $142,000 to $1.3 million for the nine months ended September 30, 2022, from $1.1 million for the nine months ended September 30, 2021, primarily from the average cost of deposits which increased to 44 basis points for the nine months ended September 30, 2022 from 36 basis points for the nine months ended September 30, 2021. Offsetting this increase was a decrease in the average balance of interest bearing deposits of $40.3 million from $424.9 million in the average balance of interest bearing deposits from September 30, 2021 to $384.6 in million in the average balance of interest bearing deposits for the nine months ended September 30, 2022. The decrease in the average balance of interest bearing deposits of $40.3 million from $424.9 million as of September 30, 2021, to $384.6 million as of September 30, 2022, was primarily as a result of a $20.8 million decrease in the average balance of our core deposit accounts and a decrease of $19.5 million in the average balance of our certificates of deposit. The average rate paid on money market deposits decreased 4 basis points to 0.55% for the nine months ended September 30, 2022, from 0.59% for the nine months ended September 30, 2021. The decrease in the balance of our certificates of deposits of $19.5 million from $52.9 million for the nine months ended September 30, 2021, to $33.4 million for the nine months ended September 30, 2022, was primarily the result of a decrease of $16.8 million in the average balance in retail certificate of deposits and a $2.7 million decrease in the average balance of certificates of deposit issued through brokers. The average balance of brokered certificates of deposits was $5.7 million for the nine months ended September 30, 2021 as compared to $3.0 million for the nine months ended September 30, 2022. The average cost of certificates of deposit was 0.79% for the nine months ended September 30, 2022, as compared to 0.93% for the nine months ended September 30, 2021.

Interest expense on advances from the FHLB increased $30,000 to $326,000 for the nine months ended September 30, 2022 from $296,000 or the nine months ended September 30, 2021. The average rate on advances from the FHLB was 1.56% for the nine months ended September 30, 2022 compared to 1.50% for the nine months ended September 30, 2021 and the average balance increased $1.5 million to $27.8 million for the nine months ended September 30, 2022 from $26.3 million for the nine months ended September 30, 2021.

Interest expense on advances from the PPPLF decreased $68,000 to $1,000 for the nine months ended September 30, 2022, from $69,000 for the nine months ended September 30, 2021. The decrease was primarily the result of a $29.5 million decrease in the average balance in advances from the PPPLF to $644,000 for the nine months ended September 30, 2022 from $30.1 million for the nine months ended September 30, 2021.

Net interest income increased ~~$1.2~~$2.6 million to ~~$8.0~~$13.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$6.8~~$10.8 million for the ~~six~~nine months ended ~~June~~September 30, 2021. Our net interest-earning assets increased ~~$23.4~~$26.8 million to ~~$111.9~~$114.8 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$88.5~~$88.0 million for the ~~six~~nine months ended ~~June~~September 30, 2021. Our interest rate spread increased by 7475 basis points to ~~2.93%~~3.19% for the ~~six~~nine months ended ~~June~~September 30, 2022 from ~~2.19%~~2.44% for the ~~six~~nine months ended ~~June~~September 30, 2021. Our net interest margin was ~~3.04%~~3.32% for the ~~six~~nine months ended ~~June~~September 30, 2022, compared to ~~2.26%~~2.51% for the ~~six~~nine months ended ~~June~~September 30, 2021.

	For the Six Months Ended June 30,														For the Nine Months Ended September 30,
	2022							2021							2022							2021
	Average Balance		Interest Income/ Expense		Yield/ Cost (5)			Average Balance		Interest Income/ Expense		Yield/ Cost (5)			Average Balance		Interest Income/ Expense		Yield/ Cost (5)			Average Balance		Interest Income/ Expense		Yield/ Cost (5)
	(Dollars in thousands)														(Dollars in thousands)
Interest-earning assets:
Loans (1)	$	356,855	$	8,122		4.55	%	$	394,005	$	7,416		3.76	%	$	380,684	$	13,646		4.78	%	$	392,892	$	11,735		3.98	%
Interest-earning deposits with banks		105,370		188		0.36	%		178,943		100		0.11	%		82,706		328		0.53	%		147,976		134		0.12	%
Investment securities		64,657		749		2.32	%		28,106		317		2.26	%		72,531		1,276		2.35	%		30,834		505		2.18	%
Restricted investment in bank stock		1,922		44		4.58	%		1,810		48		5.30	%		1,943		74		5.08	%		1,822		66		4.86	%
Total interest-earning assets		528,804		9,103		3.44	%		602,864		7,881		2.61	%		537,864		15,324		3.80	%		573,524		12,440		2.89	%
Non-interest-earning assets		30,686							23,825							30,005							26,314
Total assets	$	559,490						$	626,689						$	567,869						$	599,838

Interest-bearing liabilities:
Demand deposits	$	140,511		161		0.23	%	$	226,223		148		0.13	%	$	143,095		356		0.33	%	$	202,675		221		0.15	%
Money market deposit accounts		106,770		261		0.49	%		82,210		243		0.59	%		111,116		455		0.55	%		86,236		380		0.59	%
Passbook and statement savings accounts		38,514		22		0.11	%		32,562		24		0.15	%		38,925		35		0.12	%		33,053		36		0.15	%
Checking accounts-Municipal		62,005		102		0.33	%		48,944		83		0.34	%		58,063		230		0.53	%		50,092		126		0.34	%
Certificates of deposit		31,742		108		0.68	%		58,402		286		0.98	%		33,399		199		0.79	%		52,871		370		0.93	%
Total deposits		379,542		654		0.34	%		448,341		784		0.35	%		384,598		1,275		0.44	%		424,927		1,133		0.36	%
Federal Home Loan Bank advances		26,458		196		1.48	%		26,298		196		1.49	%		27,804		326		1.56	%		26,317		296		1.50	%
Federal Reserve PPPLF advances		924		1		0.22	%		38,152		59		0.31	%		644		1		0.21	%		30,106		69		0.31	%
Subordinated debt		9,996		225		4.50	%		1,603		43		5.36	%		9,997		338		4.51	%		4,143		157		5.05	%
Total interest-bearing liabilities		416,920		1,076		0.52	%		514,394		1,082		0.42	%		423,043		1,940		0.61	%		485,493		1,655		0.45	%
Non-interest-bearing liabilities:
Checking		90,420							59,994							92,940							61,444
Other		11,104							13,296							11,081							13,807
Total liabilities		518,444							587,684							527,064							560,744
Shareholders' Equity		41,046							39,005							40,805							39,094
Total liabilities and Shareholders' equity	$	559,490						$	626,689						$	567,869						$	599,838

Net interest income			$	8,027						$	6,799						$	13,384						$	10,785
Interest rate spread (2)						2.93	%						2.19	%						3.19	%						2.44	%
Net interest-earning assets (3)	$	111,884						$	88,470						$	114,821						$	88,031
Net interest margin (4)						3.04	%						2.26	%						3.32	%						2.51	%
Average interest-earning assets to average interest-bearing liabilities						126.84	%						117.20	%						127.14	%						118.13	%

	For the Six Months Ended June 30, 2022 vs 2021									For the Nine Months Ended September 30, 2022 vs 2021
	Increase (Decrease) Due to						Total Increase			Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)			Volume			Rate			(Decrease)
	(In thousands)									(In thousands)
Interest-earning assets:
Loans	$	(1,011	)	$	1,717		$	706		$	(454	)	$	2,365		$	1,911
Interest-earning deposits with banks		(68	)		156			88			(90	)		284			194
Investment securities		416			16			432			718			53			771
Restricted investment in bank stock		4			(8	)		(4	)		4			4			8
Total interest-earning assets		(659	)		1,881			1,222			178			2,706			2,884
Interest-bearing liabilities:
Demand deposits		(87	)		100			13			(91	)		226			135
Money market deposit accounts		86			(68	)		18			111			(36	)		75
Passbook and statement savings accounts		6			(8	)		(2	)		7			(8	)		(1	)
Checking accounts-Municipal		24			(5	)		19			18			86			104
Certificates of deposit		(76	)		(102	)		(178	)		(111	)		(60	)		(171	)
Total deposits		(47	)		(83	)		(130	)		(66	)		208			142
Federal Home Loan Bank advances		1			(1	)		—			15			15			30
Federal Reserve PPPLF		(36	)		(22	)		(58	)		(47	)		(21	)		(68	)
Subordinated debt		225			(43	)		182			157			24			181
Total interest-bearing liabilities		143			(149	)		(6	)		59			226			285
Change in net interest income	$	(802	)	$	2,030		$	1,228		$	119		$	2,480		$	2,599

Provision for loan losses increased by ~~$336,000~~$715,000 to ~~$751,000~~$1.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$415,000~~$644,000 for the ~~six~~nine months ended ~~June~~September 30, ~~2021.~~2021 as a result of increase in loan volume. Non-performing loans decreased ~~$1.2 million,~~$608,000, or ~~31.6%~~16.2% from $3.8 million at December 31, 2021, to ~~$2.6~~$3.1 million as of ~~June~~September 30, 2022, as a result of a decrease in one construction loan totaling $1.0 million and ~~$271,000~~$478,000 decrease in medical education loans offset by a $946,000 increase in one-to four-family compared to December 31, 2021. During the ~~six~~nine months ended ~~June~~September 30, 2022, total net charge-offs were ~~$129,000. During~~$338,000. Total net charge-offs were $202,000 for the ~~six~~nine months ended ~~June~~September 30, ~~2021, total charge-offs were $172,000.~~2021.

Non-interest income decreased ~~$2.7~~$4.3 million to ~~$5.3~~$7.0 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$8.0~~$11.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The decrease in non-interest income compared to the same period in 2021 was primarily due to a ~~$4.0~~$5.6 million decrease in the gain on sale of loans, net and a ~~$867,000~~$432,000 increase in loss on derivative instruments, net offset by a $1.0 million gain on sale of mortgage servicing right, ~~net and a $582,000 increase in change in fair value of loans held-for-sale.~~net. The gain on sale of loans, net decreased ~~$4.0~~$5.6 million to ~~$4.1~~$5.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$8.1~~$11.2 million for the ~~six~~nine months

sales, which decreased ~~$178.5~~$153.2 million from ~~$354.0~~$504.7 million for the ~~six~~nine months ended ~~June~~September 30, 2021, to ~~$175.5~~$351.5 million for the ~~six~~nine months ended ~~June~~September 30, 2022. In addition, there was an increase of ~~$867,000~~$432,000 in loss on derivative instruments from a gain on derivative instruments of ~~$477,000~~$55,000 for the ~~six~~nine months ended ~~June~~September 30, 2021 to a loss on derivative instruments of ($~~390,000)~~377,000) for the ~~six~~nine months end ~~June~~September 30, 2022. Offsetting these decreases, was a $1.0 million gain on sale of mortgage servicing ~~right,~~rights, net resulting from the sale of approximately $3.2 million of the mortgage servicing rights during the ~~six~~nine months ended ~~June~~September 30, 2022. ~~In addition, the fair value of loans held for sale increased $582,000 to ($482,000) for six months end June 30, 2022 compared to ($1.1 million) for six months end June 30, 2021.~~ Finally, other income increased ~~$397,000~~$486,000 to ~~$569,000~~$658,000 for the ~~six~~nine months ended ~~June~~September 30, 2022 from $172,000 for the ~~six~~nine months ended ~~June~~September 30, 2021. Included in other income for the ~~six~~nine months ended September 30, 2022 was ~~$209,000~~$352,000 in gain on settlement of bank-owned life insurance (“BOLI”).

Non-interest expense increased ~~$317,000~~$313,000 or ~~3.0%~~1.9% to ~~$11.1~~$16.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$10.7~~$16.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The increase was primarily as a result of ~~$173,000~~$181,000 increase in salaries and employee benefits and ~~$105,000~~$152,000 increase in ~~occupancy expenses offset by a $158,000 decrease in federal deposit insurance premiums.~~professional fees.

Salaries and employee benefits expense increased by ~~$173,000~~$181,000 to ~~$6.9~~$10.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$6.7~~$10.2 million for the ~~six~~nine months ended ~~June~~September 30, 2021. ~~Occupancy expenses~~Professional fees increased approximately ~~$105,000~~$152,000 to ~~$1.2 million~~$921,000 for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$1.1 million~~$769,000 for the ~~six~~nine months ended ~~June~~September 30, 2021, primarily because of increases in expenses related to leases of additional offices space compared to the same period in 2021. Offsetting these increases, was a $158,000 decrease in federal deposit insurance premiums to $198,000 for the six months ended June 30, 2022 from $356,000 for the six months ended June 30, 2021 as the average balance of interest bearing deposits decreased $68.8 million from $448.3 million for the six months ended June 30, 2021 to $379.5 million for the six months ended June 30, 2022.other consulting fees and accounting and auditing fees.

Income tax expense was ~~$312,000~~$443,000 for the ~~six~~nine months ended ~~June~~September 30, 2022, compared to ~~$1.0~~$1.4 million for the ~~six~~nine months ended ~~June~~September 30, 2021. Federal income taxes included in total taxes for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 was ~~$237,000~~$373,000 and ~~$681,000,~~$958,000, respectively, with effective federal tax rates of ~~15.3%~~15.6% and 18.8%. The decrease in the effective tax rate for the ~~six~~nine months ended ~~June~~September 30, 2022, compared to the same period a year ago reflected a decrease in income before taxes and the tax benefit related to BOLI claim proceeds.

For the ~~six~~nine months ended ~~June~~September 30, 2022, Pennsylvania state tax was a benefit of ($~~12,000)~~17,000) compared to expense of ~~$263,000 \with~~$341,000 with effective rate of ~~7.3%~~6.7% for the ~~six~~nine months ended ~~June~~September 30, 2021, respectively. In addition, New Jersey state tax was $87,000 for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$88,000~~$95,000 for the ~~six~~nine months ended ~~June~~September 30, 2021.

Non-Performing Assets We define non-performing loans as loans that are either non-accruing or accruing whose payments are 90 days or more past due and non-accruing ~~TDRs.~~troubled debt restructuring (“TDRs”). Non-performing assets, including non-performing loans and other real estate owned, totaled ~~$2.6~~$3.1 million, or 0.5% of total assets, at ~~June~~September 30, 2022. There were no non-accruing TDRs at ~~June~~September 30, 2022, and at December 31, 2021. The following table sets forth the amounts and categories of our non-performing assets at the dates indicated. There were no accruing loans past due 90 days or more at ~~June~~September 30, 2022, and at December 31, 2021.

	At June 30,			At December 31,			At September 30,			At December 31,
	2022			2021			2022			2021
	(Dollars in thousands)						(Dollars in thousands)
Non-accrual loans:
Residential:
One- to four-family	$	1,257		$	1,064		$	2,010		$	1,064
Home equity & HELOCs		64			68			63			68
Commercial:
Commercial real estate		—			—			—			—
Commercial business		—			95			—			95
SBA PPP loans		—			—			—			—
Main Street Lending Program		—			—			—			—
Construction		192			1,168			192			1,168
Consumer:
Medical education		1,087			1,358			880			1,358
Other								—			—
Total non-accrual loans		2,600			3,753			3,145			3,753

Loans accruing past 90 days		—			—			—			—

Total non-performing loans		2,600			3,753			3,145			3,753

Real estate owned		—			—			—			—
Other non-performing assets		—			—			—			—
Total non-performing assets	$	2,600		$	3,753		$	3,145		$	3,753

Ratios:
Total non-performing loans to total loans receivable		0.66	%		1.14	%		0.70	%		1.14	%
Total non-performing loans to total assets		0.46	%		0.67	%		0.52	%		0.67	%
Total non-performing assets to total assets		0.46	%		0.67	%		0.52	%		0.67	%

The following table sets forth activity in our allowance for loan losses for the periods indicated.

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021			2022			2021
	(Dollars in thousands)						(Dollars in thousands)						(Dollars in thousands)						(Dollars in thousands)
Balance at beginning of year	$	2,446		$	1,993		$	2,368		$	2,017		$	2,990		$	2,260		$	2,368		$	2,017

Charge-offs:
Residential:
One-to-four family		—			—			—			—			—			—			—			—
Home equity & HELOCs		—			—			—			—			—			—			—			—
Commercial real estate		—			—			—			—			—			—			—			—
Commercial business		(75	)		—			(75	)		—			—			—			(75	)		—
Construction		—			—			—			—			—			—			—			—
Consumer:		—			—			—			—			—			—			—			—
Medical education		(31	)		—			(67	)		(172	)		(247	)		(38	)		(314)			(210	)
Other		—			—			—			—			—			—			—			—
Total charge-offs		(106	)		—			(142	)		(172	)		(247	)		(38	)		(389	)		(210	)

Recoveries:
Residential:
One-to-four family		—			—			—			—			—			—			—			—
Home equity & HELOCs		—			—			—			—			—			—			—			—
Commercial real estate		—			—			—			—			—			—			—			—
Commercial business		—			—			—			—			—			—			—			—
Construction		—			—			—			—			—			—			—			—
Consumer:
Medical education		12			—			13			—			38			8			51			8
Other		—			—			—			—			—			—			—			—
Total recoveries		12			—			13			—			38			8			51			8

Net (charge-offs) recoveries		(94	)		—			(129	)		(172	)		(209	)		(30	)		(338	)		(202	)
Provision for loan losses		638			267			751			415	��		608			229			1,359			644
Balance at end of period	$	2,990		$	2,260		$	2,990		$	2,260		$	3,389		$	2,459		$	3,389		$	2,459

Ratios:
Net charge-offs to average loans outstanding		0.03	%		0.00	%		0.04	%		0.05	%		0.05	%		0.01	%		0.09	%		0.06	%
Allowance for loan losses to non-performing loans at end of period		115.00	%		80.23	%		115.00	%		80.23	%		107.76	%		62.25	%		107.76	%		62.25	%
Allowance for loan losses to total loans at end of period		0.76	%		0.67	%		0.76	%		0.67	%		0.76	%		0.78	%		0.76	%		0.78	%

Liquidity Management. 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, proceeds from sales of loans and securities, and matured loans and securities. In addition, we can use brokered certificates of deposit as a funding source of our asset base. As of ~~June~~September 30, 2022, the Company had ~~$9.5~~$23.0 million in brokered certificates of deposits, or ~~1.7%~~3.8% of total assets. At December 31, 2021, there were no brokered certificates of deposit outstanding. We also have the ability to borrow from the FHLB of Pittsburgh. Huntingdon Valley Bank had FHLB of Pittsburgh advances of ~~$26.5~~$37.0 million outstanding with unused borrowing capacity of ~~$70.3~~$179.4 million as of ~~June~~September 30, 2022. Additionally, at ~~June~~September 30, 2022, the Bank has the ability to borrow $6.0 million from Atlantic Community Bankers Bank and HV Bancorp Inc. has the ability to borrow up to $3.0 million for a total of $9.0 million. We have not borrowed against the credit lines with Atlantic Community Bankers Bank for the ~~six~~nine months ended ~~June~~September 30, 2022.

The board of directors is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. We believe that we have enough sources of liquidity to satisfy our short and long-term liquidity needs as of ~~June~~September 30, 2022.

We monitor and adjust our investments in liquid assets based upon our assessment of: (1) expected loan demand; (2) expected deposit flows; (3) yields available on interest-earning deposits and securities; and (4) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits and short-and intermediate-term securities.

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 cash equivalents, which include federal funds sold and interest-earning deposits in other banks. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At ~~June~~September 30, 2022, cash and cash equivalents totaled ~~$37.1~~$27.1 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled ~~$65.7~~$56.0 million at ~~June~~September 30, 2022.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was ~~$24.1~~$28.8 million for the ~~six~~nine months ended ~~June~~September 30, 2022, compared to ~~$12.7~~$13.4 million for the ~~six~~nine months ended ~~June~~September 30, 2021. Net cash used in investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans and proceeds from maturing securities, was ~~$122.0~~$169.1 million and ~~$32.2~~$15.5 million for the ~~six~~nine months ended ~~June~~September 30, 2022, and ~~June~~September 30, 2021, respectively. Net cash provided by financing activities ~~of $14.2~~was $46.6 million for the ~~six~~nine months ended ~~June~~September 30, ~~2021~~2022 compared to net cash used in ~~financing activities was $315.6~~of $327.8 million for the ~~six~~nine months ended ~~June~~September 30, 2021 respectively. Net cash provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2022, consisted primarily of increases in deposits of ~~$17.5~~$40.1 million and net increase of $10.0 million in short-term borrowing from FHLB offset by repayments of $3.1 million in repayments in PPPLF advances from the Federal Reserve, and purchases of treasury stock of ~~$212,000.~~$273,000. Net cash used in financing activities for the ~~six~~nine months ended ~~June~~September 30, 2021, consisted primarily of a decrease in deposits of ~~$293.4~~$290.9 million and repayments of ~~$31.1~~$44.9 million from the PPPLF offset by proceeds of $10.0 million from the issuance of subordinated debt.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Certificates of deposit due within one year of ~~June~~September 30, 2022, totaled ~~$31.9~~$43.1 million of total deposits. Included in certificate of deposits of ~~$31.9~~$43.1 million due within one year, is approximately ~~$9.5~~$23.0 million of brokered certificate of deposits maturing in one year. If these deposits do not remain with us, we will be required to seek other sources of funds, including other deposits and FHLB advances. Depending on market conditions, we may be required to pay higher rates on such deposits or borrowings than we currently pay. We believe, however, based on past experience that a significant portion of such deposits

will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

In response to rising inflation, the Federal Reserve Board has raised interest rates and anticipates ongoing increases in order to attain a stance of monetary policy to lower inflation. Management continues to closely monitor interest rate sensitivity trends through the Company's asset liability management program.

Capital Management. The Bank is subject to various regulatory capital requirements, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At ~~June~~September 30, 2022, the Bank exceeded all regulatory capital requirements and was considered “well capitalized” under regulatory guidelines.

Information presented for ~~June~~September 30, 2022, and December 31, 2021, reflects the Basel III capital requirements that became effective January 1, 2015, for the Bank. Under these capital requirements 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 classifications are also subject to qualitative judgments by regulators about components, risk- weightings and other factors.

Federal bank regulators require the Bank maintain minimum ratios of core capital to adjusted average assets of 4.0%, common equity Tier 1 capital to risk-weighted assets of 4.5%, Tier 1 capital to risk-weighted assets of 6.0% and total risk-based capital to risk-weighted assets of 8.0%. At ~~June~~September 30, 2022, the Bank met all the capital adequacy requirements to which it was subject. At ~~June~~September 30, 2022, the Bank was “well capitalized” under the regulatory framework for prompt corrective action. In February 2022, the Company infused $5.0 million to the Bank as Tier 1 capital. To be “well capitalized,” the Bank must maintain minimum leverage, common equity Tier 1 risk-based, Tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively. Management believes that no conditions or events have occurred since ~~June~~September 30, 2022 that would materially adversely change the Bank’s capital classifications.

The Bank’s actual capital amounts and ratios are presented in the table (dollars in thousands):

To Be Well Capitalized

Under the Prompt

Capital Adequacy

Corrective Action

Capital Adequacy

Corrective Action

Actual

Purposes

Provision

Actual

Purposes

Provision

(Dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

As of June 30, 2022

As of September 30, 2022

Total risk-based capital (to

risk-weighted assets)

55,036

12.9

$>34,120

> 8.0%

$>42,650

>10.0%

56,429

11.7

$>38,561

> 8.0%

$>48,201

>10.0%

Tier 1 capital (to risk-weighted

assets)

52,046

12.2

>25,590

> 6.0%

>34,120

> 8.0%

53,040

11.0

>28,920

> 6.0%

>38,561

> 8.0%

Tier 1 capital (to average assets)

52,046

9.4

>22,238

> 4.0%

>27,798

> 5.0%

53,040

9.1

>23,425

> 4.0%

>29,282

> 5.0%

Tier 1 common equity (to risk

-weighted assets)

52,046

12.2

>19,193

> 4.5%

>27,723

> 6.5%

53,040

11.0

>21,690

> 4.5%

>31,330

> 6.5%

As of December 31, 2021

Total risk-based capital (to

risk-weighted assets)

47,797

13.1

$>29,168

> 8.0%

$>36,460

>10.0%

Tier 1 capital (to risk-weighted

assets)

45,429

12.5

>21,876

> 6.0%

>29,168

> 8.0%

Tier 1 capital (to average assets)

45,429

8.2

>22,045

> 4.0%

>27,557

> 5.0%

Tier 1 common equity (to risk

-weighted assets)

45,429

12.5

>16,407

> 4.5%

>23,699

> 6.5%

As a licensed mortgagee, the Bank is subject to the rules and regulations of the Department of Housing and Urban Development (“HUD”), Federal Housing Authority (“FHA”) and state regulatory authorities with respect to originating, processing and selling loans. Those rules and regulations, among other things, require the maintenance of minimum net worth levels (which vary based on the portfolio of FHA loans originated by the Bank). Failure to meet the net worth requirements could adversely impact the ability of the Bank to originate loans and access secondary markets. As of ~~June~~September 30, 2022, and December 31, 2021, the Bank maintained the minimum required net worth levels.

The Bank must hold a capital conservation buffer above its minimum risk-based capital requirements. As of ~~June~~September 30, 2022, the Bank is required to maintain a capital conservation buffer of 2.50%. At ~~June~~September 30, 2022, the Bank met the capital conservation buffer requirements. Failure to maintain the full amount of the buffer will result in restrictions on the Bank’s ability to make capital distributions and to pay discretionary bonuses to executive officers.

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At ~~June~~September 30, 2022, we had outstanding commitments to originate loans of ~~$53.3~~$42.3 million, unused lines of credit totaling ~~$85.3~~$92.5 million and ~~$655,000~~$700,000 in stand-by letters of credit outstanding. We had ~~$56.1~~$45.1 million outstanding in letters of credit issued by the FHLB to secure certain deposits. We anticipate that we will have sufficient funds available to meet our current lending commitments. Certificates of deposit that are scheduled to mature in less than one year from ~~June~~September 30, 2022, totaled ~~$31.9~~$43.1 million of total deposits. Included in certificate of deposits of ~~$31.9~~$43.1 million due within one year, is approximately ~~$9.5~~$23.0 million of brokered certificate of deposits maturing in one year. 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 Federal Home Loan Bank advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for equipment, agreements with respect to borrowed funds and deposit liabilities.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of ~~June~~September 30, 2022. Based on their evaluation of the Company's disclosure controls and procedures, the Company's Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and regulations are operating in an effective manner.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the ~~second~~third fiscal quarter of 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

At ~~June~~September 30, 2022, the Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which involve amounts in the aggregate believed by management to be immaterial to the financial condition and operating results of the Company. In addition, no material proceedings are pending or known to be threatened or contemplated against the Company or its subsidiary by governmental authorities.

The Company’s repurchases of its common stock made during the quarter ended ~~June~~September 30, 2022 are set forth in the table below:

(1)~~During the second quarter of 2022, 255 shares were acquired from an employee in connection with income tax withholdings related to the vesting of restricted stock issued as part of the~~ ~~2018 Equity Incentive Plan~~. The issuance of these shares was made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) by Section 4(a) (2) thereof. The participants under the ~~2018 Equity Incentive Plan~~ are “Accredited Investors”, as defined in Rule 501(a) under the Securities Act. These transactions did not involve a public offering and occurred without general solicitation or advertising. The shares were purchased at the closing price of the Company’s common stock on the dates of purchase.

~~(2)~~ In April 2019, a stock repurchase plan was approved to repurchase up to 100,000 shares of the Company’s outstanding common stock. There is no expiration date for this plan. In February 2021, the Board of Directors approved a plan to repurchase in the open market and privately negotiated transactions, up to 100,000 shares of the Company’s outstanding common stock. This plan supplements the previous repurchase plan.

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.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	HVBC	The NASDAQ Stock Market, LLC

INDEX

PART I – FINANCIAL INFORMATION				2

		Item 1 – Consolidated Financial Statements – Unaudited		2

			Notes to Unaudited Consolidated Financial Statements	8

		Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		4749

		Item 3 – Quantitative and Qualitative Disclosures about Market Risk		6467

		Item 4 – Controls and Procedures		6468

	PART II OTHER INFORMATION			6468

		Item 1 – Legal Proceedings		6468

		Item 1A – Risk Factors		6568

		Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		6568

		Item 3 – Defaults upon Senior Securities		6569

		Item 4 – Mine Safety Disclosures		6569

		Item 5 – Other Information		6569

		Item 6 – Exhibits		6669

SIGNATURES				6770

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

Net unrealized holding gains on available-for-sales securities (1):
	For the three months ended June 30, 2022					For the six months ended June 30, 2022
(Dollars in thousands)	Net Unrealized Gains and Losses on Available-for-Sale Securities			Net Unrealized Gains and Losses on Held-to-Maturity Securities		Net Unrealized Gains and Losses on Available-for-Sale Securities			Net Unrealized Gains and Losses on Held-to-Maturity Securities
Balance at beginning period	$	(1,942	)	$	—	$	(148	)	$	—
Unrealized holding losses on available-for-sale securities before reclassification		(917	)		—		(2,711	)		—
Accretion of discount on securities transferred to held-to-maturity		—			78		—			78
Net current-period other comprehensive loss		(917	)		78		(2,711	)		78
Balance at ending period	$	(2,859	)	$	78	$	(2,859	)	$	78

Period	Total Number of Shares (1)		Average Price Paid per share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
April 1, 2022- April 30, 2022		731	$	22.55		731		91,007
May 1, 2022- May 30, 2022		1,349		21.59		1,349		89,658
June 1, 2022- June 30, 2022		934		19.56		679		88,979
Total		3,014	$	21.35		2,759


31.1		Rule 13a-14(a) Certification of the Chief Executive Officer *

31.2		Rule 13a-14(a) Certification of the Chief Financial Officer *

32		Section 1350 Certification *

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document
104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2022 has been formatted in Inline XBRL and is included in Exhibits 101.

		HV BANCORP, INC.

Date: ~~August 12,~~November 14, 2022	By:	/s/ Travis J. Thompson
		Travis J. Thompson
		Chief Executive Officer
		(Duly Authorized Officer)

Date: ~~August 12,~~November 14, 2022	By:	/s/ Joseph C. O’Neill, Jr.
		Joseph C. O’Neill, Jr.
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)