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Item 1. Financial Statements

2024-11-14 compared with 2024-08-14 · 327 added, 272 removed, 536 unchanged (53% of the section changed)

Financial Statements

FIFTH DISTRICT SAVINGS BANK

Balance Sheets

(in thousands, except per share amounts)

FIFTH DISTRICT BANCORP, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

September 30,

Cash and Due from Banks

11 unchanged sentences

Deferred Tax Asset, Net

Liabilities and Equity Capital

Liabilities and Stockholders' Equity

Interest-Bearing

4 unchanged sentences

Total Liabilities

Equity Capital

Stockholders' Equity

Preferred Stock - $ 0.01 Par Value;

1,000,000 Shares Authorized

Common Stock - $ 0.01 Par Value;

20,000,000 Shares Authorized:

5,559,473 and - 0 - Shares Issued and Outstanding at September 30, 2024 and December 31, 2023, Respectively

Additional Paid-In Capital

Unearned ESOP Stock

Retained Earnings

Accumulated Other Comprehensive Loss

Total Equity Capital

Total Liabilities and Equity Capital

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

FIFTH DISTRICT SAVINGS BANK

Statements of Operations (Unaudited)

Total Stockholders' Equity

Total Liabilities and Stockholders' Equity

The accompanying notes are an integral part of these consolidated financial statements.

FIFTH DISTRICT BANCORP, INC.

Consolidated Statements of Operations (Unaudited)

(in thousands)

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Interest and Dividend Income

8 unchanged sentences

Recovery of Credit Losses on Loans

Recovery of Credit Losses on Unfunded Commitments

Total Recovery of Credit Losses

Net Interest Income After Recovery of Credit Losses

4 unchanged sentences

Loss on Investments Securities

Gain on Sale of Asset

Total Non-Interest Income (Loss)

6 unchanged sentences

Data Processing

Charitable Contributions

Total Non-Interest Expense

2 unchanged sentences

Net Income (Loss)

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

FIFTH DISTRICT SAVINGS BANK

Statements of Comprehensive Income (Loss) (Unaudited)

Earnings (Losses) per Share - Basic and Diluted

The accompanying notes are an integral part of these consolidated financial statements.

FIFTH DISTRICT BANCORP, INC.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(in thousands)

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net Income (Loss)

Other Comprehensive Income (Loss), Net of Tax

Unrealized Net Gains (Losses) on Investment Securities Available-for-Sale Arising During the Period

Reclassification Adjustment for Net Losses Realized in Net Income (Loss), Net

Other Comprehensive Income (Loss)

Unrealized Gains (Losses) on Investment Securities Available-for-Sale Arising During the Period

Reclassification Adjustment for Net Losses Realized in Net Income (Loss)

Loss on Defined Benefit Pension Plan

Total Other Comprehensive Income (Loss)

Comprehensive Income (Loss)

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

FIFTH DISTRICT SAVINGS BANK

Statements of Equity Capital (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

FIFTH DISTRICT BANCORP, INC.

Consolidated Statements of Stockholders’ Equity (Unaudited)

(in thousands)

Three months ended September 30, 2024 and September 30, 2023.

Comprehensive

Balance at March 31, 2023

Stockholders'

Income (Loss)

Balance at June 30, 2023

Other Comprehensive Loss

Balance at September 30, 2023

Balance at June 30, 2024

Balance at March 31, 2024

Other Comprehensive Income

Balance at June 30, 2024

Issuance of Common Stock, Net of Offering Expense

ESOP Shares Released for Allocation

Balance at September 30, 2024

Nine months ended September 30, 2024 and September 30, 2023

Comprehensive

Stockholders'

Income (Loss)

Balance at December 31, 2022

Other Comprehensive Income

Balance at June 30, 2023

Other Comprehensive Loss

Balance at September 30, 2023

Balance at December 31, 2023

Other Comprehensive Income

Balance at June 30, 2024

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

FIFTH DISTRICT SAVINGS BANK

Statements of Cash Flows (Unaudited)

Issuance of Common Stock, Net of Offering Expense

ESOP Shares Released for Allocation

Balance at September 30, 2024

The accompanying notes are an integral part of these consolidated financial statements.

FIFTH DISTRICT BANCORP, INC.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash Flows from Operating Activities

3 unchanged sentences

Recovery of Credit Losses

Gain on Sale of Premises and Equipment

Gain on Sale of Asset

Net Amortization of Deferred Loan Costs

3 unchanged sentences

Increase in Cash Surrender Value on Bank Owned Life Insurance

ESOP Compensation Expense

Changes in Operating Assets and Liabilities

8 unchanged sentences

Other Financial Institutions

Purchase of Federal Home Loan Bank Stock

Increase in Loans Receivable, Net

2 unchanged sentences

Net Cash Used in Investing Activities

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

FIFTH DISTRICT SAVINGS BANK

Statements of Cash Flows (Continued) (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

FIFTH DISTRICT BANCORP, INC.

Consolidated Statements of Cash Flows (Continued) (Unaudited)

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash Flows from Financing Activities

Increase in Deposits, Net

Decrease in Deposits, Net

Federal Home Loan Bank Advances

1 unchanged sentence

Insurance, and Repairs

Net Cash Provided by (Used in) Financing Activities

Net proceeds from Issuance of Common Stock

Net Cash Provided by Financing Activities

Net Increase (Decrease) in Cash and Cash Equivalents

4 unchanged sentences

Cash Paid During the Period for Taxes

Market Value Adjustment for Defined Benefit Pension Plan

Market Value Adjustment for Unrealized Loss on

Investment Securities Available-for-Sale

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

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Non-Cash Investing and Financing Activities

Real Estate Owned Acquired Through Foreclosure

The accompanying notes are an integral part of these consolidated financial statements.

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies (Unaudited)

Description of Business

Fifth District Savings Bank (the Bank) is a federally-chartered mutual savings bank which attracts deposits from the general public and uses such deposits primarily to originate loans secured by first mortgages on owner-occupied, family residences.

Fifth District Bancorp, Inc.

(“Fifth District Bancorp” or the “Company”) is a Maryland corporation incorporated on February 15, 2024, to serve as the bank holding company for Fifth District Savings Bank (“Fifth District” or the “Bank”) in connection with the Bank’s conversion from the mutual to stock form of organization (the “Conversion”).

The Conversion was completed on July 31, 2024.

In connection with the Conversion, Fifth District Bancorp acquired 100 % ownership of Fifth District and the Company offered and sold 5,459,473 shares of its common stock at $ 10.00 per share, for gross offering proceeds of $ 54,594,730 .

The cost of the Conversion and issuance of common stock was approximately $ 2,400,000 , which was deducted from the gross offering proceeds.

Additionally, the Company contributed 100,000 shares to a newly formed charitable foundation.

The Bank’s employee stock ownership plan (“ESOP”) purchased 444,758 shares of the common stock sold by the Company, which was equal to 8 % of the 5,559,473 shares of common stock issued by the Company.

The ESOP purchased the shares using a loan from the Company.

The Company contributed approximately $ 26,097,000 of the net proceeds from the offering to the Bank, loaned $ 4,447,580 of the net proceeds to the ESOP and retained approximately $ 21,400,000 of the net proceeds.

The Bank is a federally-chartered stock savings bank which attracts deposits from the general public and uses such deposits primarily to originate loans secured by first mortgages on owner-occupied, family residences.

The Bank’s primary regulator is the Office of the Comptroller of the Currency (OCC).

2 unchanged sentences

The Bank operates as one reporting segment.

The Bank has adopted a Plan of Conversion (the Plan) to convert from the mutual form of organization to the stock form of organization and establish a stock holding company, Fifth District Bancorp, Inc.

(the Company), as the parent of the Bank.

The Plan is subject to the approval of the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System, and must be approved by the affirmative vote of at least a majority of the total votes eligible to be cast by the Bank’s voting members at a meeting of members.

The Company is being organized as a corporation under the laws of the State of Maryland, and, upon completion of the conversion, the Bank will convert to the stock form of ownership and issue all of its outstanding common stock to the Company.

Pursuant to the Plan, the Bank will determine the total offering value and number of shares of common stock to be offered for sale by the Company based upon a valuation performed by an independent appraiser.

The common stock will be priced at $ 10.00 per share.

The Bank’s Board of Directors will adopt an employee stock ownership plan which will subscribe 8 % of the sum of the number of shares of common stock sold in the offering and contributed to a charitable foundation that the Bank will establish and fund in connection with the conversion.

The costs of issuing the common stock will be deferred and deducted from the sales proceeds of the stock offering.

If the conversion is unsuccessful, all deferred costs will be charged to operations.

The Bank had $ 1,419,000 and $ 203,000 of deferred conversion costs as of June 30, 2024 and December 31, 2023, respectively, included in other assets on the balance sheets.

The Bank incurred approximately $ 127,000 in deferred conversion costs subsequent to June 30, 2024 through the date the financial statements were available to be issued.

Upon the completion of the conversion transaction, the Bank will establish a liquidation account in the amount of its retained earnings contained in the latest financial statements included in the final prospectus.

The liquidation account will be maintained for the benefit of eligible depositors who maintain deposit accounts in the Bank at the time of the conversion.

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

The Conversion was completed on July 31, 2024, at which time the Company became the holding company of the Bank, with the Company owning all of the issued and outstanding shares of the Bank’s common stock.

In the Conversion the Company sold 5,459,473 shares of its common stock at $ 10.00 per share and contributed an additional 100,000 shares of its common stock to The Fifth District Community Foundation, Inc.

Basis of Presentation

The accounting and reporting policies and practices of the Bank conform with accounting principles generally accepted in the United States of America (U.S.

The accounting and reporting policies and practices of the Company conform with accounting principles generally accepted in the United States of America (U.S.

GAAP) and predominant practices within the banking industry.

In the opinion of management, the accompanying unaudited financial statements include all adjustments considered necessary to present fairly the Bank’s financial position as of June 30, 2024 and December 31, 2023,

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

results of operations for the three and six months ended June 30, 2024 and 2023, and cash flows for the six months ended June 30, 2024 and 2023.

All adjustments are normal and recurring nature and are the only adjustments included in the accompanying unaudited financial statements.

In the opinion of management, the accompanying unaudited financial statements include all adjustments considered necessary to present fairly the Company’s financial position as of September 30, 2024 and December 31, 2023, results of operations for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023.

All adjustments are normal and recurring nature and are the only adjustments included in the accompanying unaudited consolidated financial statements.

Interim results are not necessarily indicative of results for a full year.

Principles of Consolidation

The consolidated financial statements as of and for the period ended September 30, 2024 include the amounts of Fifth District Bancorp and its wholly-owned subsidiary, Fifth District.

All intercompany transactions and balances have been eliminated.

The financial statements as of the and for the period ended September 30, 2023 represent the Bank only, as the conversion to stock form, including the formation of Fifth District Bancorp, was completed on July 31, 2024.

References herein to the “Company” for periods prior to the completion of the stock conversion should be deemed to refer to the “Bank”.

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Use of Estimates

7 unchanged sentences

In addition, regulatory agencies, as an integral part of their examination processes, periodically review the estimated losses on loans.

Based on such reviews the Bank may determine to recognize additional losses based on their judgements about information available to them at the time of their examination.

Based on such reviews the Company may determine to recognize additional losses based on their judgements about information available to them at the time of their examination.

Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near-term.

1 unchanged sentence

Cash and Cash Equivalents

For purposes of the statements of cash flows, cash and cash equivalents include cash on hand, cash items, amounts due from banks, and interest-bearing deposits at other financial institutions with an original maturity of 90 days or less, and federal funds sold.

For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash on hand, cash items, amounts due from banks, and interest-bearing deposits at other financial institutions with an original maturity of 90 days or less, and federal funds sold.

Generally, federal funds are sold for one-day periods.

Cash and due from banks include bank deposit accounts aggregating approximately $ 28,569,000 and $ 8,934,000 in excess of the Federal Deposit Insurance Corporation limit of $ 250,000 per institution on June 30, 2024 and December 31, 2023, respectively.

The Bank has not experienced any losses and does not believe that significant credit risk exists as a result of this practice.

The Bank may be required to maintain cash reserves with the Federal Reserve Bank.

The requirement is dependent upon the Bank’s cash on hand or noninterest-bearing balances.

There was no reserve requirement as of June 30, 2024, and December 31, 2023.

Cash and due from banks include bank deposit accounts aggregating approximately $ 23,595,000 and $ 8,934,000 in excess of the Federal Deposit Insurance Corporation limit of $ 250,000 per insured account on September 30, 2024 and December 31, 2023, respectively.

The Company has not experienced any losses and does not believe that significant credit risk exists as a result of this practice.

The Company may be required to maintain cash reserves with the Federal Reserve Bank.

The requirement is dependent upon the Company’s cash on hand or noninterest-bearing balances.

There was no reserve requirement as of September 30, 2024, and December 31, 2023.

Investment Securities

Debt securities classified as held-to-maturity are those debt securities the Bank has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or changes in general economic conditions.

Debt securities classified as held-to-maturity are those debt securities the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or changes in general economic conditions.

These securities are carried at cost, adjusted for amortization of premium and accretion of discounts.

Purchase premiums and discounts are recognized in interest income using the effective interest method over the terms of the securities, identified as the call date as to premiums and maturity date as to discounts.

The Bank held no held-to-maturity securities as of June 30, 2024 or December 31, 2023.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Debt securities classified as available-for-sale are those debt securities that the Bank intends to hold for an indefinite period of time but not necessarily to maturity.

Any decision to sell a security classified as available-for-sale would be based on various factors, including significant movement in interest rates, changes in the maturity mix of the Bank’s assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors.

These securities are carried at estimated fair value by a third-party pricing service with any unrealized gains or losses excluded from net income and reported in accumulated other comprehensive income (loss), which is reported as a separate component of equity capital, net of the related deferred tax effect.

The Company held no held-to-maturity securities as of September 30, 2024 or December 31, 2023.

Debt securities classified as available-for-sale are those debt securities that the Company intends to hold for an indefinite period of time but not necessarily to maturity.

Any decision to sell a security classified as available-for-sale would be based on various factors, including significant movement in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors.

These securities are carried at estimated fair value by a third-party pricing service with any

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

unrealized gains or losses excluded from net income and reported in accumulated other comprehensive income (loss), which is reported as a separate component of stockholders’ equity, net of the related deferred tax effect.

Debt securities that are classified as trading are acquired and held principally for the purpose of selling in the near term.

These securities are carried at estimated fair value by a third-party pricing service with any unrealized gains or losses included in net income and reported in non-interest income in the statements of income.

The Bank held no trading securities as of June 30, 2024 or December 31, 2023.

The Company held no trading securities as of September 30, 2024 or December 31, 2023.

Gains and losses realized on sales of debt securities, determined using the adjusted cost basis of the specific securities sold, are included in non-interest income in the statements of operations.

Dividend and interest income, including amortization of premium and accretion of discount arising at acquisition, from all categories of investment securities are included in interest income in the statements of operations.

Restricted Stock

Restricted stock is stock from the Federal Home Loan Bank (FHLB) and First National Bankers Bank (FNBB), which is restricted as to its marketability.

Because no ready market exists for these investments and they have no quoted market value, the Bank’s investment in these stocks is carried at cost.

Because no ready market exists for these investments and they have no quoted market value, the Company’s investment in these stocks is carried at cost.

A determination as to whether there has been an impairment of a restricted stock investment is performed on an annual basis and includes a review of the current financial condition of the issuer.

1 unchanged sentence

For available-for-sale securities, management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation.

If the Bank has the intent to sell the security, the security is written down to fair value, and the entire loss is recorded in earnings.

If either of the above criteria is not met, the Bank evaluates whether the decline in fair value is the result of credit losses or other factors.

In making the assessment, the Bank may consider various factors including the extent to which fair value is less than amortized cost, performance on underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments, and adverse conditions specifically related to the security.

If the Company has the intent to sell the security, the security is written down to fair value, and the entire loss is recorded in earnings.

If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors.

In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance on underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments, and adverse conditions specifically related to the security.

If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected is compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit loss, limited to the amount that the fair value is less than the amortized cost basis, recognized as a provision for credit loss in the statements of operations.

2 unchanged sentences

Losses are charged against the allowance for credit loss when management believes an available-for-sale security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met.

At June 30, 2024 and December 31, 2023, there was no allowance for credit loss related to the available-for-sale portfolio.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Accrued interest receivable on available-for-sale securities totaled approximately $ 237,000 and $ 168,000 at June 30, 2024 and December 31, 2023, respectively, and was excluded from the estimate of credit losses.

At September 30, 2024 and December 31, 2023, there was no allowance for credit loss related to the available-for-sale portfolio.

Accrued interest receivable on available-for-sale securities totaled approximately $ 337,000 and $ 168,000 at September 30, 2024 and December 31, 2023, respectively, and was excluded from the estimate of credit losses.

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Loans Receivable

1 unchanged sentence

Amortized cost is the principal balance outstanding, net of purchase premiums and discounts and deferred fees and costs.

Accrued interest receivable related to loans totaled approximately $ 1,834,000 and $ 1,589,000 at June 30, 2024, and December 31, 2023, respectively, and was reported in accrued interest receivable on the balance sheets.

Accrued interest receivable related to loans totaled approximately $ 1,813,000 and $ 1,589,000 at September 30, 2024, and December 31, 2023, respectively, and was reported in accrued interest receivable on the balance sheets.

Interest income is accrued on the unpaid principal balance as earned using the interest method over the life of the loan.

14 unchanged sentences

The allowance for credit losses is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

The Bank measures expected credit losses on a pooled basis when similar risk characteristics exist using the weighted-average remaining life method.

Expected credit losses are measured on a pooled basis when similar risk characteristics exist using the weighted-average remaining life method.

The weighted-average remaining life method applies a loss rate to a given pool of loans over the estimated remaining life of the given pool, which is based on historical data.

Loan losses are calculated using the weighted-average remaining life method due to the nature and limited complexity of the Bank’s loan portfolio.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

The Bank has identified and calculates the allowance for credit losses for each of the following portfolio segments:

Loan losses are calculated using the weighted-average remaining life method due to the nature and limited complexity of the loan portfolio.

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The Company has identified and calculates the allowance for credit losses for each of the following portfolio segments:

Risk Characteristics

21 unchanged sentences

These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending management experience and risk tolerance, loan review and audit results, asset quality and portfolio trends, loan portfolio growth, industry concentrations, trends in underlying collateral, external factors, and economic conditions not already captured.

The Bank estimates reasonable and supportable forecasts of expected credit losses and reverts to historical loss information for periods beyond the forecast period for the remaining life of the loan pool.

The Company estimates reasonable and supportable forecasts of expected credit losses and reverts to historical loss information for periods beyond the forecast period for the remaining life of the loan pool.

Loans that do not share risk characteristics are evaluated on an individual basis.

When the borrower is experiencing financial difficulty and repayment is expected to be provided through the operation or sale of the collateral, the expected credit losses are based on the fair value of collateral at the reporting date, adjusted for estimated selling costs, as appropriate.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Allowance for Credit Losses - Unfunded Commitments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans issued to meet customer financing needs.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments.

Such financial instruments are recorded when they are funded.

The Bank records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for unfunded commitments in the Bank’s statements of operations.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for unfunded commitments in the consolidated statements of operations.

The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur as well as any third-party guarantees.

The allowance for unfunded commitments is included in other liabilities on the Bank’s balance sheets.

The allowance for unfunded commitments is included in other liabilities on the consolidated balance sheets.

Bank Owned Life Insurance

The Bank is the beneficiary of life insurance contracts purchased on the lives of certain officers of the Bank which are reported at their cash surrender value.

At June 30, 2024, and December 31, 2023, life insurance contracts totaled approximately $ 10,513,000 and $ 10,332,000 , respectively.

Appreciation in the cash surrender value amounted to approximately $ 98,000 and $ 88,000 for the three months ended June 30, 2024 and 2023, respectively, and $ 181,000 and $ 148,000 for the six months ended June 30, 2024 and 2023, respectively.

Appreciation in value of the insurance policies is included in bank owned life insurance within non-interest income in the statements of operations.

At September 30, 2024, and December 31, 2023, life insurance contracts totaled approximately $ 10,603,000 and $ 10,332,000 , respectively.

Appreciation in the cash surrender value amounted to approximately $ 91,000 and $ 89,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 271,000 and $ 237,000 for the nine months ended September 30, 2024 and 2023, respectively.

Appreciation in value of the insurance policies is included in bank owned life insurance within non-interest income in the consolidated statements of operations.

Premises and Equipment

Premises and equipment are carried at cost, less accumulated depreciation.

The Bank computes depreciation generally on the straight-line method based upon the estimated useful lives of the assets.

Depreciation is computed generally on the straight-line method based upon the estimated useful lives of the assets.

Estimated useful lives for building and improvements range from 15 to 40 years, and for furniture and fixtures from 5 to 10 years.

3 unchanged sentences

Real Estate Owned

Real estate acquired through, or in lieu of, loan foreclosure is initially recorded at fair value on the date of acquisition.

Real estate acquired through, or in lieu of, loan foreclosure is initially recorded at fair value on the date of acquisition, less estimated costs to sell.

Any write-downs at the time of acquisition are charged to the allowance for credit losses.

Subsequent to acquisition, a valuation allowance is established, if necessary, to report these assets at the lower of (a) fair value minus estimated costs to sell or (b) cost.

The ability of the Bank to recover the carrying value of real estate is based upon future sales of the real estate owned.

The ability to effect such recovery is subject to market conditions and other factors, many of which are beyond the Bank’s control.

Operating income of such properties, net of related expenses, and gains and losses on their disposition, are included in the statements of operations.

The Bank had approximately $ 42,000 of real estate owned as of June 30, 2024, and December 31, 2023.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

The ability of the Company to recover the carrying value of real estate is based upon future sales of the real estate owned.

The ability to effect such recovery is subject to market conditions and other factors, many of which are beyond the Company’s control.

Operating income of such properties, net of related expenses, and gains and losses on their disposition, are included in the consolidated statements of operations.

The Company had $ 42,000 of real estate owned as of September 30, 2024, and December 31, 2023.

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method.

Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the financial statement carrying amounts and the tax bases of the Bank’s assets and liabilities.

Deferred income tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.

1 unchanged sentence

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more-likely-than-not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more-likely-than-not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions.

Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the balance sheets, along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations.

The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the consolidated balance sheets, along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the consolidated statements of operations.

Accounting principles generally accepted in the United States of America provide accounting and disclosure guidance about positions taken by an entity in its tax returns that might be uncertain.

The Bank believes that it has appropriate support for any tax positions taken, and management has determined that there are no uncertain tax positions that are material to the financial statements.

The Bank recognized no interest and/or penalties in the statements of operations for the three months and six months ended June 30, 2024 and 2023, nor any amount of interest and/or penalties payable that were recognized in the balance sheets as of June 30, 2024 and December 31, 2023, in relation to its income tax returns.

The Company believes that it has appropriate support for any tax positions taken, and management has determined that there are no uncertain tax positions that are material to the consolidated financial statements.

The Company recognized no interest and/or penalties in the consolidated statements of operations for the three months and nine months ended September 30, 2024 and 2023, nor any amount of interest and/or penalties payable that were recognized in the consolidated balance sheets as of September 30, 2024 and December 31, 2023, in relation to its income tax returns.

Any penalties or interest would be recognized in income tax expense.

2 unchanged sentences

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income and other comprehensive income (loss), net of applicable income taxes.

Other comprehensive income includes unrealized gains and losses on available-for-sale securities and pension-related changes other than net periodic pension cost.

Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss), net of applicable income taxes.

Other comprehensive income (loss) includes unrealized gains and losses on available-for-sale securities and pension-related changes other than net periodic pension cost.

Accumulated other comprehensive (loss) consists of the cumulative unrealized gains and losses on available-for-sale securities and the cumulative unrealized gain or loss for the funded status of the pension plan liability, net of tax.

Earnings per Share

Basic earnings (loss) per share (“EPS”) represents income available or loss attributable to common shareholders divided by the weighted average number of common shares outstanding during the period.

Unallocated common shares held by the ESOP are shown as a reduction in stockholders’ equity and are excluded from the weighted-

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

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

Revenue Recognition

In the ordinary course of business, the Bank recognizes income from various revenue generating activities.

Revenue from contracts with customers within the scope of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 606 is measured based on the consideration the Bank expects to be entitled to receive in exchange for those goods or services as the related performance obligation is satisfied.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

obligations are satisfied at a point in time while others are satisfied over a period of time.

In the ordinary course of business, the Company recognizes income from various revenue generating activities.

Revenue from contracts with customers within the scope of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 606 is measured based on the consideration the Company expects to be entitled to receive in exchange for those goods or services as the related performance obligation is satisfied.

Some obligations are satisfied at a point in time while others are satisfied over a period of time.

A performance obligation is deemed to be satisfied when the control over goods or services is transferred to the customer.

The majority of the Bank’s revenue is specifically excluded from the scope of ASC 606.

Service charges on deposit accounts and ATM and check card fees are the most significant categories of revenue within the scope of ASC 606 and is included in non-interest income on the statements of operations.

The majority of the Company’s revenue is specifically excluded from the scope of ASC 606.

Service charges on deposit accounts include charges related to depository accounts under standard service agreements.

6 unchanged sentences

Non-Direct-Response Advertising

The Bank expenses all advertising costs, except for direct-response advertising, as incurred.

Advertising and promotional expenses totaled approximately $ 48,000 and $ 73,000 for the three months ended June 30, 2024 and 2023, respectively, and $ 76,000 and $ 142,000 for the six months ended June 30, 2024 and 2023, respectively.

In the event the Bank incurs expenses for material direct-response advertising, it will be amortized over the estimated benefit period.

The Company expenses all advertising costs, except for direct-response advertising, as incurred.

Advertising and promotional expenses totaled approximately $ 30,000 and $ 55,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 107,000 and $ 197,000 for the nine months ended September 30, 2024 and 2023, respectively.

If the Company incurs expenses for material direct-response advertising, it will be amortized over the estimated benefit period.

Direct-response advertising consists of advertising whose primary purpose is to elicit sales to customers who could be shown to have responded specifically to the advertising and results in probable future benefits.

For the three months and six months ended June 30, 2024, and 2023, the Bank did not incur any direct-response advertising costs.

For the three months and nine months ended September 30, 2024 and 2023, the Company did not incur any direct-response advertising costs.

Recent Accounting Pronouncements - Not Yet Adopted

4 unchanged sentences

In December 2022, the FASB issued ASU 2022-06 which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

Management does not anticipate the guidance will have a material impact on the Bank’s financial statements.

In July 2023, the FASB issued ASU 2023-03 which included amendments to SEC Paragraphs in the Accounting Standards Codification pursuant to SEC Staff Accounting Bulletin No.

120, SEC Staff Announcement at the March 24, 2022, EITF meeting, and Staff Accounting Bulletin Topic 6.B.

The amendments were effective upon issuance.

The Bank does not expect these amendments to have a material effect on its financial statements.

In August 2023, the FASB issued ASU 2023-04, which included amendments to SEC Paragraphs in the Accounting Standards Codification pursuant to SEC Staff Accounting Bulletin No.

The amendments were effective upon issuance.

The Bank does not expect these amendments to have a material effect on its financial statements.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Management does not anticipate the guidance will have a material impact on the Company’s consolidated financial statements.

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting- Improvements to Reportable Segment Disclosures .

This amendment is intended to improve disclosures about a public entity’s reportable segments and addresses requests from investors and other decision makers for additional, more detailed information about a reportable segment’s expenses.

The amendment applies to all public entities that are required to report segment information in accordance with Topic 280.

All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 31, 2024.

Early adoption is permitted.

The amendments are to be applied retrospectively to all periods presented and segment expense categories should be based on the categories identified at adoption.

The Company does not currently expect adoption of the amendment to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, which amended the Income Taxes topic in the Accounting Standards Codification 742 to improve the transparency of income tax disclosures.

1 unchanged sentence

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The Bank does not expect these amendments to have a material effect on its financial statements.

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

The Company does not expect these amendments to have a material effect on its consolidated financial statements.

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

Investment Securities

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

June 30, 2024

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

September 30, 2024

Government Agencies

6 unchanged sentences

Collateralized Mortgage Obligations

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

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

With Losses Under

With Losses Over

June 30, 2024

September 30, 2024

Government Agencies

1 unchanged sentence

Collateralized Mortgage Obligations

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

With Losses Under

4 unchanged sentences

Collateralized Mortgage Obligations

At June 30, 2024, 69 of the Bank’s available-for-sale securities had unrealized losses totaling 11.8 % of the individual securities’ amortized cost basis and 10.1 % of the Bank’s total amortized cost basis of the investment securities portfolio.

At June 30, 2024, 60 of the 69 securities had been in a continuous loss position for over 12 months.

The unrealized losses of these securities are believed to be caused by interest rate increases and changing market conditions and the Bank does not intend to sell the securities, and it is not likely to be required to sell these securities prior to maturity.

At September 30, 2024, 64 of the Company’s available-for-sale securities had unrealized losses totaling 10.1 % of the individual securities’ amortized cost basis and 6.3 % of the Company’s total amortized cost basis of the investment securities portfolio.

At September 30, 2024, 57 of these 64 securities had been in a continuous loss position for over 12 months.

The unrealized losses of these securities are believed to be caused by interest rate increases and changing market conditions and the Company does not intend to sell the securities, and it is not likely to be required to sell these securities prior to maturity.

Management has determined that the declines in the fair value of these securities are not attributable to credit losses.

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

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

The amortized cost and estimated fair value of securities classified as available-for-sale at June 30, 2024, by contractual maturity, are shown in the table below (in thousands).

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

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The amortized cost and estimated fair value of securities classified as available-for-sale at September 30, 2024, by contractual maturity, are shown in the table below (in thousands).

Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options.

6 unchanged sentences

Due after 10 Years

There were no sales of available-for-sale securities during the three months ended June 30, 2024 and 2023.

The Bank sold $ 18,685,000 securities available-for-sale and recorded a loss of $ 1,144,000 during the six months ended June 30, 2024 and there was no sales of available-for-sale securities during the six months ended June 30, 2023.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

There were no sales of available-for-sale securities during the three months ended September 30, 2024 and 2023.

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

Restricted Stock

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

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

Federal Home Loan Bank

1 unchanged sentence

Loans Receivable and Allowance for Credit Losses

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

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

One-to-Four Family Mortgages

7 unchanged sentences

Total Loans Receivable, Net

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

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

Loans 90 Days or

More Past Due and

June 30, 2024

September 30, 2024

Still Accruing

4 unchanged sentences

Commercial Loans

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Loans 90 Days or

8 unchanged sentences

Credit Quality Indicators

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

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

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

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

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

Substandard - Includes loans that are inadequately protected by the collateral pledged or the current net worth and paying capacity of the borrower.

Such loans have one or more weaknesses that jeopardize the liquidation of the debt and expose the Bank to loss if the weaknesses are not corrected.

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

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

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

Such loans have one or more weaknesses that jeopardize the liquidation of the debt and expose the Company to loss if the weaknesses are not corrected.

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

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

Term Loans by Year of Origination

19 unchanged sentences

Current Period Gross Write-Offs

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

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

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

Term Loans by Year of Origination

19 unchanged sentences

Current Period Gross Write-Offs

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Nonaccrual Loans

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

June 30, 2024

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

September 30, 2024

December 31, 2023

6 unchanged sentences

Payments received while on nonaccrual status are applied to the principal balance of nonaccrual loans.

The Bank does not recognize interest income while loans are on nonaccrual status.

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

For the Three Months Ended June 30,

For the Six Months Ended June 30,

The Company does not recognize interest income while loans are on nonaccrual status.

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

One-to-Four Family Mortgages

4 unchanged sentences

Collateral-Dependent Loans

The Bank designates individually evaluated loans on nonaccrual status as collateral-dependent loans, as well as other loans that management of the Bank designates as having higher risk.

The Company designates individually evaluated loans on nonaccrual status as collateral-dependent loans, as well as other loans that management of the Company designates as having higher risk.

Collateral-dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty.

These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses.

For collateral-dependent loans, the Bank has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral.

For collateral-dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral.

The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized cost.

If the fair value of the collateral exceeds the amortized cost, no allowance is required.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

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

June 30, 2024

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

September 30, 2024

One-to-Four Family Mortgages

10 unchanged sentences

Allowance for Credit Losses

The decrease in the allowance for credit losses as of June 30, 2024 as compared to December 31, 2023 was driven by various factors, including the evolving economic outlook, values in the local real estate market, low net charge-offs, and refining our peer group selection to better align with peers whose loan portfolios reflect the composition of our own loan portfolio and the current local economic conditions.

The decrease in the allowance for credit losses as of September 30, 2024 as compared to December 31, 2023 was driven by various factors, including the evolving economic outlook, values in the local real estate market, low net charge-offs, and refining our peer group selection to better align with peers whose loan portfolios reflect the composition of our own loan portfolio and the current local economic conditions.

Adjusting this component of our estimate has resulted in a reduced peer group loss rate and corresponding adjustments to our peer comparisons.

This change in accounting estimate will be recognized prospectively.

This change in accounting estimate was recognized prospectively.

In turn our CECL reserve percentage was decreased resulting in a $ 1.1 million reversal in our allowance for credit loss.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

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

This adjustment was made in the second quarter of 2024.

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

Loans / Lines

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Allowance for Credit Losses

4 unchanged sentences

Ending Balance

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Allowance for Credit Losses

4 unchanged sentences

Ending Balance

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

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

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

Loans / Lines

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Allowance for Credit Losses

4 unchanged sentences

Ending Balance

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Allowance for Credit Losses

Beginning Balance, Prior to Adoption of ASC 326

Beginning Balance

Recovery of Credit Loss

5 unchanged sentences

The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty.

The Bank uses a probability of default/loss given default model to determine the allowance for credit losses.

The Company uses a probability of default/loss given default model to determine the allowance for credit losses.

An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification.

Occasionally, the Bank modifies loans by providing principal forgiveness on certain of its loans.

Occasionally, the Company modifies loans by providing principal forgiveness on certain of its loans.

When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses.

1 unchanged sentence

therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

In some cases, the Bank will modify a certain loan by providing multiple types of concessions.

In some cases, the Company will modify a certain loan by providing multiple types of concessions.

Typically, one type of concession, such as a term extension, is granted initially.

If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Upon the Bank’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectable, the loan (or portion of the loan) is written off.

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Upon determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectable, the loan (or portion of the loan) is written off.

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

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

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

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

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

Unfunded Commitments

The Bank did not record an adjustment for unfunded commitments for the adoption of ASC 326.

For the three and six months ended June 30, 2024 and 2023, provision for credit losses for unfunded commitments totaled approximately $- 0 -.

At June 30, 2024 and December 31, 2023, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities was approximately $ 125,000 .

The Company did not record an adjustment for unfunded commitments for the adoption of ASC 326.

For the three and nine months ended September 30, 2024 and 2023, provision for credit losses for unfunded commitments totaled approximately ($ 110,000 ) and - 0 -, respectively.

At September 30, 2024 and December 31, 2023, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities was $ 15,000 and $ 125,000 , respectively.

Related Party Loans

In the normal course of business, loans are made to officers and directors of the Bank, as well as to their affiliates.

In the normal course of business, loans are made to officers and directors of the Company, as well as to their affiliates.

Such loans are made in the ordinary course of business with substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons.

They do not involve more than normal risk of collectability or present other unfavorable features.

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

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

September 30,

Balance, Beginning of the Year

3 unchanged sentences

Related Party Other

The Bank generally requires an inspection of the property before disbursement of funds during the term of the construction loan and inspections are typically performed by one of the Bank’s directors.

There is no revenue or expense recorded by the Bank related to those services as the customer pays these fees through their closing costs.

The Company generally requires an inspection of the property before disbursement of funds during the term of the construction loan and inspections are typically performed by one of the Company’s directors.

There is no revenue or expense recorded by the Company related to those services as the customer pays these fees through their closing costs.

Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the OCC.

Failure to meet the minimum regulatory capital requirements can initiate certain mandatory, and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements.

Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items, as calculated under regulatory accounting practices.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of common equity Tier I capital, Tier I capital and total capital to risk-weighted assets and Tier I capital to average assets.

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Company’s consolidated financial statements.

Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the assets, liabilities, and certain off-balance-sheet items, as calculated under regulatory accounting practices.

The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of common equity Tier I capital, Tier I capital and total capital to risk-weighted assets and Tier I capital to average assets.

The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S.

banks (Basel Ill rules) became fully effective for the Bank on January 1, 2019.

Management believes, as of June 30, 2024 and December 31, 2023, that the Bank meets all capital adequacy requirements to which it is subject.

As of June 30, 2024 and December 31, 2023, the most recent notification from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.

banks (Basel Ill rules) became fully effective for the Company on January 1, 2019.

Management believes, as of September 30, 2024 and December 31, 2023, that the Company meets all capital adequacy requirements to which it is subject.

As of September 30, 2024 and December 31, 2023, the most recent notification from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.

To be categorized as well capitalized, the Bank must maintain minimum total ratios as disclosed in the table below.

There are no conditions or events since the notification that management believes have changed the Bank’s prompt corrective action category.

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

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

Required to Be Well-

3 unchanged sentences

Action Provisions

June 30, 2024

September 30, 2024

Tier 1 Capital to Average Assets

7 unchanged sentences

Total Capital to Risk-Weighted Assets

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Comprehensive Income (Loss)

The components of other comprehensive income (loss) and related tax effects are as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Gross Unrealized Holding Gains on Investment Securities Available-for-Sale

Current Year Tax Effect

Net-of-Tax Amount

Reclassification Adjustment for Net Losses Realized in Net Income

Current Year Tax Effect

Net-of-Tax Amount

Gross Pension-Related Changes Other than Net Periodic Pension Cost

Net-of-Tax Amount

Financial Instruments with Off-Balance Sheet Risk

In the normal course of business, the Bank is a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers.

In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers.

These financial instruments include commitments to extend credit.

These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the Bank’s balance sheets.

The contract amounts of those instruments reflect the extent of the involvement the Bank has in particular classes of financial instruments.

As of June 30, 2024 and December 31, 2023, the Bank had made various commitments to extend credit totaling approximately $ 23,447,000 and $ 24,000,000 , respectively.

Of these commitments, approximately $ 8,865,000 and $ 9,368,000 are at variable rates as of June 30, 2024 and December 31, 2023, respectively.

These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the Company’s consolidated balance sheets.

The contract amounts of those instruments reflect the extent of the involvement the Company has in particular classes of financial instruments.

As of September 30, 2024 and December 31, 2023, the Bank had made various commitments to extend credit totaling approximately $ 24,000,000 .

respectively.

Of these commitments,

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.

1 unchanged sentence

Since some of the commitments are expected to expire without being fully drawn upon, the total commitment amount disclosed above does not necessarily represent future cash requirements.

The Bank evaluates each customer’s credit worthiness on a case-by-case basis.

The amount of collateral obtained, if considered necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the customer.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

The Company evaluates each customer’s credit worthiness on a case-by-case basis.

The amount of collateral obtained, if considered necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer.

Fair Value Measurements

15 unchanged sentences

The carrying amount of accrued interest on securities approximates its fair value.

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

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

Fair Value Measurements

June 30, 2024

September 30, 2024

Investment Securities Available-for-Sale

2 unchanged sentences

Collateralized Mortgage Obligations

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Fair Value Measurements

4 unchanged sentences

Collateralized Mortgage Obligations

The Bank did no t record any liabilities at fair market value for which measurement of the fair value was made on a recurring basis at June 30, 2024 and December 31, 2023.

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

The Company did no t record any liabilities at fair market value for which measurement of the fair value was made on a recurring basis at September 30, 2024 and December 31, 2023.

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

Assets and Liabilities Measured on a Non-Recurring Basis

3 unchanged sentences

Collateral dependent loans consist of one-to-four family mortgages secured by residential properties.

The value of residential property collateral is determined based on appraisal by qualified licensed appraisers hired by the Bank.

The value of residential property collateral is determined based on appraisal by qualified licensed appraisers hired by the Company.

These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.

6 unchanged sentences

Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

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

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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

Fair Value Measurements

June 30, 2024

September 30, 2024

Collateral Dependent Loans

Real Estate Owned

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Fair Value Measurements

4 unchanged sentences

Weighted Average

June 30, 2024

September 30, 2024

Collateral Dependent Loans

15 unchanged sentences

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

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Restricted Stock - Consists of stock held as required by the respective institutions for membership and are carried at cost.

3 unchanged sentences

Bank Owned Life Insurance - Fair value approximates carrying value.

FIFTH DISTRICT SAVINGS BANK

Notes to Financial Statements

Deposits - For NOW, savings and certain money market fund accounts, fair value is equal to the amount payable on demand or carrying value.

1 unchanged sentence

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

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

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

Fair Value Measurements

June 30, 2024

September 30, 2024

Financial Assets

14 unchanged sentences

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.

These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument.

These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.

Fair value estimates may not be realizable in an immediate settlement of the instrument.

In some instances, there are no quoted market prices for the Bank’s various financial instruments, in which case fair values may be based on estimates using the present value or other valuation techniques, or based on judgements regarding future expected loss experience, current economic conditions, risk characteristics of financial instruments, or other factors.

In some instances, there are no quoted market prices for the Company’s various financial instruments, in which case fair values may be based on estimates using the present value or other valuation techniques, or based on judgements regarding future expected loss experience, current economic conditions, risk characteristics of financial instruments, or other factors.

Those techniques are significantly affected by assumptions used, including the discount rate and estimate of future cash flows.

Subsequent changes in assumptions could significantly affect the estimates.

FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

In connection with the Conversion, the Company established an ESOP for the exclusive benefit of eligible employees.

The Company makes quarterly contributions to the ESOP in amounts as defined by the plan document.

The contributions are used to pay debt services.

Certain ESOP shares are pledged as collateral for debt.

As the debt is repaid, shares are released from collateral and allocated to active employees, based on the proportion of debt service paid during the period.

In connection with the Company’s initial public offering, the ESOP borrowed $ 4,447,580 payable to the Company for the purpose of purchasing shares of the Company’s common stock.

A total of 444,758 shares were purchased with loan proceeds.

Common stock acquired by the ESOP is shown as a reduction of stockholders’ equity.

The loan is expected to be repaid over a period of up to 20 years .

Contributions to the ESOP totaled $ 224,000 during the three and nine months ended September 30, 2024.

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

Earnings per Share

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

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

Net Income (Loss) Available to Common Stockholders

Weighted Average Common Shares Oustanding

Weighted Average Unearned ESOP Shares

Weighted Average Shares

Earnings (Loss) per Common Share - Basic and Diluted

Subsequent Events

In accordance with the subsequent events topic of the FASB ASC 855, the Bank evaluates events and transactions that occur after the balance sheets date for potential recognition in the financial statements.

The effects of all subsequent events that provide additional evidence of conditions that existed at the balance sheets date are recognized in the financial statements as of June 30, 2024 and December 31, 2023.

In preparing these financial statements, the Bank evaluated the events and transactions that occurred through the date the financial statements were available to be issued.

In accordance with the subsequent events topic of the FASB ASC 855, the Company evaluates events and transactions that occur after the consolidated balance sheets date for potential recognition in the consolidated financial statements.

The effects of all subsequent events that provide additional evidence of conditions that existed at the consolidated balance sheets date are recognized in the consolidated financial statements as of September 30, 2024 and December 31, 2023.

In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred through the date the consolidated financial statements were available to be issued.

Management has concluded that there are no additional events, other than disclosed above, which require disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements