What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2025-03-21 compared with 2024-03-29 · 572 added, 578 removed, 1582 unchanged (42% of the section changed)

13 unchanged sentences

Special cash dividends, stock dividends or returns of capital, to the extent permitted by regulations and policies of the Federal Reserve Board and the Federal Deposit Insurance Corporation, may be paid in addition to, or in lieu of, regular cash dividends.

On September 23, 2020, the board of directors of First Seacoast Bancorp (a federal corporation), predecessor to the Company, authorized the repurchase of up to 114,403 shares of common stock (adjusted for conversion of First Seacoast Bancorp, Inc.) of First Seacoast Bancorp (a federal corporation).

As of December 31, 2022, First Seacoast Bancorp (a federal corporation) had repurchased 114,403 shares of its common stock (adjusted for conversion of First Seacoast Bancorp, Inc.).

The repurchase program of First Seacoast Bancorp (a federal corporation) was terminated effective January 19, 2023, in connection with the consummation of the conversion of First Seacoast Bancorp, MHC from mutual to stock form.

The Company did not repurchase any shares of its common stock during the quarter ended December 31, 2023.

On April 11, 2024, the board of directors of the Company authorized a stock repurchase program for the repurchase of up to 507,707 shares of common stock, representing approximately 10% of shares then outstanding, which became effective on May 14, 2024.

On December 12, 2024, the board of directors of the Company authorized additional stock repurchases, up to 228,858 shares of common stock, under this stock repurchase program.

The additional repurchase authorization represents approximately 5% of pro forma outstanding shares assuming the repurchase of the remaining shares subject to the original authorization.

The Company conducts repurchases through open market purchases, including by means of a trading plan adopted under SEC Rule 10b5-1, or in privately negotiated transactions, subject to market conditions and other factors.

There is no guarantee as to the number of shares that the Company may ultimately repurchase.

The program will expire 12 months after the effective date, regardless of whether all shares will have been repurchased.

On February 7, 2025, the expiration date of the program was extended to December 3, 2025.

The Company may suspend or discontinue the program at any time.

The Company holds repurchased shares in its treasury.

As of December 31, 2024, the Company has repurchased 403,211 shares under this stock repurchase program.

The following table summarizes the Company’s repurchases of its outstanding shares of common stock during the quarter ended December 31, 2024:

Total Number of Shares Purchased

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

October 1, 2024 - October 31, 2024

November 1, 2024 - November 30, 2024

December 1, 2024 - December 31, 2024

There were no sales of unregistered securities during the year ended December 31, 2024.

24 unchanged sentences

Net interest and dividend income

Provision for credit losses

(Release) provision for credit losses

Net interest and dividend income after provision for credit losses

Non-interest (loss) income

Non-interest income (loss)

Non-interest expense

(Loss) income before income tax expense (benefit)

Income (loss) before income tax expense (benefit)

Income tax expense (benefit)

Net (loss) income

Share Data (1) :

2 unchanged sentences

Total shares outstanding

Basic (loss) earnings per share

Diluted (loss) earnings per share

Basic loss per share

Diluted loss per share

(1) Adjusted for conversion of the former First Seacoast Bancorp, MHC.

19 unchanged sentences

non-performing loans

Net recoveries as a percent of average

Net charge-offs as a percent of average

outstanding loans during the year

21 unchanged sentences

• Grow our loan portfolio and increase commercial real estate and commercial and industrial lending.

Historically, our principal business activity has been the origination of one- to four-family residential mortgage loans.

In recent years, we have sought to supplement these originations by focusing on originating higher

yielding commercial real estate loans (including owner-occupied and non-owner-occupied commercial real estate and multi-family real estate loans), construction loans, commercial and industrial loans and home equity loans and lines of credit.

Historically, our principal business activity has been the origination of one- to four-family residential mortgage

In recent years, we have sought to supplement these originations by focusing on originating higher yielding commercial real estate loans (including owner-occupied and non-owner-occupied commercial real estate and multi-family real estate loans), construction loans, commercial and industrial loans and home equity loans and lines of credit.

We intend to remain as a residential mortgage lender in our market area while continuing to increase our focus on originating commercial real estate and commercial and industrial loans.

28 unchanged sentences

Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

As noted above, effective January 1, 2023, the Company adopted the new accounting standard for credit losses.

The estimation of the ACL is in accordance with the CECL methodology utilizing the WARM modeling approach as performed in a third-party software application.

The estimation of the ACL is in accordance with the ASC 326 methodology utilizing the WARM modeling approach as performed in a third-party software application.

The adequacy of the ACL is evaluated on a quarterly basis by management.

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Additional qualitative considerations are made for any identified risk which did not exist within our portfolio historically and therefore may not be adequately addressed through evaluation of such risk factor based on historical portfolio trends as previously discussed.

Our ACL as a percent of total loans decreased from 0.89% at December 31, 2022 to 0.79% at December 31, 2023, which primarily reflects the impact of ASC 326 adoption, calculated loss rates based upon remaining life measurements and our consideration of the current economic conditions that affect the qualitative adjustments used in the determination of the ACL as they have evolved over the year from the impact of inflationary pressures and geopolitical concerns, among other considerations.

Our ACL as a percent of total loans was 0.79% at December 31, 2024 and 2023, which primarily reflects the impact of calculated loss rates based upon remaining life measurements and our consideration of the current economic conditions that affect the qualitative adjustments used in the determination of the ACL as they have evolved over the year from the impact of inflationary pressures and geopolitical concerns, among other considerations.

While we consider a number of variables in our evaluation of the adequacy of the ACL, one of the more significant variables is the use of a reasonable and supportable forecast period in the calculation of a historical loss rate.

3 unchanged sentences

Economic indicators during this period were mixed and appear similar to the current economy.

Additionally, because historical loss experience may not fully reflect our expectations about the future, management has adjusted the historical loss rate through a qualitative adjustment to reflect current economic conditions not already reflected in the historical loss information.

Additionally, because historical loss experience may not fully

reflect our expectations about the future, management has adjusted the historical loss rate through a qualitative adjustment to reflect current economic conditions not already reflected in the historical loss information.

If a pre-recessionary period such as the period between March 2007 and September 2009 was chosen as the reasonable and supportable forecast period with a similar qualitative adjustment consideration, the ACL would increase by $99,000 to $3.6 million.

Alternatively, if the qualitative adjustment to reflect current economic conditions not already reflected in the historical loss information were removed from the chosen forecast period used in the calculation of the ACL, the ACL would decrease by $941,000 to $2.4 million.

While policies and procedures used to estimate the ACL, as well as the resultant provision for credit losses charged to (loss) income, are considered adequate by management and are reviewed periodically by regulators, model validators and internal auditors, they are necessarily approximate and imprecise.

1 unchanged sentence

Therefore, management considers the calculation of the ACL a critical accounting estimate.

Prior to the adoption of the new accounting standard for credit losses, the ALL consisted of general, allocated and unallocated components.

The general component was based primarily on our average historical loss rates for the preceding three years adjusted for qualitative factors stratified by our loan segments.

The reported amount of this component may be impacted by portfolio growth trends and concentrations, levels and trends of delinquencies and local and National economic trends and conditions.

The allocated component related to loans that are classified as impaired.

Generally, our impaired loans are collateral-dependent and impairment is measured through the collateral method.

When the measurement of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through the ALL.

At December 31, 2022, the collateral values of collateral-dependent impaired loans was sufficient and no impairment charge was necessary.

The unallocated component was maintained to cover uncertainties that could affect management’s estimate of probable losses.

The unallocated component of the ALL reflected the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio.

Our ALL as a percent of total loans decreased from 0.95% at December 31, 2021 to 0.89% at December 31, 2022, which primarily reflected the impact of our consideration of the then current economic conditions that affect the qualitative factors used in the determination of the ALL as they have evolved over these periods from the impact of the COVID-19 pandemic to inflationary pressures and geopolitical concerns, among other considerations.

The Company's measurement of the fair value of its financial instruments is subject to uncertainty primarily due to the lack of quoted market prices for a portion of its various assets and liabilities.

15 unchanged sentences

This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.

These fair value measurements are significantly impacted by changes in market interest rates and current economic conditions as compared to

the coupon rates for the derivatives.

These fair value measurements are significantly impacted by changes in market interest rates and current economic conditions as compared to the coupon rates for the derivatives.

We obtain a monthly interest rate volatility report to monitor the volatility of our derivatives portfolio.

3 unchanged sentences

The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring or non-recurring basis.

ASC Topic 825, “Financial Instruments,” also requires disclosure of the fair value of financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis.

ASU 2016-01 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

ASC 820 - "Fair Value Measurement (Topic 820)" also requires disclosure of the fair value of financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis.

ASC 820 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

The exit price notion is a market-based measurement of fair value that is represented by the price to sell an asset or transfer a liability in the principal market (or most advantageous market in the absence of a principal market) on the measurement date.

1 unchanged sentence

At December 31, 2024 and 2023, these factors have not materially impacted the estimated fair values of loans as compared to their carrying amounts.

Emerging Growth Company Status

Under the JOBS Act, a company with total annual gross revenues of less than $1.235 billion (adjusted for inflation) during its most recently completed fiscal year qualifies as an “emerging growth company.” The Company qualifies as an emerging growth company under the JOBS Act.

An “emerging growth company” may choose not to hold non-binding advisory stockholder votes on annual executive compensation (more frequently referred to as “say-on-pay” votes) or on executive compensation payable in connection with a merger (more frequently referred to as “say-on-golden parachute” votes).

An emerging growth company is not subject to the requirement that its auditors attest to the effectiveness of the company’s internal control over financial reporting and can provide scaled disclosure regarding executive compensation;

however, the Company will also not be subject to the auditor attestation requirement or additional executive compensation disclosure so long as it remains a “smaller reporting company” under SEC regulations (generally less than $250 million of voting and non-voting equity held by non-affiliates).

Finally, an emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company but must make such election when the company is first required to file a registration statement.

Such an election is irrevocable during the period a company is an emerging growth company.

The extended transition period is generally one year, although it may vary for any particular accounting pronouncement.

We have opted to take advantage of the benefits of this extended transition period.

Accordingly, our consolidated financial statements may not be comparable to companies that comply with such new or revised accounting standards.

A company loses emerging growth company status on the earlier of:

(i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.235 billion or more (adjusted for inflation);

(ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933 (which will be December 31, 2024 for the Company);

(iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt;

or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).

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

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Total assets were $580.8 million as of December 31, 2024, an increase of $9.7 million, or 1.7%, when compared to total assets of $571.0 million at December 31, 2023.

The increase was due primarily to increases in securities available-for-sale and net loans.

The increase was due primarily to increases in net loans and other assets offset by decreases in securities available-for-sale and in land, building and equipment, net.

The increase in other assets and decrease in land, building and equipment, net, was due primarily to accounting for the sale-leaseback transaction involving the Bank's main office and branches which was completed on June 11, 2024.

Cash and Due From Banks.

Cash and due from banks decreased $2.2 million, or 26.4%, to $6.1 million at December 31, 2023 from $8.3 million at December 31, 2022.

The decrease was due primarily to a $15.8 million increase in securities available-for-sale, a $27.7 million increase in net loans and a $6.4 million decrease in borrowings, offset by $25.6 million of net proceeds from the stock offering in connection with the conversion of the former First Seacoast Bancorp, MHC and a $22.4 million increase in total deposits during the year ended December 31, 2023.

Cash and due from banks increased $1.0 million, or 17.0%, to $7.1 million at December 31, 2024 from $6.1 million at December 31, 2023.

The increase was due primarily to a $49.4 million increase in total deposits and $7.4 million of proceeds from the sale of land, building and equipment, offset by an $8.8 million increase in net loans, a $40.7 million decrease in borrowings and $3.7 million of common stock repurchases during the year ended December 31, 2024.

Available-for-Sale Securities.

Available-for-sale securities increased by $15.8 million, or 14.9%, to $121.9 million at December 31, 2023 from $106.1 million at December 31, 2022.

This increase was due to investment purchases totaling $55.4 million and a $6.2 million decrease in net unrealized losses within the portfolio, offset by proceeds from sales, maturities and principal repayments totaling $40.9 million, realized losses of $4.2 million and $904,000 of net amortization of bond premiums.

As noted above, on November 28, 2023, we executed a balance sheet repositioning strategy related to our available-for-sale investment securities portfolio where we sold $40.6 million in book value of lower-yielding investment

securities for an after-tax realized loss of $3.1 million and purchased $40.6 million of higher-yielding investment securities which were classified as available-for-sale upon purchase.

Available-for-sale securities decreased by $1.6 million, or 1.3%, to $120.2 million at December 31, 2024 from $121.9 million at December 31, 2023.

This decrease was due to $36.2 million of proceeds from sales, maturities and principal payments received on securities available-for-sale and $547,000 of net amortization of bond premiums, offset by investment purchases totaling $36.7 million and a $1.5 million increase in net unrealized losses within the portfolio.

On December 11, 2024, we executed a balance sheet repositioning strategy related to our available-for-sale investment securities portfolio.

We sold $23.5 million in book value of lower-yielding investment securities for an after-tax realized gain of $5,000 and purchased $16.6 million of higher-yielding investment securities which were classified as available-for-sale upon purchase.

The following table sets forth the amortized cost and average yield of our debt securities, by type and contractual maturity:

Maturity as of December 31, 2024

One Year or Less

After One Year but within Five Years

After Five Years but within Ten Years

After Ten Years

Amortized Cost

Average Yield

Amortized Cost

Average Yield

Amortized Cost

Average Yield

Amortized Cost

Average Yield

Amortized Cost

Average Yield

(Dollars in thousands)

Government sponsored

enterprises obligations

Government agency small

business administration pools

guaranteed by SBA

Collateralized mortgage

obligations issued by

the FHLMC, FNMA

Residential mortgage-backed securities

Municipal bonds

Corporate debt

Corporate subordinated debt

Net loans increased $8.8 million, or 2.1%, to $435.5 million at December 31, 2024 from $426.6 million at December 31, 2023.

During the year ended December 31, 2023, we originated $81.7 million of loans.

During 2023, we also purchased $2.0 million of participation interests in commercial and industrial loans, $780,000 of one- to four-family residential mortgages and $1.5 million of consumer loans secured by manufactured housing properties.

As of December 31, 2023 and 2022, the portfolios of purchased loans had outstanding principal balances of $33.3 million and $30.5, respectively, and were performing in accordance with their original repayment terms.

Net deferred loan costs increased $183,000, or 7.5%, to $2.6 million at December 31, 2023 from $2.4 million at December 31, 2022 due primarily to the increase in deferred costs on consumer loans.

SBA fee and interest income, related to loans originated under the Paycheck Protection Program ("PPP"), recognized during the years ended December 31, 2023 and 2022 was $-0- and $233,000, respectively, and is included in interest and fees on loans.

During the year ended December 31, 2024, we originated $58.2 million of loans and purchased $2.7 million of participation interests in commercial and industrial loans and $1.8 million of consumer loans secured by manufactured housing properties.

As of December 31, 2024 and 2023, the portfolios of purchased loans had outstanding principal balances of $34.3 million and $33.3 million, respectively, and were performing in accordance with their original repayment terms.

Net deferred loan costs increased $136,000, or 5.2%, to $2.8 million at December 31, 2024 from $2.6 million at December 31, 2023 due primarily to the increase in deferred costs on consumer loans offset by a decrease in deferred costs on one- to four-family residential mortgage loans.

Our ACL on loans increased $96,000 to $3.5 million at December 31, 2024 from $3.4 million at December 31, 2023, and consisted of a $120,000 provision for loan losses offset by $24,000 of net loan charge-offs.

One- to four-family residential mortgage loans increased $6.3 million, or 2.3%, to $275.2 million at December 31, 2024 from $268.9 million at December 31, 2023.

Commercial real estate mortgage loans increased $6.0 million, or 7.4%, to $86.6 million at December 31, 2023 from $80.6 million at December 31, 2022.

Acquisition, development and land loans decreased $970,000, or 5.2%, to $17.5 million at December 31, 2023 from $18.5 million at December 31, 2022.

Commercial and industrial loans increased $1.5 million, or 6.0%, to $25.5 million at December 31, 2023 from $24.1 million at December 31, 2022.

Commercial real estate mortgage loans decreased $546,000, or 0.6%, to $86.0 million at December 31, 2024 from $86.6 million at December 31, 2023.

Acquisition, development and land loans decreased $2.6 million, or 14.7%, to $14.9 million at December 31, 2024 from $17.5 million at December 31, 2023.

Commercial and industrial loans decreased $1.8 million, or 7.1%, to $23.7 million at December 31, 2024 from $25.5 million at December 31, 2023.

Home equity loans and lines of credit increased $6.8 million, or 48.4%, to $20.9 million at December 31, 2024 from $14.1 million at December 31, 2023.

Multi-family real estate loans decreased $604,000, or 7.4%, to $7.6 million at December 31, 2023 from $8.2 million at December 31, 2022.

Multi-family real estate loans decreased $1.8 million, or 24.1%, to $5.8 million at December 31, 2024 from $7.6 million at December 31, 2023.

Consumer loans increased by $2.6 million, or 26.3%, to $12.4 million at December 31, 2024 from $9.8 million at December 31, 2023.

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We also continue to consider selling selected, conforming 15-year and 30-year fixed rate mortgage loans to the secondary market on a servicing retained basis as market conditions allow, providing us a recurring source of revenue from loan servicing income and gains on the sale of such loans.

Our ACL on loans decreased $191,000 to $3.4 million at December 31, 2023 from $3.6 million at December 31, 2022, due primarily to the adoption of ASU 2016-13 and its new credit impairment standard for financial assets measured at amortized cost.

The ASU requires financial assets measured at amortized cost, including loans, to be presented at the net amount expected to be collected, through an ACL for losses that are expected to occur over the remaining life of the asset, rather than incurred losses.

The ASU requires the measurement of all expected credit losses for loans held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

Accordingly, the ASU requires the use of forward-looking information to form credit loss estimates.

Many of the loss estimation techniques applied at prior reporting dates are still permitted, though the inputs to those techniques have changed to reflect the full amount of expected credit losses.

The Bank has selected the Weighted Average Remaining Maturity Model (“WARM” or "CECL model"), for the loss calculation of each of the Bank’s loan pools utilizing a third-party software application.

The WARM uses a quarterly loss rate and future expectations of loan balances to calculate an ACL.

A loss rate is applied to pool balances over time.

The effect of implementing this ASU was recorded as a cumulative-effect adjustment through retained earnings as of the beginning of the reporting period in which the ASU is effective, which was January 1, 2023.

The adoption of the new standard resulted in a $295,000 decrease to the ACL on loans which was offset by a $290,000 increase in the allowance for off-balance sheet commitments that are not unconditionally cancelable.

The decrease in ACL on loans was due to a reduced emphasis on qualitative factors under the CECL model as the underlying historical loss data of the selected peer group is more robust with broader time horizons as compared to our actual historical loss data used under the incurred loss methodology.

Under the CECL model, subsequent changes in the ACL are recorded through a charge to the provision for credit losses in the statement of loss as the amounts expected to be collected change.

Our deposits are generated primarily from residents within our primary market area.

We offer a selection of deposit accounts, including non-interest-bearing and interest-bearing checking accounts, savings accounts, money market accounts and time deposits, for both individuals and businesses.

Deposits increased $22.4 million, or 5.9%, to $404.8 million at December 31, 2023 from $382.4 million at December 31, 2022 primarily as a result of an increase in time deposits, offset by a decrease in core deposits.

Core deposits (defined as all deposits other than time deposits) decreased $7.1 million, or 2.2%, to $313.5 million at December 31, 2023 from $320.6 million at December 31, 2022.

The decrease in core deposits was due to a $26.9 million, or 29.0%, decrease in non-interest bearing accounts and a decrease in NOW accounts and demand deposits of $14.5 million, or 13.0%, offset by an increase in money market deposits of $24.4 million, or 40.1%, and an increase in savings deposits of $9.9 million, or 18.0%.

deposits increased $29.6 million, or 47.9%, to $91.3 million at December 31, 2023 from $61.7 million at December 31, 2022.

At December 31, 2023 and 2022, there were $23.6 million and $18.1 million of brokered deposits included in time deposits, respectively, and $20.9 million and $-0- of brokered deposits included in savings deposits, respectively.

The purchase of brokered deposits offered a lower cost alternative to advances from the Federal Home Loan Bank of a similar duration.

Total borrowings decreased $6.4 million, or 6.4%, to $93.0 million at December 31, 2023 from $99.4 million at December 31, 2022 due to a decrease of $26.4 million in FHLB advances offset by $20.0 million of FRB advances.

Advances from FHLB decreased $26.4 million, or 26.6%, to $73.0 million at December 31, 2023 from $99.4 million at December 31, 2022 due primarily to the net repayment of advances from the receipt of $25.6 million of net proceeds from the stock offering in connection with the conversion of the former First Seacoast Bancorp, MHC.

Advances from FRB increased to $20.0 million at December 31, 2023 from $-0- at December 31, 2022 due to net advances from the Bank Term Funding Program.

Deposits increased $49.4 million, or 12.2%, to $454.2 million at December 31, 2024 from $404.8 million at December 31, 2023 due to an increase in both time and core deposits.

Core deposits (defined as all deposits other than time deposits) increased $5.0 million, or 1.6%, to $318.5 million at December 31, 2024 from $313.5 million at December 31, 2023.

The increase in core deposits was due to a $20.7 million, or 31.9%, increase in savings deposits, offset by a decrease in NOW and demand deposits of $1.5 million, or 0.9%, and a decrease in money market deposits of $14.3 million, or 16.7%.

Time deposits increased $44.4 million, or 48.7%, to $135.7 million at December 31, 2024 from $91.3 million at December 31, 2023.

At December 31, 2024 and 2023, there were $63.1 million and $23.6 million of brokered deposits included in time deposits, respectively, and $22.1 million and $20.9 million of brokered deposits included in savings deposits, respectively.

The purchase of brokered deposits offered a lower cost alternative to advances of similar duration from the Federal Home Loan Bank.

Total borrowings decreased $40.7 million, or 43.8%, to $52.3 million at December 31, 2024 from $93.0 million at December 31, 2023 due to a decrease in FHLB and FRB advances.

Advances from FHLB decreased $20.7 million, or 28.4%, to $52.3 million at December 31, 2024 from $73.0 million at December 31, 2023.

Advances from FRB decreased to $-0- at December 31, 2024 from $20.0 million at December 31, 2023 due to the repayment of advances from the Bank Term Funding Program.

Total Stockholders’ Equity.

Total stockholders’ equity increased $17.3 million, or 35.0%, to $66.6 million at December 31, 2023 from $49.3 million at December 31, 2022.

This increase was due primarily to $25.6 million of net proceeds received from the conversion of the former First Seacoast Bancorp, MHC and $3.8 million of other comprehensive income related primarily to net changes in unrealized holding losses in the available-for-sale securities portfolio adjusted for realized securities losses offset by a net loss of $10.7 million and the purchase of $2.2 million of common stock by the ESOP during the year ended December 31, 2023.

Total stockholders’ equity decreased $4.6 million, or 6.9%, to $62.1 million at December 31, 2024 from $66.6 million at December 31, 2023.

This decrease was due primarily to $3.7 million of common stock repurchases, an other comprehensive loss of $1.1 million related primarily to net changes in unrealized holding losses in the available-for-sale securities portfolio as a result of increases in market interest rates during the year ended December 31, 2024 and a net loss of $513,000 for the year ended December 31, 2024, offset by the recognition of $786,000 of stock-based compensation.

Non-performing Assets.

Non-performing assets include loans that are 90 or more days past due or on non-accrual status and real estate and other loan collateral acquired through foreclosure and repossession.

Management determines that a loan is non-performing when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent.

Management determines that a loan is non-performing when it is probable that at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent.

When a loan is determined to be non-performing, the measurement of the loan in the ACL on loans is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for non-performance based on the fair value of the collateral.

Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis.

We generally cease accruing interest on our loans when contractual payments of principal or interest have become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing.

We generally cease accruing interest on our loans when contractual payments of principal or interest have become 90 days past due or when management has serious doubts about further collectability of principal or interest, even though the loan is currently performing.

Interest received on non-accrual loans generally is applied against principal or applied to interest on a cash basis.

Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for at least six consecutive months and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Non-performing loans were $141,000, or 0.03% of total loans, at December 31, 2023, compared to $89,000, or 0.02% of total loans, at December 31, 2022.

At December 31, 2023, non-performing loans consist of a residential mortgage loan and an associated home equity loan which had outstanding balances totaling $141,000.

The property has an estimated market value of approximately $216,000.

At December 31, 2022, non-performing loans consisted primarily of a residential mortgage loan to a deceased borrower which had an outstanding balance of $84,000.

The property was sold in April 2023 and the outstanding loan balance was paid in full.

Non-performing loans were $-0- at December 31, 2024, compared to $141,000, or 0.03% of total loans, at December 31, 2023.

At December 31, 2023, non-performing loans consisted of a residential mortgage loan and an associated home equity loan which had outstanding balances totaling $141,000 and an estimated collateral market value of $216,000.

The property was sold on July 19, 2024 and all outstanding balances were repaid.

At December 31, 2024 and 2023, we had no foreclosed assets.

Comparison of Operating Results for the Years Ended December 31, 2024 and 2023

Net loss was $10.7 million for the year ended December 31, 2023, compared to a net loss of $565,000 for the year ended December 31, 2022, an increase of $10.1 million.

This increase was due to a $3.5 million, or 23.8%, decrease in net interest and dividend income after provision for credit losses, a $2.9 million, or 326.0%, decrease in non-interest income and a $4.4 million increase in income tax expense, offset by a $740,000, or 4.4%, decrease in non-interest expense during the year ended December 31, 2023.

Net loss was $513,000 for the year ended December 31, 2024, compared to a net loss of $10.7 million for the year ended December 31, 2023, a decrease of $10.1 million.

The decrease was due primarily to an increase in non-interest income of $5.9 million, a decrease in income tax expense of $3.4 million, a $388,000 increase in net interest and dividend income, a $260,000 decrease in (release) provision for credit losses and a decrease in non-interest expenses of $167,000 during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Interest and Dividend Income.

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This increase was due to a $2.7 million, or 16.2%, increase in interest and fees on loans and a $2.1 million, or 57.0%, increase in interest and dividend income on investments.

Interest and fees on loans for the years ended December 31, 2023 and 2022 included $-0- and $233,000 of interest and fees earned on PPP loans, respectively.

Average interest-earning assets increased $36.9 million, or 6.9%, to $569.8 million for the year ended December 31, 2024 from $532.8 million for the year ended December 31, 2023.

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The weighted average yield for the loan portfolio increased 45 basis points to 4.53% for the year ended December 31, 2024 from 4.08% for the year ended December 31, 2023 due primarily to an increase in market interest rates.

average yield for all other interest-earning assets increased to 3.12% for the year ended December 31, 2023 from 2.25% for the year ended December 31, 2022 due primarily to an increase in market interest rates.

The weighted average yield for all other interest-earning assets increased to 4.25% for the year ended December 31, 2024 from 3.12% for the year ended December 31, 2023 due primarily to an increase in market interest rates.

Interest Expense.

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Interest expense on deposits increased $4.3 million, or 79.9%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The average balance of interest-bearing deposits increased $22.2 million, or 7.5%, to $319.2 million for the year ended December 31, 2023 from $297.0 million for the year ended December 31, 2022 primarily as a result of an increase in the average balance of money market, savings and time deposits offset by a decrease in the average balances of NOW and demand deposits.

The average balance of interest-bearing deposits increased $42.4 million, or 13.3%, to $361.6 million for the year ended December 31, 2024 from $319.2 million for the year ended December 31, 2023 primarily as a result of an increase in the average balance of time, savings and money market deposits offset by a decrease in the average balances of NOW and demand deposits.

The weighted average rate of interest-bearing deposits increased to 2.67% for the year ended December 31, 2024 from 1.67% for the year ended December 31, 2023 due primarily to an increase in market interest rates and to respond to deposit pricing by competitors.

Interest expense on borrowings consists of interest on advances from the Federal Home Loan Bank and the Federal Reserve Bank.

Interest expense on borrowings increased $2.7 million, or 254.6%, to $3.7 million for the year ended December 31, 2023 from $1.0 million for the year ended December 31, 2022 primarily due to an increase in the average balance of borrowings and an increase in market interest rates.

Interest expense on borrowings increased $164,000, or 4.4%, to $3.9 million for the year ended December 31, 2024 from $3.7 million for the year ended December 31, 2023 primarily due to an increase in the average balance of borrowings.

The average balance of borrowings increased $3.0 million, or 3.9%, to $81.9 million for the year ended December 31, 2024 from $78.8 million for the year ended December 31, 2023.

The weighted average rate of borrowings increased to 4.70% for the year ended December 31, 2023 from 1.64% for the year ended December 31, 2022 due primarily to an increase in market interest rates.

The weighted average rate of borrowings increased to 4.73% for the year ended December 31, 2024 from 4.70% for the year ended December 31, 2023.

Net Interest and Dividend Income.

Net interest and dividend income decreased $3.4 million, or 22.6%, to $11.5 million for the year ended December 31, 2023 from $14.9 million for the year ended December 31, 2022.

This decrease was due to an increase of $37.1 million, or 10.2%, in the average balance of interest-bearing liabilities, consisting primarily of an increase in the average balance of borrowings and time deposits, during the year ended December 31, 2023 offset by a $35.8 million, or 7.2%, increase in the average balance of interest-earning assets, consisting primarily of increases in the average balances of loans and non-taxable debt securities.

Net interest margin decreased to 2.16% for the year ended December 31, 2023 from 2.99% for the year ended December 31, 2022 due primarily to an increase in the average rate of borrowings and interest-bearing deposits offset by an increase in the average yield on interest-earning assets.

Provision for Credit Losses.

Based upon management’s analysis of the ACL, a $188,000 provision for credit losses expense was recorded for the year ended December 31, 2023 compared to $-0- for the year ended December 31, 2022.

The provision for credit losses expense for the year ended December 31, 2023 consisted of a $105,000 provision for credit losses on loans and a $83,000 provision for credit losses on off-balance sheet credit exposures.

Non-Interest Income.

Non-interest income decreased $2.9 million, or 326.0%, to $(2.0) million for the year ended December 31, 2023 compared to $888,000 for the year ended December 31, 2022.

The decrease in non-interest income during the year ended December 31, 2023 was due primarily to a $3.4 million, or 458.6%, increase in losses realized on the sale of securities, a decrease of $280,000, or 27.0%, in customer service fees and a decrease of $49,000, or 38.9%, in loan servicing fee income offset by an $849,000 gain on termination of interest rate swaps.

Net interest and dividend income increased $388,000, or 3.4%, to $11.9 million for the year ended December 31, 2024 from $11.5 million for the year ended December 31, 2023.

This increase was due to a $36.9 million, or 6.9%, increase in the average balance of interest-earning assets, consisting primarily of increases in the average balances of loans and taxable debt securities during the year ended December 31, 2024 offset by an increase of $45.3 million, or 11.3%, in the average balance of interest-bearing liabilities, consisting primarily of an increase in the average balance of time and savings deposits.

Net interest rate spread decreased to 1.42% for the year ended December 31, 2024 from 1.59% for the year ended December 31, 2023 due primarily to an increase in the average rate of interest-bearing deposits offset by an increase in the average yield on interest-earning assets.

(Release) Provision for Credit Losses.

Based upon management’s analysis of the ACL, a $(72,000) release of credit losses was recorded for the year ended December 31, 2024 compared to a $188,000 provision for credit losses for the year ended December 31, 2023.

The release of credit losses for the year ended December 31, 2024 consisted of a $120,000 provision for credit losses on loans and a $(192,000) release of credit losses on off-balance sheet credit exposures.

Non-Interest Income (Loss).

Non-interest income increased $5.9 million, or 294.5%, to $3.9 million for the year ended December 31, 2024 compared to $(2.0) million for the year ended December 31, 2023.

The increase in non-interest income during the year ended December 31, 2024 was due primarily to a one-time $2.5 million gain on the sale of land and buildings and a $4.2 million, or 100.2%, decrease in losses realized on the sale of securities, as compared to an $849,000 gain on termination of interest rate swaps recognized during the year ended December 31, 2023.

Non-Interest Expense.

Non-interest expense decreased $167,000, or 1.0%, to $15.9 million for the year ended December 31, 2024 from $16.0 million for the year ended December 31, 2023.

The decrease in non-interest expense was due primarily to a $1.0 million, or 9.5%, decrease in salaries and employee benefits, a $68,000, or 11.4%, decrease in marketing, and a $32,000, or 6.6%, decrease in equipment expense offset by a $196,000, or 14.0%, increase in data processing and a $103,000, or 66.9%, increase in deposit insurance fees during the year ended December 31, 2023.

The decrease in salaries and benefits during the year ended December 31, 2023 was due primarily to a non-recurring $1.5 million charge incurred in 2022 to withdraw from the Pentegra DB Plan offset by the recognition of previously unearned compensation associated with restricted stock awards granted in 2021 and compensation expense associated with incentive and non-statutory stock options granted in May 2023.

Included in marketing for the year ended December 31, 2022 was a one-time $150,000 donation to the First Seacoast Community Foundation, Inc.

The decrease in non-interest expense was due primarily to a $427,000, or 4.4%, decrease in salaries and employee benefits, a $111,000, or 20.9%, decrease in marketing, a

$104,000, or 22.8%, decrease in equipment expense and a $94,000, or 5.9%, decrease in data processing offset by a $214,000, or 28.2%, increase in occupancy expense, a $160,000, or 15.8%, increase in professional fees and assessments and a $142,000, or 55.3%, increase in deposit insurance fees during the year ended December 31, 2024.

The decrease in salaries and benefits during the year ended December 31, 2024 was due to the adjustment of staffing levels in late 2023 reflecting the expected reduction in 2024 residential mortgage and commercial lending activity offset by normal salary increases.

The increase in occupancy expense was due primarily to the increase in lease expense associated with the sale-leaseback transaction completed on June 11, 2024.

Income Taxes.

Income tax expense (benefit) increased $4.4 million to a $3.9 million income tax expense for the year ended December 31, 2023 compared to an income tax benefit of $451,000 for the year ended December 31, 2022.

Income tax expense decreased $3.4 million to $527,000 for the year ended December 31, 2024 compared to $3.9 million for the year ended December 31, 2023.

The effective tax rate was 3,764.3% and 58.8% for the years ended December 31, 2024 and 2023, respectively.

Loss before income tax expense (benefit) was $6.7 million for the year ended December 31, 2023 as compared to $1.0 million for the year ended December 31, 2022.

The increase in the effective tax rate for 2023 as compared to 2022 was due primarily to the establishment of a 100% valuation allowance for all deferred tax assets.

Income (loss) before income tax expense was $14,000 for the year ended December 31, 2024 as compared to $(6.7) million for the year ended December 31, 2023.

The increase in the effective tax rate for 2024 as compared to 2023 was due primarily to the increase in the valuation allowance for all deferred tax assets during the year ended December 31, 2024.

Average Balance Sheets

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The percent changes to NPV in the +200, +300 and +400 bp changes in interest rates was -21.2%, -32.0% and -43.6%, respectively, at December 31, 2024 versus policy limits of -20.0%, -30.0% and -40.0%, respectively.

These percent changes were due primarily to the migration of deposits during 2023 from less interest-sensitive products such as NOW and demand deposits to products with greater interest rate sensitivity, i.e., money market and time deposits.

The percent changes to NPV in the +200, +300 and +400 bp changes in interest rates was -21.5%, -32.5% and -43.3%, respectively, at December 31, 2023 versus policy limits of -20.0%, -30.0% and -40.0%, respectively.

These percent changes were due primarily to the migration of deposits during 2024 and 2023 from less interest-sensitive products such as NOW and demand deposits to products with greater interest rate sensitivity, i.e., money market and time deposits.

We monitor our exposure to movements in interest rates regularly and discuss the implementation of strategies we believe will mitigate the negative impact of such movements.

All categories of percent change to NPV were within board of directors - approved policy limits at December 31, 2022.

Economic Value of Equity.

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Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition, liquidity and results of operations.

Changes in the level of interest rates also may negatively affect our ability to originate real estate loans, the value of our assets and our ability to realize gains from the sale of our assets, all of which ultimately affect our earnings.

Changes in the level of interest rates may also negatively affect our ability to originate real estate loans, the value of our assets and our ability to realize gains from the sale of our assets, all of which ultimately affect our earnings.

Also, our interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on our balance sheet or projected operating results.

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At December 31, 2024, our “reciprocal” CDARS® and ICS deposits were $-0- and $6.0 million, respectively.

At December 31, 2023, our “reciprocal” CDARS® and ICS deposits were $-0- and $1.1 million, respectively.

Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from the sale of loans and proceeds from sales and maturities of securities.

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At December 31, 2024 and 2023, we had $52.3 million and $73.0 million outstanding in advances from the FHLB, respectively, and the ability to borrow an additional $94.0 million and $71.8 million, respectively.

Additionally, at December 31, 2023 and 2022, we had an overnight line of credit with the FHLB for up to $3.0 million and unsecured Fed Funds borrowing lines of credit with two correspondent banks for up to $5.0 million.

At December 31, 2024 and 2023, we had an overnight line of credit with the FHLB for up to $3.0 million.

Additionally, at December 31, 2024 and 2023, the Bank had a total of $2.0 million and $5.0 million, respectively, of unsecured Fed Funds borrowing lines of credit with correspondent banks.

At December 31, 2024 and 2023, there were no outstanding balances under any of these additional credit facilities.

The Bank has established two secured credit facilities with the FRB – Bank Term Funding Program (“BTFP”) and Borrower-In-Custody of Collateral Program (“BIC”).

At December 31, 2023 and 2022, we had $20.0 million and $-0-outstanding in advances from the FRB, respectively, and the ability to borrow an additional $3.5 million under the BTFP and is based upon eligible collateral, principally government-sponsored enterprise obligations, mortgage-backed securities and collateralized mortgage obligations issued by various U.S.

Government agencies, owned as of March 12, 2023 and December 31, 2023.

Advances can be requested under the BTFP until March 11, 2024.

The interest rate for term advances under the BTFP will be the one-year overnight index swap rate plus 10 basis points and fixed for the term of the advance – up to one year - on the day the advance is made.

At December 31, 2023, the Bank’s borrowing capacity is $50.6 million under the BIC and is based upon eligible collateral -principally general obligation municipal bonds.

The Bank established two secured credit facilities with the FRB – Bank Term Funding Program (“BTFP”) and Borrower-In-Custody of Collateral Program (“BIC”).

As of December 31, 2024 and 2023, $-0- and $20.0 million of BTFP advances were outstanding, respectively, and were collateralized by eligible collateral consisting primarily of government-sponsored enterprise obligations, mortgage-backed securities and collateralized mortgage obligations issued by various U.S.

Government agencies, owned as of March 12, 2023, December 31, 2023, and December 13, 2024.

No further advances could be requested under the BTFP after March 11, 2024.

The advance matured on December 13, 2024 at a fixed annual rate of 4.89%.

The interest rate for term advances under the BTFP was based upon the one-year overnight index swap rate plus 10 basis points and fixed for the term of the advance – up to one year - on the day the advance was made.

Advances under the BIC, if any, are collateralized by eligible collateral.

During December 2024, the Bank unpledged the collateral previously pledged to the BIC - principally general obligation municipal bonds – with the intention of pledging commercial real estate loans.

On January 7, 2025, the Bank completed the collateral eligibility process with the FRB whereby the FHLB agreed to subordinate their interest in our commercial real estate loans up to a maximum of $65 million allowing these loans to be pledged to the BIC.

The Bank subsequently pledged $65.0 million of its commercial real estate loans to the BIC resulting in $38.5 million of borrowing capacity under this credit facility as of January 16, 2025.

At December 31, 2023,

the Bank’s borrowing capacity was $50.6 million under the BIC and was based upon eligible collateral -principally general obligation municipal bonds.

The entire balance of this credit facility was available at December 31, 2023.

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investing activities and financing activities.

Net cash (used) provided by operating activities was $(1.9) million and $973,000 for the years ended December 31, 2023 and 2022, respectively.

Net cash used by operating activities was $2.9 million and $1.9 million for the years ended December 31, 2024 and 2023, respectively.

Net cash used by investing activities, which consists primarily of disbursements for loan originations and loan purchases and the purchase of securities available-for-sale, offset by principal collections on loans, proceeds from sales, maturities and principal payments received on securities available-for-sale, was $2.5 million and $39.5 million for the years ended December 31, 2024 and 2023, respectively.

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We have no material commitments for capital expenditures as of December 31, 2024.

Our current strategy is to increase core deposits and utilize FHLB and FRB advances, as well as brokered deposits, to fund loan growth.

Our current strategy is to increase core deposits and utilize FHLB advances, as well as brokered deposits, to fund loan growth.

First Seacoast Bancorp, Inc.

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Cash and due from banks

Interest bearing time deposits with other banks

Securities available-for-sale, at fair value

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Total liabilities and stockholders' equity

(1) Adjusted for conversion of the former First Seacoast Bancorp, MHC.

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

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CONSOLIDATED STATEMENTS OF LOSS

Year Ended December 31,

(Dollars in thousands, except per share data)

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Net interest and dividend income

Provision for credit losses

Net interest and dividend income after provision for credit losses

(Release) provision for credit losses

Net interest and dividend income after (release) provision for credit losses

Non-interest income:

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Gain on sale of loans

Securities losses, net

Securities gains (losses), net

Gain (loss) on sale of land, building and equipment

Gain on termination of interest rate swaps

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Investment services fees

Total non-interest (loss) income

Total non-interest income (loss)

Non-interest expense:

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Total non-interest expense

Loss before income tax expense (benefit)

Income tax expense (benefit)

Income (loss) before income tax expense

Income tax expense

Loss per share:

Weighted Average Shares:

Diluted (1), (2)

(1) Adjusted for conversion of the former First Seacoast Bancorp, MHC.

(1) Not adjusted for potentially dilutive shares for years where a net loss is recognized.

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(Dollars in thousands)

Other comprehensive income (loss), net of income taxes (1) :

Other comprehensive (loss) income, net of income taxes (1) :

Securities available-for-sale:

Unrealized holding gains (losses) on securities available-for-sale

Unrealized holding (losses) gains on securities available-for-sale

arising during the year, net of income taxes of $( 540 ) and $ 315

in 2024 and 2023, respectively

Reclassification adjustment for securities losses, net and net amortization

Reclassification adjustment for securities (gains) losses, net and net amortization

of bond premiums included in net loss, net of income taxes of

$ 146 and $ 1,367 in 2024 and 2023, respectively

Total unrealized gain (loss) on securities available-for-sale

Total unrealized (loss) gain on securities available-for-sale

Change in interest rate swaps, net of income taxes of $( 3 ) and

$( 30 ) in 2024 and 2023, respectively

Reclassification adjustment for gains and net interest expense on swaps included in

Reclassification adjustment for gains and net interest income on swaps included in

net loss, net of income taxes of $( 8 ) and $( 230 ) in 2024 and 2023,

Total change in interest rate swaps

Other comprehensive income (loss)

Other comprehensive (loss) income

Comprehensive loss

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Balance December 31, 2022 (1)

Other comprehensive loss

Treasury stock activity (1)

Issuance of stock compensation

Amortization of unearned stock compensation

ESOP shares earned - 9,967 shares (1)

Balance December 31, 2022 (1)

Other comprehensive income

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Balance December 31, 2023

Other comprehensive loss

Treasury stock activity

Excise tax on stock repurchases

Issuance of stock compensation

Amortization of unearned stock compensation

Stock-based compensation expense

ESOP shares earned - 15,354 shares

Balance December 31, 2024

(1) Shares adjusted for conversion of the former First Seacoast Bancorp, MHC.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

(Dollars in thousands)

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash (used) provided by operating activities:

Adjustments to reconcile net loss to net cash used by operating activities:

Cumulative change in accounting principle (ASU 2016-13)

Stock based compensation

Loss on disposition of property and equipment

Depreciation and amortization

Net amortization of bond premium

Provision for credit losses

Securities (gains) losses, net

(Release) provision for credit losses

Gain on sale of loans

Securities losses, net

(Gain) loss on sale of land, building and equipment

Gain on termination of interest rate swaps

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Increase in deferred costs on loans

Deferred tax expense (benefit)

Increase in accrued interest receivable

Decrease (increase) in other assets

Deferred tax expense

Decrease (increase) in accrued interest receivable

(Increase) decrease in other assets

Increase in deferred compensation liability

(Decrease) increase in other liabilities

Net cash (used) provided by operating activities

Increase in lease liabilities

Decrease in other liabilities

Net cash used by operating activities

Cash flows from investing activities:

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Loan originations and principal collections, net

Net redemption (purchase) of Federal Home Loan Bank stock

Proceeds from sales and maturities of interest bearing time deposits with other banks

Net redemption of Federal Home Loan Bank stock

Proceeds from sales of interest bearing time deposits with other banks

Proceeds from sale of land, building and equipment

Termination of fair value hedges

Proceeds from termination of interest rate swaps

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Cash flows from financing activities:

Net decrease in NOW, demand deposits, money market and savings accounts

Net increase (decrease) in NOW, demand deposits, money market and savings accounts

Net increase in time deposits

(Decrease) increase in mortgagors’ escrow accounts

Increase (decrease) in mortgagors’ escrow accounts

Proceeds of finance lease

Principal payments on finance lease

Proceeds from sale of common stock, net

Common stock purchased by ESOP

Return of capital from conversion of former First Seacoast Bancorp, MHC

Treasury stock activity

Net (payments) proceeds from short-term FHLB advances

Return of capital from conversion of First Seacoast Bancorp, Inc.

Treasury stock purchases

Proceeds from advances from Federal Reserve Bank

Proceeds from long-term FHLB advances

Net payments on short-term FHLB advances

Payments on long-term FHLB advances

Proceeds from advances from Federal Reserve Bank

Payments on advances from Federal Reserve Bank

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Deferred taxes

Other comprehensive income (loss)

Other comprehensive (loss) income

Effect of change in fair value of interest rate swaps:

1 unchanged sentence

Deferred taxes

Other comprehensive (loss) income

Other comprehensive loss

Cumulative fair value hedging adjustment - loans

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Other liabilities

Effect of the adoption of ASU 2016-02:

Other liabilities

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

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Deposits at the Bank are insured by the Federal Deposit and Insurance Corporation (“FDIC”) for the maximum amount permitted by law.

The Company has one reportable segment, “Banking Services.” All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others.

For example, lending is dependent upon the ability of the Company to fund itself with deposits and other borrowings and manage interest rate and credit risk.

Accordingly, all significant operating decisions are based upon analysis of the Company as one segment or unit.

Summary of Significant Accounting Policies

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If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount the fair value is less than the amortized cost basis.

Losses related to non-credit- related factors will be recorded in other comprehensive loss.

Losses related to non-credit- related factors will be recorded in other comprehensive (loss) income.

Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense.

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

Debt securities are placed on nonaccrual status at the time any principal or interest payments become 90 days delinquent.

Debt securities are placed on non-accrual status at the time any principal or interest payments become 90 days delinquent.

Interest accrued but not received for a security placed on non-accrual is reversed against interest income.

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Otherwise, premiums are recognized over the period to maturity.

Interest Bearing Time Deposits With Other Banks

The Company maintained time deposits with other banks and credit unions, which were fully insured by the FDIC or National Credit Union Administration (“NCUA”).

Balances were carried at cost and the time deposits carried terms of up to four years .

Federal Home Loan Bank Stock

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Allowance for Credit Losses ("ACL")

Effective January 1, 2023 , the Company adopted the new accounting standard for credit losses, ASU No.

2016-13, " Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, as amended ("ASU 2016-13" or “ASC 326”)." This new accounting standard, commonly referred to as "CECL," significantly changed the methodology for accounting for reserves on loans and unfunded off-balance sheet credit exposures, including certain unfunded loan commitments and standby guarantees.

ASU 2016-13 replaced the "incurred loss" methodology used to establish an allowance on loans and off-balance sheet credit exposures, with an "expected loss" approach.

Under CECL, the ACL at each reporting period serves as a best estimate of projected credit losses over the contractual life of certain assets, adjusted for expected prepayments, given an expectation of economic conditions and forecasts as of the valuation date.

Upon adoption of CECL, the Company made the following elections regarding accrued interest receivable:

The Company estimates its allowance for credit losses ("ACL") as outlined in Accounting Standards Update ("ASU") 2016-13, " Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, as amended ("ASU 2016-13" or “ASC 326”)." Under ASC 326, the ACL at each reporting period serves as a best estimate of projected credit losses over the contractual life of certain assets and off-balance sheet exposures, adjusted for expected prepayments, given an expectation of economic conditions and forecasts as of the valuation date.

Upon adoption of ASC 326, the Company made the following elections regarding accrued interest receivable:

(i) present accrued interest receivable balances separately on the balance sheet on the consolidated statements of condition;

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For loans, write-off typically occurs when a loan has been in default for 90 days or more.

An immaterial amount of accrued interest on non-accrual loans was written off during the year ended December 31, 2023, by reversing interest income.

Immaterial amounts of accrued interest on non-accrual loans were written off during the years ended December 31, 2024 and 2023, by reversing interest income.

Historically, the Company has not experienced uncollectible accrued interest receivable on its securities available-for-sale.

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A loss rate is applied to pool balances over time.

CECL may create more volatility in the ACL, specifically the ACL on loans and ACL on off-balance sheet credit exposures.

Under CECL, the ACL may increase or decrease period to period based on many factors, including, but not limited to:

ASC 326 may create more volatility in the ACL, specifically the ACL on loans and ACL on off-balance sheet credit exposures.

Under ASC 326, the ACL may increase or decrease period to period based on many factors, including, but not limited to:

(i) macroeconomic forecasts and conditions;

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and (vi) various qualitative factors outlined in ASU 2016-13.

The significant key assumptions used with the ACL calculation at December 31, 2023 using the CECL methodology, included:

The significant key assumptions used with the ACL calculation at December 31, 2024 and 2023 using the ASC 326 methodology, included:

Macroeconomic factors (loss drivers):

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Generally, the forecast period the Company believes to be reasonable and supportable will be set annually and validated through an assessment of economic leading indicators.

In periods of greater volatility and uncertainty, such as the current interest rate environment, the Company will likely use a shorter forecast period, whereas when markets, economies, interest rate environment, political matters, and other factors are considered to be more stable and certain, a longer forecast period may be used.

In periods of greater volatility and uncertainty, such as the current interest rate environment, the Company will likely use a shorter forecast period, whereas when markets,

economies, interest rate environment, political matters, and other factors are considered to be more stable and certain, a longer forecast period may be used.

Also, in times of greater uncertainty, the Company may consider a range of possible forecasts and evaluate the probability of each scenario.

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In determining the length of time over which the reversion will take place (i.e., "reversion speed"), factors such as, historical credit loss experience over previous economic cycles, as well as where the Company believes it is within the current economic cycle, will be considered.

At December 31, 2023, the Company has chosen a forecast period of four quarters which will be similar to the historical loss period between January 2014 and December 2016 and then reverting to the long-term average over the following two quarters using the straight-line reversion method.

At December 31, 2024 and 2023, the Company has chosen a forecast period of four quarters which will be similar to the historical loss period between January 2014 and December 2016 and then reverting to the long-term average over the following two quarters using the straight-line reversion method.

The Company believes this historical forecast period to be representative of potential economic conditions over the next eighteen months.

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the Company has a reasonable expectation at the reporting date that a modification will be executed with an individual borrower, or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

During the year ended December 31, 2023 , the Company adopted ASU 2022-02 , "Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures ," which eliminated the accounting guidance for troubled debt restructurings (TDRs) by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.

The allowance for credit losses on off-balance sheet commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit.

The allowance for credit losses on off-balance sheet credit exposures represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit.

However, a liability is not recognized for commitments unconditionally cancellable by the Company.

The allowance for credit losses on off-balance sheet commitments is recognized as a liability (other liabilities in the consolidated balance sheet), with adjustments to the allowance recognized in the provision for credit losses in the consolidated statements of loss.

The allowance for credit losses on off-balance sheet commitments is determined by estimating future draws and applying the expected loss

rates on those draws.

The allowance for credit losses on off-balance sheet credit exposures is recognized as a liability (other liabilities in the consolidated balance sheet), with adjustments to the allowance recognized in the provision for credit losses in the consolidated statements of loss.

The allowance for credit losses on off-balance sheet credit exposures is determined by estimating future draws and applying the expected loss rates on those draws.

Future draws are based on historical averages of utilization rates (i.e., the likelihood of draws taken).

To estimate future draws on unfunded balances, current utilization rates are compared to historical utilization rates.

utilization rates are below historical utilization rates, the rate difference is applied to the committed balance to estimate the future draw.

If current utilization rates are below historical utilization rates, the rate difference is applied to the committed balance to estimate the future draw.

Loss rates are estimated by utilizing the same loss rates calculated for the allowance for credit losses general reserves.

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There are factors beyond the Company's control, such as changes in projected economic conditions, real estate markets or particular industry conditions which may materially impact asset quality and the adequacy of the ACL and thus the resulting provision for credit losses.

Prior to the adoption of the new accounting standard for credit losses, the allowance for loan losses ("ALL") consisted of general, allocated and unallocated components.

The general component of the ALL was based on historical loss experience adjusted for qualitative factors stratified by the following loan segments:

commercial real estate;

commercial and industrial;

acquisition, development and land;

one to four family residential;

home equity loans and lines of credit and consumer.

The Company used a rolling average of historical losses based on a timeframe appropriate to capture relevant loss data for each loan segment.

This historical loss factor was adjusted for the following qualitative factors:

levels/trends in delinquencies;

credit quality trends;

portfolio growth trends and concentrations;

effects of changes in risk selection and underwriting standards and other changes in lending policies, procedures and practices;

experience/ability/depth of lending management and staff;

and national and local economic trends and conditions.

Under previous accounting guidance, the allocated component related to loans which were classified as impaired.

The Company assessed non-accrual loans and certain loans rated substandard or worse for impairment.

Generally, impaired loans were collateral-dependent and impairment was measured through the collateral method.

When the measurement of the impaired loan was less than the recorded investment in the loan, the impairment was recorded through the ALL.

At December 31, 2022, the collateral values of collateral-dependent impaired loans was sufficient and no impairment charge was necessary.

The unallocated component was maintained to cover uncertainties that could affect the Company's estimate of probable losses.

Prior to January 1, 2023, when a loan was modified and a concession was made to a borrower experiencing financial difficulty, the modification was considered a TDR.

An allowance for loan losses for loans that have been modified in a TDR is measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent.

Management exercised significant judgment in developing these estimates.

Land, Building and Equipment

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The Company reviews the financial strength of the insurance carriers prior to the purchase of life insurance policies and no less than annually thereafter.

A life insurance policy with any individual carrier is limited to 15 % of Tier one capital, and the total cash surrender value of life insurance policies is limited to 25 % of Tier one capital at the time of purchase.

insurance policy with any individual carrier is limited to 15 % of Tier one capital, and the total cash surrender value of life insurance policies is limited to 25 % of Tier one capital at the time of purchase.

Treasury Stock

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The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit and investments securities, as well as revenue related to our mortgage servicing activities and bank owned life insurance, as these activities are subject to other GAAP discussed elsewhere within our disclosures.

elsewhere within our disclosures.

Descriptions of our revenue-generating activities that are within the scope of ASC 606 and which are presented in our income statements as components of non-interest income are as follows:

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• Investment service fees—these represent fees for investment advisory services, which are generally based on the market values of assets under management, and commissions earned on individual investment and insurance products purchased by clients of FSB Wealth Management.

Revenue is recognized when a performance obligation is completed, which is generally monthly for investment advisory services or when an investment

product is purchased.

Revenue is recognized when a performance obligation is completed, which is generally monthly for investment advisory services or when an investment product is purchased.

Payment for such performance obligations is generally received in the month following the time the performance obligations are satisfied.

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The ESOP is a tax-qualified retirement plan for the benefit of company employees.

The cost of shares issued to the ESOP, but not yet allocated to participants, is shown as a reduction of stockholders' equity.

Compensation expense is based on the market price of shares as they are committed to be released to participant accounts.

Defined Contribution Plan

During the years ended December 31, 2024 and 2023, the Company sponsored a 401(k) defined contribution plan for substantially all employees pursuant to which employees of the Company could elect to make contributions to the plan subject to Internal Revenue Service limits.

The Company also made matching and profit-sharing contributions to eligible participants in accordance with plan provisions.

The Company also made and expensed matching and profit-sharing contributions to eligible participants in accordance with plan provisions.

Stock Based Compensation

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The 2024 Plan provides for the granting of incentive and non-statutory stock options to purchase shares of common stock or the granting of shares of restricted stock awards and restricted stock units.

The 2024 Plan authorizes the issuance or delivery to participants of up to 392,700 converted shares of common stock.

Of this number, the maximum number of shares of common stock that may be issued pursuant to the exercise of stock options is 280,500 shares, and the maximum number of shares of common stock that may be issued as restricted stock awards or restricted stock units is 112,200 shares.

Effective May 27, 2021, the Company adopted the First Seacoast Bancorp 2021 Equity Incentive Plan (the “2021 Plan”).

The 2021 Plan provides for the granting of incentive and non-statutory stock options to purchase shares of common stock or the granting of shares of restricted stock awards and restricted stock units.

The 2021 Plan authorizes the issuance or delivery to participants of up to 348,800 converted shares of common stock (adjusted for the second step conversion transaction).

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The Company recognizes compensation expense for its awards on a straight-line basis over the requisite service period for the entire award (straight-line attribution method), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date fair value of the award that is vested at that time.

Defined Benefit Plan

The Company participated in the Pentegra Defined Benefit Plan for Financial Institutions (The Pentegra DB Plan), a tax-qualified defined benefit pension plan.

The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code.

There were no collective bargaining agreements in place that required contributions to the Pentegra DB Plan.

On May 26, 2022, the board of directors approved a resolution authorizing the Company to give notice of its intent to withdraw from the Pentegra DB Plan as of September 30, 2022.

On September 30, 2022, the Company proceeded with its notification to withdraw from the Pentegra DB Plan as of September 30, 2022 (see Note 12 Employee Benefits for more information).

The Company’s funding policy was to make an annual contribution determined by the Pentegra DB Plan actuaries that will not be less than the minimum required contribution nor greater than the maximum federal income tax deductible limit.

Contributions were based on the individual employer’s experience.

Supplemental Executive Retirement Plans

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The agreements provide supplemental retirement benefits payable in installments over a period of years upon retirement or death and for the crediting to a liability account a fixed amount of compensation, which earns interest at a rate determined in the agreement.

The Company recognizes the cost of providing these benefits over the time period the individuals render service through the retirement date.

The Company recognizes the cost of providing these benefits over

the time period the individuals render service through the retirement date.

At each measurement date, the aggregate amount accrued equals the then present value of the benefits expected to be provided to the individual in exchange for the individual’s service to that date.

All leases with an initial term greater than 12 months recognize:

(1) a Right of Use ("ROU" asset), which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term;

and (2) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, each measured on a discounted basis.

The Company elected to not separate lease and non-lease components.

As a lessee, the majority of the operating lease portfolio consists of a real estate lease for one branch location and leases for certain equipment.

The operating leases have remaining lease terms of one year to eight years , and in some instances include options to renew for periods up to four years .

ROU assets and lease liabilities are not recognized for leases with an initial term of 12 months or less.

Operating lease expense represents fixed lease payments for operating leases recognized on a straight-line basis over the applicable lease term (see Note 14, Leases, for more information).

The Company’s lease arrangements consist of operating and finance leases;

however, the majority of the leases have been classified as non-cancellable operating leases and are primarily for real estate and equipment leases with remaining lease terms of up to 15 years.

The Company accounts for leases under ASC Topic 842 – Leases (Topic 842) – and recognizes its operating leases on its consolidated balance sheet by recording a net lease liability, representing the Company’s legal obligation to make these lease payments, and a Right-Of-Use (“ROU”) asset, representing the Company’s legal right to use the leased assets.

The Company, by policy, does not include renewal options for leases as part of its ROU asset and lease liabilities unless they are deemed reasonably certain to exercise.

The Company does not have any sub-lease agreements.

The Company determines whether a contract contains a lease based on whether a contract, or a part of a contract, conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The discount rate is either implicit in the lease or, when a rate cannot be readily determined, the Company’s incremental borrowing rate is used.

The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term (see Note 13 for more information).

Provisions for income taxes are based on taxes currently payable or refundable and deferred income taxes on temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements.

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The accounting for changes in the fair value of such derivatives depends on the intended use of the derivative and resulting designation.

For derivatives designated as cash flow hedges, the gain or loss on the derivative is reported in other comprehensive income (loss) and is reclassified into earnings in the same periods during which the hedged transaction affects earnings.

For derivatives designated as cash flow hedges, the gain or loss on the derivative is reported in other comprehensive (loss) income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.

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Multi-family real estate loans are secured by properties consisting of five or more rental units in the Company's market area, including apartment buildings and student housing.

Also, the Company’s exposure to the transportation and hospitality/restaurant industries amounted to less than 5 % of the gross loan portfolio at December 31, 2023 and 2022.

Segment Reporting

For example, lending is dependent upon the ability of the Company to fund itself with deposits and other borrowings and manage interest rate and credit risk.

Accordingly, all significant operating decisions are based upon analysis of the Company as one segment or unit.

The Company adopted ASU 2023-07 , “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures," on January 1, 2024 , which provides updated guidance for segment reporting.

The Company has determined that all of its banking services meet the aggregation criteria of ASC 280, Segment Reporting , as its current operating model is structured whereby the Bank serves a similar base of customers who utilize a company-wide offering of similar products and services managed through similar processes that are collectively reviewed by the Company’s Chief Executive Officer , who has been identified as the chief operating decision maker (“CODM”).

The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based upon net income or loss calculated on the same basis as net income or loss is reported in the Company’s consolidated statements of net loss and other comprehensive (loss) income.

The CODM is also regularly provided with the expense information at a level consistent with that disclosed in the Company’s consolidated statements of net loss and other comprehensive (loss) income.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

As an “emerging growth company,” as defined in Title 1 of Jumpstart Our Business Startups (JOBS) Act, the Company has elected to use the extended transition period to delay adoption of new or reissued accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies.

As a result, the Company’s consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards without an extended transition period.

As of December 31, 2023 , there was no significant difference in the comparability of the Company’s consolidated financial statements as a result of this extended transition period.

The Company’s status as an “emerging growth company” will end on the earlier of:

(i) the last day of the fiscal year of the Company during which it had total annual gross revenues of $1.07 billion (as adjusted for inflation) or more;

(ii) the last day of the fiscal year of the Company following the fifth anniversary of the effective date of the Company’s initial public offering (which will be December 31, 2024 for the Company);

(iii) the date on which the Company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt;

or (iv) the date on which the Company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).

In March 2022, the FASB issued ASU 2022-2, “Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures,” which eliminates the troubled debt restructuring (“TDR”) accounting model for creditors that have adopted Topic 326, “Financial Instruments – Credit Losses.” All other creditors must continue to apply the TDR accounting model until they adopt ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.” Due to the removal of the TDR accounting model, all loan modifications now will be accounted for under the general loan modification guidance in Subtopic 310-20.

In addition, on a prospective basis, entities will be subject to new disclosure requirements covering modifications of receivables to borrowers experiencing financial difficulty.

Public business entities within the scope of the Topic 326 vintage disclosure requirements also will be required to prospectively disclose current-period gross write-off information by vintage (that is, year of origination).

This ASU becomes effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.

The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In November 2019, the FASB issued ASU 2019-11, “ Codification Improvements to Topic 326, Financial Instruments – Credit Losses,” to increase stakeholder awareness of the improvements made to the various amendments to Topic 326 and to clarify certain areas of guidance as companies transition to the new standard.

Also during November 2019, the FASB issued ASU 2019-10, “ Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates ,” finalizing various effective date deferrals for private companies, not-for-profit organizations and certain smaller reporting companies applying the credit losses (CECL), leases and hedging standards.

The effective date for ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments,” is deferred to years beginning after December 15, 2022.

The effective dates for ASU 2016-02, “ Leases (Topic 842)” was deferred to fiscal years beginning after December 15, 2021.

The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” to increase stakeholders’ awareness of the amendments and to expedite improvements to the Codification.

In May 2019, the FASB issued ASU 2019-05, “Financial Instruments—Credit Losses, Topic 326.” This ASU addresses certain stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis.

For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets.

Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information.

On October 16, 2019, the FASB approved a proposal to delay the implementation of this standard for smaller reporting companies to years beginning after December 15, 2022.

Early adoption is permitted.

See the next paragraph for further discussion regarding the implementation of this standard.

In June 2016, the FASB issued ASU 2016-13 ,“Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments,” which creates a new credit impairment standard for financial assets measured at amortized cost and available-for-sale debt securities.

The ASU requires financial assets measured at amortized cost (including loans and held-to-maturity debt securities) to be presented at the net amount expected to be collected, through an allowance for credit losses that are expected to occur over the remaining life of the asset, rather than incurred losses.

The ASU requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down.

The measurement of credit losses for newly recognized financial assets (other than certain purchased assets) and subsequent changes in the allowance for credit losses are recorded in the statement of loss as the amounts expected to be collected change.

The ASU was originally to be effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021.

In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” extending the implementation date by one year for smaller reporting companies and clarifying that operating lease receivables are outside the scope of Accounting.

In November, 2019, the FASB issued ASU 2019-10, which delayed the effective date for ASU 2016-13 for smaller reporting companies, resulting in ASU 2016-13 becoming effective in the first quarter of 2023 for the Company.

The ASU requires the measurement of all expected credit losses for loans held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

Accordingly, the ASU requires the use of forward-looking information to form credit loss estimates.

Many of the loss estimation techniques applied today are still permitted, though the inputs to those techniques have changed to reflect the full lifetime amount of expected credit losses.

The Company has selected a loss estimation methodology which utilizes a third-party software application.

The Company has recorded the effect of implementing this ASU using a modified-retrospective approach through a cumulative-effect adjustment through retained earnings as of the beginning of the reporting period in which the ASU was effective, which was January 1, 2023 .

The adoption of the new standard resulted in a decrease to its allowance for credit losses on loans (“ACL”).

This decrease, though, was offset by an increase in the allowance for credit losses on off-balance sheet ("OBS") commitments that are not unconditionally cancelable.

The decrease in ACL was due to a reduced emphasis on qualitative factors under the CECL model as the underlying historical loss data of the selected peer group is much more robust with broader time horizons as compared to the Company's actual historical loss data used under an incurred loss methodology.

The adoption of this ASU did not have a material impact on the Company's consolidated financial statements (see below and Note 6, Loans, for more information).

January 1, 2023 CECL Transition (Day 1) Impact

The CECL methodology reflects the Company's view of the state of the economy and forecasted macroeconomic conditions and their impact on the Company's loan portfolio as of the adoption date.

The following table illustrates the impact of the adoption of ASU 2016-13:

January 1, 2023

As reported under ASC 326

Pre-ASC 326 Adoption

Impact of ASC 326 Adoption

(Dollars in thousands)

Allowance for credit losses on loans:

Commercial real estate (CRE)

Multifamily (MF)

Commercial and industrial (C+I)

Acquisition, development, and land (ADL)

1-4 family residential (RES)

Home equity line of credit (HELOC)

Consumer (CON)

Allowance for credit losses on loans

Allowance for credit losses on OBS credit exposures

STOCKHOLDERS' EQUITY

Retained earnings

Recent Accounting Pronouncements Yet To Be Adopted

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ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures," which provides updated guidance for segment reporting.

The updated guidance requires enhanced disclosures for significant expenses by reportable operating segment.

Significant expense categories and amounts are those regularly provided to the chief operating decision maker ("CODM") and included in the measure of a segment’s profit or loss.

The updated guidance will also require the Company to disclose the title and position of its CODM, including an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The Company plans to adopt this ASU for the annual reporting period beginning January 1, 2024, and for interim periods beginning January 1, 2025.

The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” effective January 1, 2025, with early adoption permitted, updating accounting guidance.

The updated guidance requires additional disclosure and disaggregated information in the income tax rate reconciliation using both percentages and reporting currency amounts, with additional qualitative explanations of individually significant reconciling items.

The updated guidance also requires disclosure of the amount of income taxes paid (net of refunds received) disaggregated by jurisdictional categories (federal (national), state and foreign).

The adoption of the ASU is not expected to have a material impact on the Company's consolidated financial statements.

In January 2021, the FASB issued ASU 2021-1, “ Reference Rate Reform (Topic 848) (Scope), ” which clarifies certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting applied to derivatives that are affected by the discounting transition.

This ASU was to become effective immediately for all entities 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 effective date was extended by the issuance of ASU No.

2022-06, “ Reference Rate Reform (Topic 848), ” which defers the sunset date of Topic 848 from December 2022 to December 2024.

The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

Interest Bearing Time Deposits with Other Banks

The Company’s $ 747,000 of time deposits outstanding at December 31, 2022 matured during 2023.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures.” ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities.

ASU 2024-03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption.

The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization.

Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 on a prospective basis.

Retrospective application for all periods presented is permitted.

Early adoption is also permitted.

We are currently evaluating the effect this standard will have on our disclosures.

In March 2024, the FASB issued ASU 2024-02, “Codification Improvements,” which amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification.

The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance.

Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities.

ASU 2024-02 is effective January 1, 2025 and is not expected to have a material impact on the Company's consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, " Income Taxes- Improvements to Income Tax Disclosures" , which will require enhancements and further transparency to various income tax disclosures, most notably the tax rate reconciliation and income taxes paid.

ASU 2023-09 becomes effective for annual periods beginning after December 15, 2024 on a prospective basis.

Retrospective application for all periods presented is permitted.

Early adoption is also permitted.

We are currently evaluating the effect this standard will have on our disclosures.

Securities Available-for-Sale

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Gross realized losses

Net realized losses

Net realized gains (losses)

The following is a summary of gross unrealized losses and fair value for those investments with unrealized losses, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, at December 31, 2024 and 2023.

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Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At December 31, 2023, the Company had 107 securities available-for-sale in an unrealized loss position without an allowance for credit losses.

At December 31, 2024 and 2023, the Company had 116 and 107 securities available-for-sale in an unrealized loss position without an allowance for credit losses, respectively.

Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost.

The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

Accordingly, as of December 31, 2023, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in market interest rates and other market conditions, and therefore the Company carried no allowance for credit losses on securities available-for-sale as of December 31, 2023.

There was no accrued interest reversed against interest income for the years ended December 31, 2023 and 2022.

Accrued interest receivable on available-for-sale securities totaled $ 1.1 million at December 31, 2023, and is excluded from the estimate of credit losses.

At December 31, 2023, $ 74.1 million of securities available-for-sale were pledged as collateral for the Company's Bank Term Funding Program and Borrower-In-Custody secured credit facilities (see Note 10 Borrowings for more information).

Accordingly, as of December 31, 2024, management believes that the unrealized losses detailed in the previous tables are due to noncredit-related factors, including changes in market interest rates and other market conditions, and therefore the Company carried no allowance for credit losses on securities available-for-sale as of December 31, 2024 and 2023.

There was no accrued interest reversed against interest income for the years ended December 31, 2024

Accrued interest receivable on available-for-sale securities totaled $ 800,000 and $ 1.1 million at December 31, 2024 and 2023, respectively, and is excluded from the estimate of credit losses.

At December 31, 2024 and 2023, $- 0 - and $ 74.1 million of securities available-for-sale were pledged as collateral for the Company's Bank Term Funding Program ("BTFP") and Borrower-In-Custody ("BIC") secured credit facilities, respectively.

During December 2024, the Company repaid its BTFP loan and unpledged all the collateral previously pledged to the BTFP and BIC - principally U.S.

Government-sponsored obligations and general obligation municipal bonds – with the intention of pledging commercial real estate loans to the BIC (see Note 9 for more information).

As of December 31, 2024 and 2023, there were no holdings of securities of any issuer, other than the SBA, FHLMC, GNMA and FNMA, whose aggregate carrying value exceeded 10% of stockholders’ equity.

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1-4 family residential (RES)

Home equity line of credit (HELOC)

Home equity loans and lines of credit (HELOC)

Consumer (CON)

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Total loans, net

The Company elected to include deferred loan originations costs, net from and exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this footnote.

As of December 31, 2023 and 2022, accrued interest receivable for loans totaled $ 1.2 million and $ 989,000 , respectively, and is included in the “accrued interest receivable” line item on the Company’s consolidated balance sheets.

Changes in the ACL for the year ended December 31, 2023, under the CECL model, by portfolio segment, are summarized as follows:

The Company elected to include deferred loan originations costs, net and to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this footnote.

As of December 31, 2024 and 2023, accrued interest receivable for loans totaled $ 1.3 million and $ 1.2 million, respectively, and is included in the “accrued interest receivable” line item on the Company’s consolidated balance sheets.

January 1, 2023 ASC 326 Transition (Day 1) Impact

The ASC 326 methodology reflects the Company's view of the state of the economy and forecasted macroeconomic conditions and their impact on the Company's loan portfolio as of the adoption date.

The following table illustrates the impact of the adoption of ASU 2016-13:

January 1, 2023

As reported under ASC 326

Pre-ASC 326 Adoption

Impact of ASC 326 Adoption

(Dollars in thousands)

Allowance for credit losses on loans:

Commercial real estate (CRE)

Multifamily (MF)

Commercial and industrial (C+I)

Acquisition, development, and land (ADL)

1-4 family residential (RES)

Home equity loans and lines of credit (HELOC)

Consumer (CON)

Allowance for credit losses on loans

Allowance for credit losses on OBS credit exposures

STOCKHOLDERS' EQUITY

Retained earnings

Changes in the ACL for the year ended December 31, 2024 and 2023, by portfolio segment, are summarized as follows:

(Dollars in thousands)

Balance, December 31, 2023

(Release) provision for credit losses on loans

Balance, December 31, 2024

Balance, December 31, 2022, Prior to Adoption of ASC 326

Impact of adopting ASC 326

Provision for credit losses on loans

(Release) provision for credit losses on loans

Balance, December 31, 2023

Changes in the ALL for the year ended December 31, 2022, under the incurred loss model, by portfolio segment, are summarized as follows:

The increase in the allowance for credit losses in 2024 was primarily a result of the increase in loans.

The decrease in the allowance for credit losses in 2023 was primarily a result of the impact of adopting ASC 326 offset by the increase in loans.

The following represents the composition of the Company's (release) provision for credit losses for the year ended December 31:

(Dollars in thousands)

Balance at December 31, 2021

Provision for loan losses

Balance at December 31, 2022

As of December 31, 2022, information about loans and the ALL, by portfolio segment, are summarized below:

Off-balance sheet credit exposures

Total (release) provision for credit losses

The following is an aged analysis of past due loans by portfolio segment as of December 31, 2024:

(Dollars in thousands)

December 31, 2022 Loan Balances

Individually evaluated for impairment

Collectively evaluated for impairment

ALL related to the loans

Individually evaluated for impairment

Collectively evaluated for impairment

Total Past Due

The following is an aged analysis of past due loans by portfolio segment as of December 31, 2023:

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The Company's collateral-dependent non-accrual RES and HELOC loans with one borrower had an amortized cost basis of $ 141,000 at December 31, 2023 and was secured by real estate with an appraised value of $ 216,000 .

There was no significant change in the extent to which the collateral secures the loan.

Interest income recognized on non-accrual loans during the year ended December 31, 2023 was $- 0 -.

There were no loans past due over 90 days still accruing interest at December 31, 2023.

The property was sold on July 19, 2024 and all outstanding balances were repaid.

Interest income recognized on non-accrual loans during the years ended December 31, 2024 and 2023 was $- 0 -.

There were no loans past due over 90 days still accruing interest at December 31, 2024 and 2023.

There were no loans collateralized by residential real estate property in the process of foreclosure at December 31, 2024 and 2023.

There were no loans modified for borrowers experiencing financial difficulty during the year ended December 31, 2023.

There were no loans modified for borrowers experiencing financial difficulty during the years ended December 31, 2024 and 2023.

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

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Because the effect of most modifications made to borrowers experiencing financial difficulty would already be included in the ACL as a result of the measurement methodologies used to estimate the allowance, a change in the ACL is generally not recorded upon modification.

There were no loans modified and determined to be a troubled debt restructuring during the year ended December 31, 2022.

The following is an aged analysis of past due loans by portfolio segment as of December 31, 2022:

(Dollars in thousands)

Total Past Due

The following table provides information on impaired loans as of and for the year ended December 31, 2022:

As of December 31, 2022

At December 31, 2022

(Dollars in thousands)

With no related allowance recorded:

Total impaired loans

Credit Quality Information

The Company utilizes a ten-grade internal loan rating system for its commercial real estate, multifamily, commercial and industrial and acquisition, development and land loans.

Residential real estate, home equity loans and line of credit and consumer loans are considered “pass” rated loans until they become delinquent.

One- to four-family residential real estate, home equity loans and lines of credit and consumer loans are considered “pass” rated loans until they become delinquent.

Once delinquent, loans can be rated an 8, 9 or 10 as applicable.

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Loans in this category are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted and should be charged off.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial and industrial, commercial real estate, acquisition, development and land loans and multifamily loans.

On a periodic basis, the Company engages an independent third party to review a significant portion of loans within these segments and to assess the credit risk management practices of its commercial lending department.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, multifamily, commercial and industrial, and acquisition, development and land loans.

On a periodic basis, the Company engages an independent third party to review a significant portion of loans within these segments and to assess the credit risk

management practices of its commercial lending department.

Management uses the results of these reviews as part of its annual review process and overall credit risk administration.

On a quarterly basis, the Company formally reviews the ratings on all residential real estate and home equity loans if they have become delinquent.

On a quarterly basis, the Company formally reviews the ratings on all one- to four-family residential real estate, home equity loans and lines of credit and consumer loans if they have become delinquent.

Criteria used to determine ratings consist of loan-to-value ratios and days delinquent.

Based upon the most recent analysis performed, the risk category of loans by portfolio segment by vintage, reported under the CECL methodology, was as follows as of December 31, 2023:

Based upon the most recent analysis performed, the risk category of loans by portfolio segment by vintage, reported under the ASC 326 methodology, was as follows as of December 31, 2024 and 2023 (gross charge-offs by vintage are not material for disclosure for the years presented):

December 31, 2024:

(Dollars in thousands)

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Special mention

The following presents the internal risk rating of loans by portfolio segment as of December 31, 2022:

December 31, 2023:

(Dollars in thousands)

Revolving Loans Amortized Cost Basis

Revolving Loans Converted to Term

Special mention

Certain directors and executive officers of the Company and entities in which they have significant ownership interests were customers of the Bank during 2024 and 2023.

8 unchanged sentences

Substantially all of these loans were originated by the Bank and sold to third parties on a non-recourse basis with servicing rights retained.

These retained servicing rights are recorded as a servicing asset and are initially recorded at fair value (see Note 20 Fair Value of Assets and Liabilities for more information).

These retained servicing rights are recorded as a servicing asset and are initially recorded at fair value (see Note 19 for more

information).

Changes to the balance of mortgage servicing rights are recorded in loan servicing fee income in the Company’s consolidated statements of loss.

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and accounting for and remitting principal and interest payments to investors.

Loan servicing fee income, including late and ancillary fees, was $ 77,000 and $ 126,000 for the years ended December 31, 2023 and 2022, respectively.

Servicing fee income is recorded in loan servicing fee income in the Company’s consolidated statements of loss.

Loan servicing fee income, including late and ancillary fees, was $ 48,000 and $ 77,000 for the years ended December 31, 2024 and 2023, respectively, is recorded as loan servicing fee income in the Company’s consolidated statements of loss.

The Company’s residential mortgage investor loan servicing portfolio is primarily comprised of fixed rate loans concentrated in the Company’s market areas.

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Balance, end of year

Land, Buildings and Equipment

Land, buildings and equipment consisted of the following at December 31, 2023 and 2022:

Land, Building and Equipment

Land, building and equipment consisted of the following at December 31, 2024 and 2023:

(Dollars in thousands)

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Less accumulated depreciation

On June 11, 2024, the Bank entered into and closed on an agreement with a single purchaser for the purchase and sale of four properties formerly owned and operated by the Bank, which included four branches (with an adjacent drive thru) and a parking lot, each adjacent to a sold branch, for an aggregate cash purchase price of $ 7.5 million (see Note 13 for more information).

Deposits consisted of the following at December 31, 2024 and 2023:

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There were $ 63.1 million and $ 23.6 million of brokered time deposits which were bifurcated into amounts below the FDIC insurance limit at December 31, 2024 and 2023, respectively.

Additionally, there were $ 20.9 million and $- 0 - of brokered deposits included in savings deposits at December 31, 2023 and 2022, respectively.

Reciprocal deposits were $ 1.1 million and $- 0 - at December 31, 2023 and 2022, respectively.

Additionally, there were $ 22.1 million and $ 20.9 million of brokered deposits included in savings deposits at December 31, 2024 and 2023, respectively.

Reciprocal deposits were $ 6.0 million and $ 1.1 million at December 31, 2024 and 2023, respectively.

Deposits from related parties totaled approximately $ 11.6 million and $ 10.7 million at of December 31, 2024 and 2023, respectively.

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(Dollars in thousands)

0.00 % to 5.53 % – fixed

0.00 % – fixed

3 unchanged sentences

0.00 % – fixed

December 31, 2023

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0.00 % – fixed

4.38 % to 4.48 % – fixed

0.00 % – fixed

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0.00 % – fixed

Included in the above borrowings from the FHLB at December 31, 2023 is a $ 25.0 million long-term advance, with an interest rate of 4.48 %, which is callable by the FHLB on May 2, 2024 and quarterly thereafter, and a $ 25.0 million long-term advance, with an interest rate of 4.38 %, which is callable by the FHLB on December 8, 2025 and quarterly thereafter.

As of December 31, 2023 and 2022 borrowings from the FHLB also include $ 2.7 million of advances through the FHLB’s Jobs for New England program where certain qualifying small business loans that create or preserve jobs, expand woman-, minority- or veteran-owned businesses, or otherwise stimulate the economy in New England communities are offered at an interest rate of 0 %.

Included in the above borrowings from the FHLB at December 31, 2024 is a $ 25.0 million long-term advance, with an interest rate of 4.75 %, which is callable by the FHLB on January 29, 2025 and quarterly thereafter.

Also, included in the above borrowings from the FHLB at December 31, 2024 and 2023 is a $ 25.0 million long-term advance, with an interest rate of 4.38 %, which is callable by the FHLB on December 8, 2025 and quarterly thereafter.

As of December 31, 2024 and 2023, borrowings from the FHLB also include $ 2.3 million and $ 2.7 million, respectively, of advances through the FHLB’s Jobs for New England program where certain qualifying small business loans that create or preserve jobs, expand woman-, minority- or veteran-owned businesses, or otherwise stimulate the economy in New England communities are offered at an interest rate of 0 %.

At December 31, 2024 and 2023, the Bank had an overnight line of credit with the FHLB that may be drawn up to $ 3.0 million.

Additionally, the Bank had a total of $ 5.0 million of unsecured Fed Funds borrowing lines of credit with two correspondent banks.

The entire balance of all these credit facilities was available at December 31, 2023 and 2022.

Federal Reserve Bank of Boston (“FRB”)

The Bank has established two secured credit facilities with the FRB – Bank Term Funding Program (“BTFP”) and Borrower-In-Custody of Collateral Program (“BIC”).

As of December 31, 2023, a $ 20.0 million BTFP advance is outstanding and collateralized by eligible collateral consisting primarily of government-sponsored enterprise obligations, mortgage-backed securities and collateralized mortgage obligations issued by various U.S.

Government agencies, owned as of March 12, 2023.

The advance matures on December 13, 2024 at a fixed annual rate of 4.89 %.

The interest rate for term advances under the BTFP are based upon the one-year overnight index swap rate plus 10 basis points and fixed for the term of the advance – up to one year - on the day the advance is made.

At December 31, 2023, the Bank’s remaining borrowing capacity is $ 3.5 million under the BTFP.

Advances under the BIC would be collateralized by eligible collateral - principally general obligation municipal bonds.

The Bank established two secured credit facilities with the FRB – Bank Term Funding Program (“BTFP”) and Borrower-In-Custody of Collateral Program (“BIC”).

As of December 31, 2024 and 2023, $- 0 - and $ 20.0 million of BTFP advances were outstanding, respectively, and were collateralized by eligible collateral consisting primarily of government-sponsored enterprise obligations, mortgage-backed securities and collateralized mortgage obligations issued by various U.S.

Government agencies, owned as of March 12, 2023, December 31, 2023 and December 13, 2024.

No further advances could be requested under the BTFP after March 11, 2024.

The advance matured on December 13, 2024 at a fixed annual rate of 4.89 %.

Advances under the BIC would be collateralized by eligible collateral.

During December 2024, the Bank unpledged the collateral previously pledged to the BIC - principally general obligation municipal bonds – with the intention of pledging commercial real estate loans.

On January 7, 2025, the Bank completed the eligibility process whereby the FHLB agreed to subordinate their interest in commercial real estate loans up to a maximum of $ 65.0 million allowing these loans to be pledged to the BIC.

The Bank subsequently pledged $ 65.0 million of its commercial real estate loans to the BIC resulting in $ 38.5 million of borrowing capacity under this credit facility as of January 16, 2025.

The entire $ 50.6 million borrowing capacity of the BIC was available at December 31, 2023.

The current and deferred components of income tax expense (benefit) consisted of the following for the years ended December 31, 2023 and 2022:

Correspondent Banks

At December 31, 2024 and 2023, the Bank had a total of $ 2.0 million and $ 5.0 million, respectively, of unsecured Fed Funds borrowing lines of credit with correspondent banks.

The entire balance of these credit facilities was available at December 31, 2024 and 2023.

The current and deferred components of income tax expense consisted of the following for the years ended December 31, 2024 and 2023:

December 31, 2024

1 unchanged sentence

(Dollars in thousands)

Total income tax expense (benefit) is different from the amounts computed by applying the U.S.

Federal income tax rates in effect to loss before income taxes.

Total income tax expense is different from the amounts computed by applying the U.S.

Federal income tax rates in effect to income (loss) before income taxes.

The reasons for these differences are as follows for the years ended December 31, 2024 and 2023:

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Computed “expected” tax benefit

State tax expense (benefit), net of federal tax expense (benefit)

State tax benefit, net of federal tax benefit

Valuation allowance

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Deferred tax liabilities:

Interest rate swaps

Prepaid expenses

2 unchanged sentences

Total deferred tax liabilities

Net deferred tax (liabilities) assets, included in other (liabilities) assets

Net deferred tax liabilities, included in other liabilities

The calculation of the Company’s charitable contribution carryforward deferred tax asset is based upon a carryforward of approximately $ 208,000 and $ 654,000 of charitable contributions at December 31, 2024 and 2023, respectively.

During 2024, $ 100,000 of the carryforward was utilized and $ 346,000 expired unused.

Of the remaining carryforward, $ 187,000 expires in 2027 and $ 21,000 expires in 2028.

As of December 31, 2024 and 2023, it has been determined that it is more likely than not that the benefit from this charitable contribution carryforward will not be realized prior to expiration.

3 unchanged sentences

However, the Code allows a corporation to carry forward the excess charitable contributions to each of the five immediately succeeding years, subject to a 10% limitation in each of those years.

Thus, the Company would have six years in which to utilize the December 31, 2019 charitable contribution carryforward.

Thus, the Company would have six years in which to utilize the charitable contribution carryforward.

The valuation allowance for this net deferred tax asset may be adjusted in the future if estimates of taxable income during the carryforward period are increased.

1 unchanged sentence

The Federal net operating loss carryforward can be carried forward indefinitely but is limited to 80 % of each subsequent year’s taxable income.

The New Hampshire net operating loss carryforward expires in 2032 and 2033 and is also limited to 80 % of each subsequent year’s taxable income.

The New Hampshire net operating loss carryforward expires in 2032 through 2034 and is also limited to 80 % of each subsequent year’s taxable income.

Additionally, as of December 31, 2024, the Company has a New Hampshire Business Enterprise Tax credit carry forward of $ 310,000 that expires in 2029 through 2034.

17 unchanged sentences

The Company also makes matching and profit-sharing contributions to eligible participants in accordance with plan provisions.

The Company’s contributions for the years ended December 31, 2023 and 2022 was $ 209,000 and $ 202,000 , respectively.

The Company participated in the Pentegra Defined Benefit Plan for Financial Institutions (The Pentegra DB Plan), a tax-qualified defined benefit pension plan.

The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code.

There were no collective bargaining agreements in place that require contributions to the Pentegra DB Plan.

The Pentegra DB Plan is a single plan under Internal Revenue Code Section 413 (c) and, as a result, all of the assets stand behind all of the liabilities.

Accordingly, under the Pentegra DB Plan, contributions made by a participating employer may be used to provide benefits to participants of other participating employers.

The Company enacted a “hard freeze” for the Pentegra DB Plan as of December 31, 2018, eliminating all future service-related accruals for participants.

Prior to this enactment the Company maintained a “soft freeze” status that continued service-related accruals for its active participants with no new participants permitted into the Pentegra DB Plan.

On May 26, 2022, the board of directors approved a resolution authorizing the Company to give notice of its intent to withdraw from the Pentegra DB Plan as of September 30, 2022.

On September 30, 2022, the Company proceeded with its notification to withdraw from the Pentegra DB Plan as of September 30, 2022.

As a result, a contribution amount that achieved a funded status of 100 % - market value of plan assets equal to the final withdrawal liability - was due.

The final withdrawal liability amounted to $ 1.5 million of which $ 200,000 was paid prior to December 31, 2022 and $ 1.3 million of pension expense was accrued at December 31, 2022 and subsequently paid in January 2023.

A final settlement credit was received in June 2023.

Total pension plan (credit) expense for the years ended December 31, 2023 and 2022 was $( 14,000 ) and $ 1.5 million, respectively, and is included in salaries and employee benefits in the accompanying consolidated statements of loss.

The Company’s contributions for the years ended December 31, 2024 and 2023 were $ 232,000 and $ 209,000 , respectively.

Supplemental Executive Retirement Plans

11 unchanged sentences

The discount rate used to determine the Company’s obligation was 6.25 % during the years ended December 31, 2024 and 2023.

For the years ended December 31, 2023 and 2022 the expense of the supplemental retirement plan was $ 75,000 .

For the years ended December 31, 2024 and 2023 the expense of the supplemental retirement plan was $ 59,000 and $ 75,000 , respectively.

The Company enacted a “hard freeze” for this supplemental retirement plan as of January 1, 2022.

22 unchanged sentences

Committed to be allocated

(1) Adjusted for conversion of the former First Seacoast Bancorp, MHC.

The fair value of unallocated shares was approximately $ 3.5 million and $ 2.8 million at December 31, 2024 and 2023, respectively.

6 unchanged sentences

Further, stock options may not be granted with a term that is longer than 10 years.

On May 25, 2023, 249,144 incentive and non-statutory stock options to purchase shares of common stock were granted to directors for their services on the board of directors and certain members of management.

As of December 31, 2022, no stock options had been granted.

On May 25, 2023, 249,144 incentive and non-statutory stock options to purchase shares of common stock were granted under the 2021 Plan to directors for their services on the board of directors and certain members of management.

The Company estimates the grant date fair value of each option using the Black-Scholes option pricing model.

4 unchanged sentences

The estimated grant date fair value of each option is expensed as employee benefits expense ratably over the vesting period.

The expense recognized for this equity incentive plan was $ 150,000 and $- 0 -, for the years ended December 31, 2023 and 2022, respectively, which provided a tax benefit of $ 40,000 and $- 0 -, respectively.

At December 31, 2023, total unrecognized compensation expense for this equity incentive plan was $ 598,000 with a 2.4 year weighted average future recognition period.

A summary of stock options outstanding as of December 31, 2023, and changes during the year ended December 31, 2023 is presented below:

The expense recognized for this grant was $ 239,000 and $ 150,000 , for the years ended December 31, 2024 and 2023, respectively, which provided a tax benefit of $ 64,000 and $ 40,000 , respectively.

At December 31, 2024 and 2023, total unrecognized compensation expense for this equity incentive plan was $ 335,000 and $ 598,000 with a 1.4 year and 2.4 year weighted average future recognition period, respectively.

Effective May 30, 2024, the Company adopted the First Seacoast Bancorp, Inc.

2024 Equity Incentive Plan (the “2024 Plan”).

The 2024 Plan authorizes the issuance or

delivery to participants of up to 392,700 converted shares of common stock.

On December 2, 2024, 280,500 incentive and non-statutory stock options to purchase shares of common stock were granted under the 2024 Plan to directors for their services on the board of directors and certain members of management.

As noted above, the Company estimates the grant date fair value of each option using the Black-Scholes option pricing model which requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock.

The expected volatility assumption for this award was based upon the actual historical price volatility of the Company’s common stock.

The expected term of the option was calculated using the simplified method since the Company continues to lack the appropriate historical data.

Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The estimated grant date fair value of each option is expensed as employee benefits expense ratably over the vesting period.

The expense recognized for this grant was $ 31,000 for the year ended December 31, 2024, which provided a tax benefit of $ 8,000 .

At December 31, 2024, total unrecognized compensation expense for this equity incentive plan was $ 1.0 million, with a 2.9 year weighted average future recognition period.

The Company has a policy of using shares held as treasury stock to satisfy share option exercises.

Currently, the Company has a sufficient number of treasury shares to satisfy expected share option exercises.

A summary of stock options outstanding as of December 31, 2024 and 2023, and changes during the years then ended is presented below:

December 31, 2024

Number of Shares

4 unchanged sentences

(In Thousands)

Balance at beginning of year

Balance at end of year

Outstanding at beginning of year

Outstanding at end of year

Fully vested and expected to vest

Exercisable at end of year

December 31, 2023

Number of Shares

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (in Years)

Aggregate Intrinsic Value

Stock options:

(In Thousands)

Non-vested at beginning of year

Non-vested at end of year

Date of grant

10 unchanged sentences

(1) Vesting is ratably and the period begins on the date of the grant.

On June 1, 2023, 2,478 restricted stock awards were granted to a certain member of management at $ 7.99 per share.

On December 2, 2024, 112,200 restricted stock awards were granted under the 2024 Plan to directors for their services on the board of directors and certain members of management at $ 9.29 per share.

The total fair value related to the December 2, 2024 grant was $ 1.0 million.

These restricted stock awards time-vest over a three year period and have been fair valued as of the date of grant.

The holders of restricted stock awards participate fully in the rewards of stock ownership of the Company, including voting rights when granted and dividend rights when vested.

For the year ended December 31, 2024, the expense recognized for this grant was $ 29,000 , which provided a tax benefit of $ 8,000 .

At December 31, 2024, total unrecognized compensation expense for this equity incentive plan was $ 1.0 million, with a 2.9 year weighted average future recognition period.

On June 1, 2023, 2,478 restricted stock awards were granted under the 2021 Plan to a certain member of management at $ 7.99 per share.

The total fair value related to the June 1, 2023 grant was $ 20,000 .

These restricted stock awards time-vest 50 % as of November 18, 2023 and 50 % as of November 18, 2024 and have been fair valued as of the date of grant.

On November 18, 2021, 98,850 restricted stock awards (adjusted for the second step conversion transaction) were granted to directors for their services on the board of directors and certain members of management at $ 11.95 per share (adjusted for the second step conversion transaction).

On November 18, 2021, 98,850 restricted stock awards (adjusted for the second step conversion transaction) were granted under the 2021 Plan to directors for their services on the board of directors and certain members of management at $ 11.95 per share (adjusted for the second step conversion transaction).

The total fair value related to the grant was $ 1.2 million.

1 unchanged sentence

The holders of restricted stock awards participate fully in the rewards of stock ownership of the Company, including voting rights when granted and dividend rights when vested.

A summary of non-vested restricted shares outstanding as of December 31, 2023 and 2022, and changes during the years ended December 31, 2023 and 2022 is presented below:

For the years ended December 31, 2024 and 2023, the expense recognized for these grants was $ 350,000 and $ 399,000 , respectively, which provided a tax benefit of $ 95,000 and $ 108,000 , respectively.

At December 31, 2024 and 2023, total unrecognized compensation expense for this equity incentive plan was $- 0 - and $ 350,000 , respectively.

A summary of non-vested restricted shares outstanding as of December 31, 2024 and 2023, and changes during the years then ended is presented below:

December 31, 2024

10 unchanged sentences

Non-vested at end of year

(1) Adjusted for conversion of the former First Seacoast Bancorp, MHC.

For the years ended December 31, 2023 and 2022, the expense recognized for this equity incentive plan was $ 399,000 and $ 387,000 , respectively, which provided a tax benefit of $ 108,000 and $ 105,000 , respectively.

At December 31, 2023 and 2022, total unrecognized compensation expense for this equity incentive plan was $ 350,000 and $ 729,000 , respectively, with a 0.9 year and 1.9 year weighted average future recognition period, respectively.

The Company is obligated under various lease agreements for one of its branch offices and certain equipment.

These agreements are accounted for as operating leases and their terms expire between 2024 and 2031 and, in some instances, contain options to renew for periods up to four years .

The Company has no financing leases.

The Company adopted ASU 2016-02 –Leases (Topic 842)– effective January 1, 2022 and began recognizing its operating leases on its consolidated balance sheet by recording a net lease liability, representing the Company’s legal obligation to make these lease payments, and a ROU asset, representing the Company’s legal right to use the leased assets.

The Company’s lease arrangements consist of operating and finance leases;

however, the majority of the leases have been classified as non-cancellable operating leases and are primarily for real estate and equipment leases with remaining lease terms of up to 15 years.

The Company accounts for leases under ASC Topic 842 – Leases (Topic 842) – and recognizes its operating leases on its consolidated balance sheet by recording a net lease liability, representing the Company’s legal obligation to make these lease payments, and a ROU asset, representing the Company’s legal right to use the leased assets.

The Company, by policy, does not include renewal options for leases as part of its ROU asset and lease liabilities unless they are deemed reasonably certain to exercise.

The Company does not have any sub-lease agreements.

The following table summarizes information related to the Company’s right-of-use asset and net lease liability:

December 31, 2023

Operating Leases

Balance Sheet Location

(Dollars in thousands)

Right-of-use asset

Net lease liability

Other Liabilities

December 31, 2022

Operating Leases

Balance Sheet Location

(Dollars in thousands)

Right-of-use asset

Net lease liability

Other Liabilities

1 unchanged sentence

The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term.

Concurrently with the sale-leaseback transaction, the Bank entered into an absolute net lease agreement with the purchaser under which the Bank will lease the properties for an initial term of 15 years with one renewal option of 15 years.

The lease agreement includes a 2.5 % annual rent escalation during the initial term and during the renewal term, if exercised.

The sale-leaseback transaction resulted in a pre-tax gain of $ 2.5 million which is included in non-interest income in the accompanying consolidated statements of loss.

The Company’s operating lease ROU asset and corresponding operating lease liability of $ 5.2 million primarily resulted in an increase in ROU assets and lease liabilities at December 31, 2024 (included in other assets and other liabilities), compared to December 31, 2023.

Additionally, the Company recorded a $ 1.5 million finance lease liability related to this agreement representing the portion of the gain not eligible for immediate recognition.

The Company's obligation under this operating lease expires in June 2039 and has future lease payments of $ 9.1 million as of December 31, 2024.

Total lease expense for this operating lease was $ 292,000 and $- 0 - for the years ended December 31, 2024 and 2023, respectively.

During 2023, the Company completed a conversion of all of its branch ATMs from owned equipment to leased equipment and recognized a $ 2,000 loss on the disposition of all ATM-related equipment.

The Company's obligation under the operating lease related to these ATMs expires in August 2030 and has future lease payments of $ 432,000 as of December 31, 2024.

Total lease expense was $ 26,000 and $- 0 - for the years ended December 31, 2023 and 2022, respectively.

The Company's obligation under the operating lease related to one of its branches expires in August 2027 and has future lease payments of $ 151,000 as of December 31, 2023.

Total lease expense was $ 37,000 and $ 33,000 for the years ended December 31, 2023 and 2022, respectively.

Total lease expense under the operating lease related to these ATMs was $ 77,000 and $ 26,000 for the years ended December 31, 2024 and 2023, respectively.

The Company's obligation under an operating lease related to a branch not included in the sale-leaseback transaction expires in August 2027 and has future lease payments of $ 113,000 as of December 31, 2024.

Total lease expense for this obligation was $ 39,000 and $ 37,000 for the years ended December 31, 2024 and 2023, respectively.

This lease agreement contains clauses calling for escalation of minimum lease payments contingent on increases in LIBOR, or a similar replacement index, and the consumer price index.

The components of operating lease cost and other related information are as follows:

Year Ended December 31,

The following tables summarize information related to the Company’s lease portfolio and other supplemental information as of and for the years ended December 31, 2024 and 2023:

(Dollars in thousands)

Operating lease cost

Short-term lease cost

Variable lease cost (cost excluded from lease payments)

Sublease income

Total operating lease cost

Other Information:

Cash paid for amounts included in the measurement of lease liabilities - operating cash flows from operating leases

Operating lease - operating cash flows (liability reduction)

Weighted average lease term remaining (in years)

Lease liabilities

Lease Term and Discount Rate:

Weighted-average remaining lease term (years)

Weighted-average discount rate (1)

(1) A lease implicit rate or incremental borrowing rate is used based on information available at commencement date of lease.

(Dollars in thousands)

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Operating cash flows from finance lease

Financing cash flows from finance lease

ROU assets obtained in exchange for lease obligations:

Operating leases

Net operating lease cost

Finance lease cost:

Amortization of right-of-use assets

Interest on lease liabilities

Total lease cost

The total minimum lease payments due in future periods for lease agreements in effect at December 31, 2024 were as follows:

4 unchanged sentences

Total lease liability

Other Comprehensive Income (Loss)

The Company reports certain items as “other comprehensive income (loss)" and reflects total accumulated other comprehensive loss (“AOCI”) in the consolidated financial statements for all years containing elements of other comprehensive income or loss.

Other Comprehensive (Loss) Income

The Company reports certain items as “other comprehensive (loss) income" and reflects total accumulated other comprehensive loss (“AOCI”) in the consolidated financial statements for all years containing elements of other comprehensive income or loss.

The following table presents a reconciliation of the changes in the components of other comprehensive income or loss for the dates indicated, including the amount of income tax expense or benefit allocated to each component of other comprehensive income or loss:

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(Dollars in thousands)

Losses on sale of securities available-for-sale

Securities losses, net

Income tax expense (benefit)

(Gains) losses on sale of securities available-for-sale

Securities (gains) losses, net

Income tax expense

Net amortization of bond premiums

Interest on debt securities

Income tax expense (benefit)

Income tax expense

Gain on termination of interest rate swaps

Income tax expense (benefit)

Net interest expense on swaps

Interest expense on borrowings

Income tax expense (benefit)

Income tax expense

Net interest income on interest rate swaps

Interest expense on deposits

Income tax expense

Total reclassification adjustments

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Balance at December 31, 2022

Other comprehensive (loss) income before

Other comprehensive income (loss) before

reclassification

Amounts reclassified from AOCI

Other comprehensive (loss) income (1)

Other comprehensive income (loss)

Balance at December 31, 2023

Other comprehensive income (loss) before

Other comprehensive loss before

reclassification

Amounts reclassified from AOCI

Other comprehensive income (loss) (1)

Other comprehensive loss

Balance at December 31, 2024

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Standby letters of credit

The Company records an ACL for off-balance sheet credit exposures that are not unconditionally cancelable through a charge to the provision for credit losses on the Company’s consolidated statements of loss.

The Company records an ACL for off-balance sheet credit exposures that are not unconditionally cancelable through a charge to the (release) provision for credit losses on the Company’s consolidated statements of loss.

At December 31, 2024 and 2023, the ACL for off-balance sheet credit exposures totaled $ 199,000 and $ 391,000 , respectively, and was included in other liabilities on the Company’s consolidated balance sheets.

The provision for credit losses for off-balance sheet credit exposures for the years ended December 31, 2023 and 2022 was $ 83,000 and $- 0 -, respectively.

The (release) provision for credit losses for off-balance sheet credit exposures for the years ended December 31, 2024 and 2023 was $( 192,000 ) and $ 83,000 , respectively.

In the ordinary course of business, the Company may be subject to various legal proceedings.

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Treasury Stock

As of December 31, 2024 and 2023, the Company held a total of 519,243 and 115,448 shares in its treasury, respectively.

Common Stock Repurchases

On September 23, 2020, the board of directors of First Seacoast Bancorp (a federal corporation) authorized the repurchase of up to 114,403 shares of First Seacoast Bancorp's (a federal corporation) outstanding common stock (adjusted for the second step conversion transaction), which equals approximately 2.2 % of all shares then outstanding and approximately 5.0 % of the then outstanding shares owned by stockholders other than First Seacoast Bancorp, MHC.

On April 11, 2024, the board of directors of the Company authorized a stock repurchase program for the repurchase of up to 507,707 shares of common stock, representing approximately 10 % of shares then outstanding, which became effective on May 14, 2024.

On December 12, 2024, the board of directors of the Company authorized additional stock repurchases, up to 228,858 shares of common stock, under this stock repurchase program.

The additional repurchase authorization represents approximately 5 % of pro forma outstanding shares assuming the repurchase of the remaining shares subject to the original authorization.

The Company holds repurchased shares in its treasury.

As of December 31, 2022, First Seacoast Bancorp (a federal corporation) had repurchased all 114,403 shares authorized (adjusted for the second step conversion transaction).

As of December 31, 2024, the Company has repurchased 403,211 shares under this stock repurchase program.

Equity Incentive Plan

A certain member of management elected to surrender 549 and 496 (adjusted for the second step conversion transaction) shares of a vested restricted stock award on November 18, 2023 and 2022, respectively, in lieu of a cash payment for the tax liabilities associated with the time-vesting of their award.

A certain member of management elected to surrender 584 and 549 shares of a vested restricted stock award on November 18, 2024 and 2023, respectively, in lieu of a cash payment for the tax liabilities associated with the time-vesting of their award.

The Company holds these shares in its treasury.

As of December 31, 2023 and 2022, the Company held a total of 115,448 and 114,899 (adjusted for the second step conversion transaction) shares in its treasury, respectively.

Derivatives and Hedging Activities

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These agreements provided for the Company to receive payments at a variable rate determined by a specific index (three-month LIBOR) in exchange for making payments at a fixed rate.

Publication of LIBOR is expected to cease in December of 2024.

Publication of LIBOR ended in September of 2024.

The swap agreements allowed for substitution of an alternative reference rate such as the secured overnight financing rate (“SOFR”) at that time.

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Also, $ 536,000 of cash posted to the counterparty as collateral on these interest rate swaps contracts was returned to the Company.

The changes in the fair value of interest rate swaps were reported in other comprehensive income (loss) and were subsequently reclassified into interest expense or income in the period that the hedged transactions affected earnings.

The change in fair value for these derivative instruments for the year ended December 31, 2023 and 2022, was $( 112,000 ) and $ 761,000 for the years ended December 31, 2023 and 2022, respectively.

At December 31, 2022, the fair value of interest rate swap derivatives resulted in an asset of $ 961,000 and is recorded in other assets.

The following table summarizes the Company's cash flow hedges associated with its interest rate risk management activities:

December 31, 2022

(Dollars in thousands)

Maturity Date

Other Liabilities

Hedging Instruments:

Interest Rate Swap 2020

Interest Rate Swap 2021

Total Hedging Instruments

Hedged Items:

Variability in cash flows

related to 90-day FHLB

The following table summarizes the effect of cash flow hedge accounting on the consolidated statements of loss for the years ended December 31, 2023 and 2022:

Location and Amount of Loss Recognized in

Consolidated Statements of Loss

(Dollars in thousands)

The effect of cash flow hedge accounting:

Amount reclassified from AOCI into expense

The changes in the fair value of interest rate swaps were reported in other comprehensive (loss) income and were subsequently reclassified into interest expense or income in the period that the hedged transactions affected earnings.

The change in fair value for these derivative instruments for the years ended December 31, 2024 and 2023, was $- 0 - and $( 112,000 ), respectively.

On July 12, 2024, the Company entered into a two-year interest rate contract that was designated as fair value hedge utilizing a pay fixed interest rate swap to hedge a portion of its index-based brokered deposits included in savings deposits and its change in fair value attributable to the movement in the one-month SOFR.

The carrying amount of the hedged liability located in “savings deposits" includes the savings account balance used to designate hedging relationships in which the hedged items are the stated amount of liabilities anticipated to be outstanding for the designated hedged period.

The carrying amount of the savings deposit used in the hedged relationship was $ 22.1 million at December 31, 2024.

Under the "portfolio layer" approach, the Company designated a $ 10.0 million notional amount of portfolio liabilities that are not expected to be affected by prepayments, defaults and other factors affecting the timing and amount of cash flows of the designated hedged layer.

At inception, this fair value hedge had a pay fixed rate of 4.33 % and a received rate of 5.32 %.

The change in the fair value of the interest rate swap was reported in other comprehensive (loss) income and was subsequently reclassified into interest expense or income in the period that the hedged transaction affected earnings.

The change in fair value for this derivative instrument for the year ended December 31, 2024 was $( 43,000 ).

For the year ended December 31, 2024, $ 30,000 of interest income was reclassified from AOCI into expense.

Fair Value Hedges of Interest Rate Risk

During 2023, the Company entered into interest rate contracts that were designated as fair value hedges utilizing a pay fixed interest rate swap to hedge portions of the residential mortgage loan portfolio's change in fair value attributable to the movement in the one-month SOFR.

Additionally, the Company entered into an interest rate contract that was designated as fair value hedge utilizing a pay fixed interest rate swap to hedge a portion of the securities available-for-sale municipal bond portfolio's change in fair value attributable to the movement in the one-month SOFR.

The Company is exposed to changes in the fair value of certain pools of fixed-rate assets due to changes in benchmark interest rates.

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As of December 31, 2023, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges:

In June 2023, the Company entered into a three-year $ 25 million notional amount interest rate contract that was designated as a fair value hedge utilizing a pay fixed interest rate swap to hedge a portion of the residential mortgage loan portfolio's change in fair value attributable to the movement in the one-month SOFR.

In November 2023, the Company entered into a second three-year $ 25 million notional amount interest rate contract that was also designated as a fair value hedge utilizing a pay fixed interest rate swap to hedge a portion of the residential mortgage loan portfolio's change in fair value attributable to the movement in the one-month SOFR.

On November 1, 2024, the Company terminated this second pay fixed interest rate swap which resulted in a swap termination fee of $ 398,000 due to the counterparty.

The $ 398,000 fee is recorded as a residential mortgage loan basis adjustment and is included in 1-4 family residential loans as it is amortized over the remaining expected life of the original swap – 24 months.

Also, $ 1.2 million of cash posted to the counterparty as

collateral for this interest rate swap contract was returned to the Company.

The Company terminated this interest rate swap as it was determined that this derivative was no longer meeting the aims of the Company’s interest rate risk management strategy as it was probable that the hedged forecasted transaction – the potential interest rate risk/variability in fair value of the residential loan portfolio attributable to the movement in one-month SOFR – would not occur by the end of the original maturity date of the hedging instrument.

Additionally, in December 2023, the Company entered into a three-year $ 10 million notional amount interest rate contract that was designated as fair value hedge utilizing a pay fixed interest rate swap to hedge a portion of the securities available-for-sale municipal bond portfolio's change in fair value attributable to the movement in the one-month SOFR.

On December 19, 2024 the Company terminated this pay fixed interest rate swap which resulted in a swap termination fee of $ 32,000 due to the counterparty.

The $ 32,000 fee is recorded as a municipal bond basis adjustment and is included in securities available-for-sale as it is amortized over a period consistent with the amortization of the discounts and premiums associated with the formerly hedged items.

Also, $ 280,000 of cash posted to the counterparty as collateral for this interest rate swap contract was returned to the Company.

The Company terminated this interest rate swap as it was determined that this derivative was no longer meeting the aims of the Company’s interest rate risk management strategy as it was probable that the hedged forecasted transaction – the potential interest rate risk/variability in fair value of the securities available-for-sale municipal bond portfolio attributable to the movement in one-month SOFR – would not occur by the end of the original maturity date of the hedging instrument.

As of December 31, 2024 and 2023, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges:

Location in Consolidated Balance Sheets

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The carrying amount of the hedged asset located in “total loans” includes the amortized cost basis of closed portfolios of fixed-rate residential loans used to designate hedging relationships in which the hedged items are the stated amount of assets anticipated to be outstanding for the designated hedged period.

At December 31, 2023, the amortized cost basis of the closed portfolios of fixed-rate residential loans used in the hedging relationship was approximately $ 62.2 million;

the cumulative basis adjustments associated with this hedging relationship was $ 632,000 ;

and the notional amount of the designated hedged item was $ 50.0 million.

Under the "portfolio layer" approach, the Company designated a $ 50.0 million notional amount of portfolio assets that are not expected to be affected by prepayments, defaults and other factors affecting the timing and amount of cash flows of the designated hedged layer.

At December 31, 2024 and 2023, the amortized cost basis of the closed portfolios of fixed-rate residential loans used in the hedging relationship was in excess of the carrying amount of the hedged asset.

At December 31, 2024 and 2023, the cumulative basis adjustments associated with this hedging relationship was $( 43,000 ) and $ 632,000 , respectively;

and the notional amount of the designated hedged item was $ 25.0 million and $ 50.0 million, respectively.

Under the "portfolio layer" approach, the Company designated a notional amount of portfolio assets that are not expected to be affected by prepayments, defaults and other factors affecting the timing and amount of cash flows of the designated hedged layer.

The carrying amount of the hedged asset located in “securities available-for-sale, at fair value” includes the principal amount of municipal bonds used to designate hedging relationships in which the hedged items are the stated amount of assets anticipated to be outstanding for the designated hedged period.

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The notional amounts of these agreements do not represent amounts exchanged by the parties and, thus, are not a measure of potential loss exposure.

At December 31, 2023, the Company’s fair value hedges had a remaining maturity of 2.73 years, an average pay fixed rate of 4.29 % and an average received rate of 5.32 %.

The Company had no fair value hedges at December 31, 2022.

At December 31, 2024 and 2023, the Company’s fair value hedges had a remaining maturity of 1.42 years and 2.73 years, respectively, an average pay fixed rate of 3.99 % and 4.29 %, respectively, and an average received rate of 5.19 % and 5.32 %, respectively.

Derivatives not Designated as Hedging Instruments

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The interest rate swap contract with the commercial loan borrower allows them to convert floating-rate loan payments based on SOFR to fixed-rate loan payments.

This interest rate swap is simultaneously hedged by an offsetting derivative that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.

This interest rate swap is simultaneously hedged by an offsetting derivative that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such

transactions.

As the interest rate derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivative and the offsetting derivative are recognized directly in earnings.

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December 31, 2024

Derivatives designated as

hedging instruments:

Derivatives designated as hedging instruments:

Interest rate contracts - fair value hedge

Interest rate contracts - cash flow hedge

Other liabilities

Total derivatives designated as

hedging instruments

Derivatives not designated as

hedging instruments:

Total derivatives designated as hedging instruments

Derivatives not designated as hedging instruments:

Customer loan swaps

Other liabilities

Total derivatives not designated as

hedging instruments

December 31, 2023

Derivatives designated as

hedging instruments:

Interest rate contracts - cash flow hedge

Derivatives designated as hedging instruments:

Interest rate contracts - fair value hedge

Other liabilities

Total derivatives designated as

hedging instruments

Derivatives not designated as hedging instruments:

Customer loan swaps

Other liabilities

The following table presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the consolidated statements of loss for years ended December 31, 2024 and 2023:

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As such, management believes the risk of incurring credit losses on derivative contracts with institutional counterparties is remote.

As of December 31, 2023 and 2022, the Company posted $ 1.6 million and $ 535,000 , respectively, of cash to the counterparties as collateral on its interest rate swap contracts and customer loan swaps, which was presented within cash and due from banks on the consolidated balance sheets.

As of December 31, 2024 and 2023, the Company posted $ 781,000 and $ 1.6 million, respectively, of cash to the counterparties as collateral on its interest rate swap contracts and customer loan swaps, which was presented within cash and due from banks on the consolidated balance sheets.

Balance Sheet Offsetting

1 unchanged sentence

The Company’s derivative transactions with institutional counterparties are generally executed under International Swaps and Derivative Association (“ISDA”) master agreements which include “right of set-off” provisions.

In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis.

In such cases there is generally a legally enforceable right to offset recognized amounts and there may

be an intention to settle such amounts on a net basis.

Generally, the Company does not offset such financial instruments for financial reporting purposes.

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Derivative Assets:

Interest rate contracts(2)

Customer loan swaps - dealer bank(3)

Derivative Liabilities:

Interest rate contracts(2)

Interest rate contracts - fair value hedges(2)

Interest rate contracts - cash flow hedge (2)

Customer loan swaps - commercial customer (3)

Derivative Liabilities:

Interest rate contracts - fair value hedges (2)

Interest rate contracts - cash flow hedge (2)

Customer loan swaps - dealer bank (3)

December 31, 2023

Derivative Assets:

Interest rate contracts - fair values hedges (2)

Customer loan swaps - dealer bank (3)

Derivative Liabilities:

Interest rate contracts (2)

Customer loan swaps - commercial customer (3)

(1) The amount presented was the lesser of the amount pledged (received) or the net amount presented in the consolidated balance sheets.

3 unchanged sentences

The Company does not post collateral to its commercial customers as part of its contract.

At December 31, 2023 and 2022, there were no derivatives in a net liability position related to these agreements.

Fair Values of Assets and Liabilities

17 unchanged sentences

The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

While management believes the Company’s valuation methodologies are appropriate and consistent

with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and, therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented therein.

12 unchanged sentences

Fair value is based on a valuation model that calculates the present value of estimated future net servicing income.

The valuation model utilizes interest rate, prepayment speed and default rate assumptions that market participants would use in estimating future net servicing income and that can be validated against available market data (see Note 7 Loan Servicing, for more information).

These assumptions are inherently sensitive to change as these unobservable inputs are not based on quoted prices in active markets or otherwise observable.

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Securities available-for-sale:

Government-sponsored enterprises obligations

Government-sponsored enterprises ("GSE") obligations

U.S Government agency small business administration

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Securities available-for-sale:

Government-sponsored enterprises obligations

Government-sponsored enterprises ("GSE") obligations

U.S Government agency small business administration

8 unchanged sentences

Mortgage servicing rights

Other liabilities:

For the years ended December 31, 2024 and 2023, the changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:

5 unchanged sentences

Total unrealized net gains (losses)

included in net income related to

included in net loss related to

assets still held as of December 31, 2024

3 unchanged sentences

Total unrealized net gains (losses)

included in net income related to

included in net loss related to

assets still held as of December 31, 2023

39 unchanged sentences

Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data.

Therefore, real estate collateral related nonrecurring fair value measurement adjustments have generally been classified as Level 3.

Therefore, real estate collateral related non-recurring fair value measurement adjustments have generally been classified as Level 3.

Estimates of fair value used for other collateral supporting commercial loans generally are based on assumptions not observable in the marketplace, and therefore, such valuations have been classified as Level 3.

Financial assets measured at fair value on a non-recurring basis during the reported periods also include loans held for sale.

Financial assets measured at

fair value on a non-recurring basis during the reported periods also include loans held for sale.

Residential mortgage loans held for sale are recorded at the lower of cost or fair value and are therefore measured at fair value on a non-recurring basis.

The fair values for loans held for sale are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality and are included in Level 3.

At December 31, 2023 and 2022, there were no assets measured at fair value on a nonrecurring basis.

At December 31, 2024 and 2023, there were no assets measured at fair value on a non-recurring basis.

Non-Financial Assets and Non-Financial Liabilities:

2 unchanged sentences

There were no foreclosed assets at December 31, 2024 or 2023.

ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

ASC 825 - "Accounting For Financial Instruments (Subtopic 825-10)" , requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above.

ASU 2016-01 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

ASC 825 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

11 unchanged sentences

Advances from Federal Home Loan Bank

Advances from Federal Reserve Bank

Mortgagors’ tax escrow

3 unchanged sentences

Cash and due from banks

Interest-bearing time deposits with other banks

Federal Home Loan Bank stock

3 unchanged sentences

Advances from Federal Home Loan Bank

Advances from Federal Reserve Bank

Mortgagors’ tax escrow

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Miscellaneous expense

Income before income tax expense and equity in

3 unchanged sentences

loss of First Seacoast Bank

Equity in undistributed net loss of

First Seacoast Bank

Equity in undistributed net loss of First Seacoast Bank

CONDENSED STATEMENTS OF CASH FLOWS

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Undistributed net loss of First Seacoast Bank

Deferred tax expense

Decrease in other assets

Decrease in other liabilities

Increase in other liabilities

Net cash provided by operating activities

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Capital contribution to First Seacoast Bank

Principal payments received on ESOP loan

Net cash (used) provided by investing activities

Principal payments received on ESOP

Net cash provided (used) by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from the sale of common stock, net

Proceeds from the issuance of common stock

Return of capital from conversion of former First Seacoast Bancorp, MHC

Excise tax on stock repurchases

Treasury stock purchases

Net cash provided (used) by financing activities

Net cash (used) provided by financing activities

Net change in cash

1 unchanged sentence

Cash at end of year

Subsequent Events

On March 22, 2024, the Bank signed a letter of intent for the sale and leaseback of its five properties owned and operated by the Bank, which consists of its main office and branch, a building annex used primarily by its FSB Wealth Management division and three standalone branches.

Each of the sold branches include an adjacent drive thru.

All of the sold properties include an adjacent parking lot.

Subject to the results of its due diligence, the Bank intends to enter into a purchase and sale agreement for these properties for an aggregate cash purchase price of $ 7.9 million.

The Bank will concurrently enter into absolute net lease agreements with the purchaser under which the Bank will lease each of the properties under an initial term of 15 years.

We will not close any branches or exit any markets as a result of the sale-leaseback transaction.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of First Seacoast Bancorp, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of First Seacoast Bancorp, Inc.

and Subsidiaries (the Company) as of December 31, 2024, the related consolidated statements of loss, comprehensive loss, changes in stockholders’ equity, and cash flows for the year then ended and the related notes (collectively, “the financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses – Qualitative Factors

As described in Note 5 to the financial statements, the Company has recorded an allowance for credit

losses in the amount of $3.5 million as of December 31, 2024, representing management’s

estimate of credit losses over the remaining expected life of the Company’s loan portfolio as of that

date pursuant to the application of ASC 326.

The Company’s methodology to determine its allowance for credit losses on loans incorporates qualitative assessments of its historical losses, current loan portfolio and economic conditions, the application of forecasted economic conditions,

and model limitations.

We determined that performing procedures relating to these components of the Company’s methodology is a critical audit matter.

The principal considerations for our determination are (i) the application of significant judgment and estimation on the part of management, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures and evaluating audit evidence obtained, and (ii) significant audit effort was necessary in evaluating management’s methodology, significant assumptions and calculations.

How the Critical Audit Matter was addressed in the Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

These procedures included, among others, testing management’s process for determining the qualitative reserve component, evaluating the appropriateness of management’s methodology relating to the qualitative reserve component and testing the completeness and accuracy of data utilized by management.

We have served as the Company's auditor since 2024.

/s/ Wolf & Company, P.C.

Boston, Massachusetts

March 21, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

1 unchanged sentence

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of First Seacoast Bancorp, Inc.

and Subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of loss, comprehensive loss, changes in stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of First Seacoast Bancorp, Inc.

and Subsidiaries (the Company) as of December 31, 2023, the related consolidated statements of loss, comprehensive loss, changes in stockholders’ equity and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Baker Newman & Noyes LLC

We have served as the Company’s auditor since 2011.

We served as the Company’s auditor from 2011 to 2024.

Portsmouth, New Hampshire

4 unchanged sentences

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-K

Item 5. Market for Registrant’s Common Equity