What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-06-12 compared with 2024-06-14 · 159 added, 172 removed, 1184 unchanged (22% of the section changed)

44 unchanged sentences

The primary audit procedures we performed to address this critical audit matter included the following, among others:

● We obtained an understanding of the relevant controls related to management’s establishment of the qualitative factors, assessment, review and approval of the qualitative factors, and the data used in determining the qualitative factors.

● We obtained an understanding of the relevant controls related to management’s establishment of the qualitative factors, its assessment, review and approval of the qualitative factors, and the data used in determining the qualitative factors.

● We evaluated the relevance and the reasonableness of assumptions related to evaluation of the loan portfolio, current and forecasted economic conditions, and other risk factors used in development of the qualitative factors.

12 unchanged sentences

Cash and cash equivalents (including interest earning deposits in other banks of $ 14,375 and $ 12,164 )

Certificates of deposit held for investment

Investment securities:

48 unchanged sentences

Net interest income

Provision for (recapture of) credit losses

Net interest income after provision for (recapture of) credit losses

Provision for credit losses

Net interest income after provision for credit losses

NON-INTEREST INCOME:

15 unchanged sentences

Professional fees

Gain on sale of premises and equipment, net

Total non-interest expense

10 unchanged sentences

Other comprehensive income (loss):

Net unrealized holding gain (losses) from available for sale investment securities arising during the period, net of tax (expense) benefit of ($ 34 ), $ 2,641 , and $ 3,091 , respectively

Net unrealized holding gains (losses) from available for sale investment securities arising during the period, net of tax (expense) benefit of ($ 892 ), ($ 34 ), and $ 2,641 , respectively

Reclassification adjustment of net loss from sales of available for sale investment securities included in net income, net of tax benefit of $ 0 , ($ 655 ), and $ 0 , respectively

13 unchanged sentences

Common stock repurchased

Restricted stock grants

Restricted stock cancelled

Restricted stock grants and forfeited, net

Stock-based compensation expense

Purchase of subsidiary shares from non-controlling interest

Other comprehensive loss, net

Balance March 31, 2023

Adjustment to retained earnings, net of tax;

adoption of ASU 2016-13

Cash dividend on common stock ($ 0.24 per share)

3 unchanged sentences

Stock-based compensation expense

Purchase of subsidiary shares from non-controlling interest

Other comprehensive loss, net

Other comprehensive income, net

Balance March 31, 2024

Adjustment to retained earnings, net of tax;

adoption of ASU 2016-13

Cash dividend on common stock ($ 0.08 per share)

Exercise of stock options

Common stock repurchased

12 unchanged sentences

Depreciation and amortization

Purchased loans amortization (accretion), net

Provision for (recapture of) credit losses

(Benefit) provision for deferred income taxes

Purchased loans amortization , net

Provision for credit losses

Provision (benefit) for deferred income taxes

Stock-based compensation expense

1 unchanged sentence

Net loss on sales of investment securities available for sale

Net gain on sales of premises and equipment

Income from BOLI

BOLI death benefit in excess of cash surrender value

Changes in certain other assets and liabilities:

12 unchanged sentences

Purchases of investment securities held to maturity

Proceeds from calls and maturities of investment securities held to maturity

Proceeds from sale of shares in trading asset - VISA stock

Purchases of premises and equipment and capitalized software

1 unchanged sentence

Redemption (purchase) of FHLB stock, net

Proceeds from death benefit on BOLI

Proceeds from sales of real estate owned ("REO") and premises and equipment

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Net (decrease) increase in deposits

Net increase (decrease) in deposits

Dividends paid

1 unchanged sentence

Repayment of borrowings

Net (decrease) increase in advance payments by borrowers for taxes and insurance

Net increase (decrease) in advance payments by borrowers for taxes and insurance

Principal payments on finance lease liability

1 unchanged sentence

Repurchase of common stock

Net cash (used in) provided by financing activities

Net cash used in financing activities

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

3 unchanged sentences

Cash paid during the period for:

Cash Inflows from Operating Activities:

Income taxes refund

NONCASH INVESTING AND FINANCING ACTIVITIES:

Dividends declared and accrued in other liabilities

Net unrealized holding gains (losses) from available for sale investment securities

Net unrealized holding gains (loss) from available for sale investment securities

Income tax effect related to other comprehensive income (loss)

1 unchanged sentence

Income tax effect related to loss on sale of available for sale investment securities

ROU assets obtained in exchange for operating lease liabilities

Adjustment to retained earnings, net of deferred tax;

- adoption of ASU 2016-13

Conversion of shares in trading asset - VISA Stock

See accompanying notes to consolidated financial statements.

23 unchanged sentences

Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for credit losses (“ACL”), the valuation of investment securities, and the valuation of goodwill for potential impairment.

Cash and Cash Equivalents – Cash and cash equivalents include amounts on hand, due from banks and interest-earning deposits in other banks.

Cash and cash equivalents have a maturity of 90 days or less at the time of purchase.

Certificates of Deposit Held for Investment – Certificates of deposit held for investment include amounts invested with financial institutions at a stated interest rate and maturity date.

Early withdrawal penalties apply;

however, the Company plans to hold these investments to maturity.

Investment Securities – Investments in debt securities are classified as held to maturity when the Company has the ability and positive intent to hold such securities to maturity.

34 unchanged sentences

ACL on Available for Sale Debt Securities - Each reporting period, the Company assesses each available for sale debt security that is in an unrealized loss position to determine whether the decline in fair value below the amortized cost basis results from a credit loss or other factors.

The Company did not record an ACL on available for sale debt securities at March 31, 2024 or upon adoption of ASU 2016-13 on April 1, 2023.

The Company did not record an ACL on available for sale debt securities at March 31, 2025 and 2024, or upon adoption of ASU 2016-13 on April 1, 2023.

As of both dates, the Company considered the unrealized losses across the classes of major security-type to be related to fluctuations in market conditions, primarily interest rates, and not reflective of a deterioration in credit value.

5 unchanged sentences

Projected cash flows are discounted by the current effective interest rate.

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 that the fair value is less than the amortized cost basis.

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

The remaining impairment related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to accumulated other comprehensive income (loss) (“AOCI”).

1 unchanged sentence

The probability of default and loss given default are incorporated into the present value of expected cash flows and compared against amortized cost.

The Company did not record an ACL on held to maturity debt securities at March 31, 2024 or upon adoption of ASU 2016-13 on April 1, 2023 as the impact was insignificant.

The Company did not record an ACL on held to maturity debt securities at March 31, 2025 and 2024, or upon adoption of ASU 2016-13 on April 1, 2023 as the impact was insignificant.

ACL on Loans – The Company adopted the new accounting standard for the ACL (ASU 2016-13), commonly referred to as the current expected credit losses or CECL methodology, as of April 1, 2023.

All disclosures as of and for the year ended March 31, 2024 are presented in accordance with ASU 2016-13.

All disclosures as of and for the years ended March 31, 2025 and 2024 are presented in accordance with ASU 2016-13.

The comparative financial periods prior to the adoption of this new accounting standard are presented and disclosed under previously applicable GAAP’s incurred loss methodology, which is not directly comparable to the recently adopted CECL methodology.

For further information regarding the ACL, see Note 4 to the Consolidated Financial Statements.

As a result of implementing ASU 2016-13, there was a one-time adjustment to the fiscal year 2024 opening ACL balance of $ 42,000 .

For further information regarding the ACL, see Note 4.

As a result of implementing ASU 2016-13 on April 1, 2023, there was a one-time adjustment to the fiscal year 2024 opening ACL balance of $ 42,000 .

The Company elected not to measure an ACL for accrued interest receivable on loans and instead elected to reverse interest income on loans or securities that are placed on nonaccrual status, which is generally when the instrument is 90 days past due, or earlier if the Company believes the collection of interest is doubtful.

4 unchanged sentences

The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period that historical experience was based for each loan type.

Finally, the Company consider forecasts about future economic conditions or changes in collateral values that are reasonable and supportable.

Finally, the Company considers forecasts about future economic conditions or changes in collateral values that are reasonable and supportable.

The Company estimates the expected credit losses over the loans’ contractual terms, adjusted for expected prepayments.

1 unchanged sentence

The methodology for estimating the amount of expected credit losses has two basic components:

a general component for estimated expected credit losses for pools of loans that share similar risk characteristics and an individual component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans.

(i) a general component for pools of loans that share similar risk characteristics;

and (ii) an individual component for loans that do not share risk characteristics with other loans and are evaluated individually.

The Company's ACL model methodology is to build a reserve rate using historical life of loan default rates combined with assessments of current loan portfolio information and current and forecasted economic environment and business cycle information.

The model uses statistical analysis to determine the life of loan default rates for the quantitative component and analyzes qualitative factors (Q-Factors) that assess the current loan portfolio conditions and forecasted economic environment and collateral values.

For loans that are individually evaluated, an allowance is established

when the discounted cash flows or collateral value (less estimated selling costs, if applicable) of the impaired loan is lower than the carrying value of that loan.

For loans that are individually

evaluated, an allowance is established when the discounted cash flows or collateral value (less estimated selling costs, if applicable) is lower than the carrying value of the loan.

When available information confirms that specific loans or portions thereof are uncollectible, identified amounts are charged against the ACL.

6 unchanged sentences

ACL for Unfunded Loan Commitments – The allowance for unfunded loan commitments is maintained at a level believed by management to be sufficient to absorb estimated expected losses related to these unfunded credit facilities.

The determination of the adequacy of the allowance is based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities.

Changes in the allowance for credit losses – unfunded loan commitments are recognized as provision for (or recapture of) credit loss expense and added to the allowance for credit losses – unfunded loan commitments, which is included in accrued expenses and other liabilities in the consolidated balance sheets.

The determination of the adequacy of the allowance is based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same clients, and the terms and expiration dates of the unfunded credit facilities.

Changes in the allowance for credit losses – unfunded loan commitments are recognized as provision for (or recapture of) credit loss expense and added to the ACL– unfunded loan commitments, which is included in accrued expenses and other liabilities in the consolidated balance sheets.

REO – REO consists of properties acquired through foreclosure and is initially recorded at the estimated fair value of the properties, less estimated costs of disposal.

12 unchanged sentences

The determination of whether a decline affects the ultimate redemption value is influenced by criteria such as:

(1) the significance of any decline in net assets of the FHLB as compared to the capital stock amount of the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, (3) the impact of legislative and regulatory changes on institutions and, accordingly, the customer base of the FHLB, and (4) the liquidity position of the FHLB.

(1) the significance of any decline in net assets of the FHLB as compared to the capital stock amount of the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, (3) the impact of legislative and regulatory changes on institutions and, accordingly, the client base of the FHLB, and (4) the liquidity position of the FHLB.

The Company has determined there is no impairment on the FHLB stock investment at March 31, 2025 and 2024.

21 unchanged sentences

The Company is amortizing the MSRs in proportion to and over the period of estimated net servicing income.

MSRs were fully amortized at March 31, 2023.

MSRs were fully amortized at March 31, 2025 and 2024.

Business Combinations, CDI and Goodwill – GAAP requires the total purchase price in a business combination to be allocated to the estimated fair values of assets acquired and liabilities assumed, including certain intangible assets.

6 unchanged sentences

At both March 31, 2025 and 2024, gross CDI was $ 1.4 million.

At March 31, 2024 and 2023, accumulated amortization was $ 1.1 million and $ 984,000 , respectively.

At March 31, 2025 and 2024, accumulated amortization was $ 1.2 million and $ 1.1 million respectively.

The amortization expense for CDI in future years is estimated to be $ 93,000 and $ 78,000 , for the years ending March 31, 2026 and 2027, respectively.

13 unchanged sentences

Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Trust Assets – Assets held by the Trust Company in a fiduciary or agency capacity for trust customers are not included in the consolidated financial statements because such items are not assets of the Company.

Trust Assets – Assets held by the Trust Company in a fiduciary or agency capacity for trust clients are not included in the consolidated financial statements because such items are not assets of the Company.

Assets totaling $ 877.9 million were held in trust as of March 31, 2025 compared to $ 961.8 million as of March 31, 2024.

31 unchanged sentences

The Company had $ 13,000 in write offs and $ 26,000 in recoveries from other installment loans for the year ended March 31, 2024.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) :

Improvements to Income Tax Disclosures.

The amendments in this ASU are intended to provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income tax paid information.

The ASU requires disclosure in the rate reconciliation of specific categories as well as additional information for reconciling items that meet a quantitative threshold.

The amendment requires on an annual basis a reconciliation broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received.

The new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

An entity should apply the amendments in this ASU on a prospective basis.

The Company expects this ASU to only impact its disclosure requirements and does not expect the adoption of this ASU to have a material impact on its business operations or the Company's consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220) :

Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures.

The amendments in this ASU require disclosure, in notes to the financial statements, of specified information about certain costs and expenses.

In conjunction with recent standards that enhanced the disaggregation of revenue and income tax information, the disaggregated expense information will enable investors to better understand the major components of an entity's income statement.

The new standard is effective for annual periods beginning after December 15, 2026, with early adoption permitted.

The Company expects this ASU to only impact its disclosure requirements and does not expect the adoption of the ASU to have a material impact on its business operations or the Company's consolidated financial statements.

In January 2025, the FASB issued ASU 2025-01, Income Statement (Subtopic 220-40):

Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures:

Clarifying the Effective Date.

The amendments in this ASU amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption of ASU 2025-01 is permitted.

Reclassifications – Certain prior period amounts have been reclassified to conform to the current period presentation;

39 unchanged sentences

(3) Comprised of FHLMC and FNMA issued securities.

During the third fiscal quarter of 2022, the Company reassessed the classification of certain investment securities and transferred $ 85.8 million of U.S.

government and agency securities from the available for sale classific ation to the held to maturity classification.

The net unrealized after tax gain of $ 18,000 was deemed insignificant and the book balance of investment securities were transferred.

No gains or losses were recognized in connection with the transfer.

The contractual maturities of investment securities as of March 31, 2025 are as follows (in thousands):

47 unchanged sentences

Based on management’s evaluation and intent, the unrealized losses related to the investment securities in the above tables are considered temporary.

The Company received proceeds from the sales of available for sale investment securities totaling $ 43.5 million for the year ended March 31, 2024.

Gross realized losses on sales of available for sale investment securities totaled $ 2.7 million for the year ended March 31, 2024 and are included in other non-interest income in the accompanying consolidated statements of income.

The Company had no sales and realized no gains or losses on sales of investment securities for the years ended March 31, 2023 and 2022.

Investment securities available for sale with an amortized cost of $ 2.1 million and $ 2.6 million and a fair value of $ 2.0 million and $ 2.4 million at March 31, 2025 and 2024, respectively, were pledged as collateral for government public funds held by the Bank.

Investment securities held to maturity with an amortized cost of $ 12.2 million and $ 11.2 million and a fair value of $ 10.4 million and $ 9.3 million at March 31, 2025 and 2024, respectively, were pledged as collateral for government public funds held by the Bank.

Investment securities held to maturity with an amortized cost of $ 151.2 million and a fair value of $ 126.1 million at March 31, 2024, were pledged as collateral to the FRB.

Investment securities held to maturity with an amortized cost of $ 141.3 million and $ 151.2 million and a fair value of $ 120.5 million and $ 126.1 million at March 31, 2025 and March 31, 2024, respectively, were pledged as collateral to the FRB.

LOANS AND ACL

1 unchanged sentence

At March 31, 2025, deferred loan fees totaled $ 4.3 million compared to $ 4.7 million at March 31, 2024.

Loans receivable discounts and premiums totaled $ 1.3 million and $ 1.9 million, respectively, as of March 31, 2024, compared to $ 1.4 million and $ 2.1 million, respectively, as of March 31, 2023.

Loans receivable discounts and premiums totaled $ 1.2 million and $ 1.7 million as of March 31, 2025, compared to $ 1.3 million and $ 1.9 million as of March 31, 2024, respectively.

Loans receivable consisted of the following at the dates indicated (in thousands):

9 unchanged sentences

Loans receivable, net

(1) All amounts prior to April 1, 2023 were calculated using the previous incurred loss methodology to compute our allowance for loan losses, which is not directly comparable to the current expected credit losses (“CECL”) methodology.

The Company’s loan portfolio includes originated and purchased loans.

6 unchanged sentences

At March 31, 2025, loans carried at $ 756.6 million were pledged as collateral to the FHLB and FRB for borrowing arrangements.

Aggregate loans to officers and directors, all of which are current, consisted of the following for the periods indicated (in thousands):

Aggregate loans to officers and directors, all of which are current, consisted of the following at and for the periods indicated (in thousands):

Year Ended March 31,

62 unchanged sentences

These methods incorporate the post-modification loan terms, as well as defaults and charge-offs associated with historical modified loans.

At March 31, 2023, all TDR loans were paying as agreed.

There were no new TDRs for the year ended March 31, 2023.

In accordance with the Company’s policy guidelines, unsecured loans are generally charged-off when no payments have been received for three consecutive months unless an alternative action plan is in effect.

7 unchanged sentences

The following table presents the amortized cost basis and financial effect of loans at March 31, 2025, that were both experiencing financial difficulty and modified during the fiscal year ended March 31, 2025 (in thousands):

Term Extension

Commercial business

Commercial real estate

The following table presents the financial effect of the loan modifications presented above for borrowers experiencing financial difficulty for the fiscal year ended March 31, 2024:

Weighted Average

Term Extension

Commercial business

Payment Modification

Commercial real estate

13 unchanged sentences

The borrower currently has the capacity to perform according to the loan terms.

Any concerns about risk factors such as stability of margins, stability of cash flows, liquidity, dependence on a single product/supplier/customer, depth of management, etc.

Any concerns about risk factors such as stability of margins, stability of cash flows, liquidity, dependence on a single product/supplier/client, depth of management, etc.

are offset by strengths in other areas.

17 unchanged sentences

“Loss” is not intended to imply that the loan or some portion of it will never be paid, nor does it in any way imply that there has been a forgiveness of debt.

The following table sets forth the Company’s loan portfolio at March 31, 2024 by risk attribute and year of origination as well as current period gross charge-offs (in thousands):

The following table sets forth the Company’s loan portfolio at March 31, 2025 and 2024 by risk attribute and year of origination as well as current period gross charge-offs (in thousands):

March 31, 2025

Term Loans Amortized Cost Basis by Origination Fiscal Year

7 unchanged sentences

Current YTD gross write-offs

Special Mention

Total multi-family

Current YTD gross write-offs

March 31, 2025

Term Loans Amortized Cost Basis by Origination Fiscal Year

Real estate construction

Total real estate construction

Current YTD gross write-offs

Real estate one-to-four family

Total real estate one-to-four family

Current YTD gross write-offs

Other installment

Total other installment

Current YTD gross write-offs

Total loans receivable, gross

Special Mention

Total loans receivable, gross

Total current YTD gross write-offs

March 31, 2024

Term Loans Amortized Cost Basis by Origination Fiscal Year

Commercial business

Special Mention

Total commercial business

Current YTD gross write-offs

Commercial real estate

Special Mention

Total commercial real estate

Current YTD gross write-offs

Special Mention

Current YTD gross write-offs

Special Mention

Total multi-family

Current YTD gross write-offs

March 31, 2024

Term Loans Amortized Cost Basis by Origination Fiscal Year

14 unchanged sentences

ACL on Loans –

The following tables detail activity in the ACL for loans for the fiscal year ended March 31, 2024 under the CECL methodology, and in the allowance for loan losses under the incurred loss methodology for the fiscal years ended March 31, 2023 and March 31, 2022, by loan category (in thousands):

The following tables detail activity in the ACL for loans for the fiscal years ended March 31, 2025 and 2024 under the CECL methodology, and in the allowance for loan losses under the incurred loss methodology for the fiscal year ended March 31, 2023, by loan category (in thousands):

March 31, 2025

Beginning balance

Impact of adopting CECL (ASU 2016-13)

Provision for (recapture of) credit losses

2 unchanged sentences

Beginning balance

Impact of adopting CECL (ASU 2016-13)

Provision for (recapture of) loan losses

4 unchanged sentences

Ending balance

The following tables present an analysis of loans receivable and the allowance for loan losses, based on impairment methodology, as of March 31, 2023 (in thousands):

Allowance for Loan Losses

Recorded Investment in Loans

March 31, 2023

Commercial business

Commercial real estate

Real estate construction

Changes in the ACL for unfunded loan commitments were as follows for the years indicated (in thousands):

6 unchanged sentences

Non-accrual loans – Loans are reviewed regularly and it is the Company’s general policy that a loan is past due when it is 30 to 89 days delinquent.

In general, when a loan is 90 days delinquent or when collection of principal or interest appears doubtful, it is placed on non-accrual status, at which time the accrual of interest ceases and a reserve for unrecoverable accrued interest is established and charged against operations.

In general, when a loan is 90 days or more delinquent or when collection of principal or interest appears doubtful, it is placed on non-accrual status, at which time the accrual of interest ceases and a reserve for unrecoverable accrued interest is established and charged against operations.

As a general practice, payments received on non-accrual loans are applied to reduce the outstanding principal balance on a cost recovery method.

11 unchanged sentences

Real estate construction

A substantial portion of the 30-89 days past due and 90 days and greater past due loans at March 31, 2024 and 2023 are comprised of government guaranteed loans.

These government guaranteed loans are pass rated loans and are not considered to be non-accrual loans given the Company expects to receive all principal and interest and not considered to be classified loans because there are no well-defined weaknesses or risk of loss.

Given these government guaranteed loans are neither non-accrual loans nor classified loans, these loans are not considered to be impaired loans based on the Company’s policy.

Given these loans are not considered to be impaired loans and are fully guaranteed by the SBA or USDA, these loans are omitted from the required allowance calculation.

The following tables present an analysis of loans by credit quality indicators as of March 31, 2023 (in thousands):

March 31, 2023

Commercial business

Commercial real estate

Real estate construction

Impaired loans – Prior to the implementation of ASU 2016-13 on April 1, 2023, a loan was considered impaired when based on current information and circumstances, the Company determines it was probable that it would be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments.

Factors considered in determining impairment included, but were not limited to, the financial condition of the borrower, the value of the underlying collateral and the status of the economy.

Prior to the implementation of ASU 2016-13, impaired loans were comprised of TDR loans that were performing under their restructured terms.

Two of the impaired loans were on non-accrual status as of March 31, 2024.

The increase in the 30-89 days past due loans was primarily related to two commercial loans totaling to $ 725,000 which are in the process of securing new contracts to improve revenue.

Included in the 30-89 days past due loans at March 31, 2025 and 2024 are $ 3.1 million and $ 1.8 million, respectively, of fully guaranteed SBA or USDA loans.

These government guaranteed loans are classified as pass rated loans and are not considered to be either nonaccrual or classified loans because based on the guarantee, the Company expects to receive all principal and interest according to the contractual terms of the loan agreement and there are no well-defined weaknesses or risk of loss.

As a result, these loans were omitted from the required calculation of the ACL for loans.

Interest income foregone on non-accrual loans was $ 16,000 and $ 10,000 for the year ended March 31, 2025 and 2024, respectively.

At March 31, 2025, the Company had $ 94,000 of non-accrual loans with no ACL and $ 61,000 of non-accrual loans with an ACL of $ 1,000 .

The amortized cost of collateral dependent loans as of March 31, 2024, were $ 58,000 and $ 79,000 for commercial business and commercial real estate loans, respectively.

The following tables present information regarding impaired loans at the dates and for the years indicated (in thousands):

March 31, 2023

Commercial business

Commercial real estate

March 31, 2023

March 31, 2022

Commercial business

Commercial real estate

The cash basis interest income on impaired loans was not materially different than the interest recognized on impaired loans as shown in the above tables.

At March 31, 2024, the Company had $ 137,000 of non-accrual loans with no ACL and $ 36,000 of non-accrual loans with an ACL of $ 1,000 .

The amortized cost of collateral dependent loans as of March 31, 2025, were $ 37,000 and $ 57,000 for commercial business and commercial real estate loans, respectively, compared to $ 58,000 and $ 79,000 for the prior fiscal year.

PREMISES AND EQUIPMENT

3 unchanged sentences

Furniture and equipment

Construction in progress

Less accumulated depreciation and amortization

44 unchanged sentences

The trust preferred securities accrue and pay distributions periodically at specified annual rates as provided in each trust agreement.

The trusts used the net proceeds from each of the offerings to purchase a like

amount of junior subordinated debentures (the “Debentures”) of the Company.

The trusts used the net proceeds from each of the offerings to purchase a like amount of junior subordinated debentures (the “Debentures”) of the Company.

The Debentures are the sole assets of the trusts.

30 unchanged sentences

Deferred income

Purchase accounting

Net unrealized loss on investment securities available for sale

22 unchanged sentences

In addition, the Company had no accrued interest or penalties related to income tax matters as of March 31, 2025 and 2024.

It is the Company’s

policy to recognize potential accrued interest and penalties related to income tax matters as a component of the provision for income taxes.

It is the Company’s policy to recognize potential accrued interest and penalties related to income tax matters as a component of the provision for

income taxes.

The Company is subject to U.S federal and State of Oregon income taxes.

19 unchanged sentences

The Company has reserved 1,800,000 shares of its common stock for issuance under the 2017 Plan.

At March 31, 2025, there were 1,308,215 shares available for grant under the 2017 Plan.

The 2003 Plan and the 2017 Plan are collectively referred to as “the Stock Option Plans.”

10 unchanged sentences

There was no stock-based compensation expense related to stock options for the years ended March 31, 2025, 2024 and 2023 under the Stock Option Plans.

The following table presents the activity related to stock options under the Stock Option Plans for the years indicated:

Year Ended March 31,

There was no activity related to stock options for the year ended March 31, 2025.

The following table presents the activity related to stock options under the Stock Option Plans for the years ended March 31, 2024 and 2023:

Balance, beginning of period

2 unchanged sentences

Balance, end of period

There were no stock options outstanding as of March 31, 2024.

The following table presents information on stock options outstanding, less estimated forfeitures, as of March 31, 2023:

March 31, 2023

Stock options fully vested and expected to vest:

Weighted average exercise price

Aggregate intrinsic value (1)

Weighted average contractual term of options (years)

Stock options fully vested and currently exercisable:

Weighted average exercise price

Aggregate intrinsic value (1)

Weighted average contractual term of options (years)

(1) The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price) that would have been received by the option holders had all option holders exercised.

This amount changes based on changes in the market value of the Company’s stock.

The total intrinsic value of stock options exercised was $ 28,000 , $ 7,000 and $ 25,000 for the years ended March 31, 2024, 2023 and 2022, respectively.

The fair value of restricted stock awards is equal to the fair value of the Company’s stock on the date of grant.

There were no stock options outstanding as of March 31, 2025 and 2024.

There was no intrinsic value of stock options exercised for the fiscal year ended March 31, 2025.

The total intrinsic value of stock options exercised was $ 28,000 and $ 7,000 for the years ended March 31, 2024 and 2023, respectively, under the Stock Options Plans.

The Company may grant restricted stock pursuant to the 2017 Plan for which vesting can either be time based or performance based.

Performance based awards are subject to attaining certain performance metrics and all, or a portion of, the performance based awards can subsequently be cancelled for not attaining the predetermined performance metrics.

The fair value of restricted stock awards is equal to the fair value of the Company’s stock price on the date of grant.

The related stock-based compensation expense is recorded over the requisite service period.

Stock-based compensation related to restricted stock was $ 384,000 , $ 34,000 , and $ 390,000 for the years ended March 31, 2025, 2024, and 2023, respectively.

The unrecognized stock-based compensation related to restricted stock was $ 245,000 and $ 440,000 at March 31, 2024 and 2023, respectively.

The unrecognized stock-based compensation related to restricted stock was $ 1.1 million and $ 245,000 at March 31, 2025 and 2024, respectively.

The weighted average vesting period for the restricted stock was 2.46 years and 1.31 years at March 31, 2025 and 2024, respectively.

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Employee Stock Ownership Plan - The Company sponsors an ESOP that covers all employees with at least one year and 1,000 hours of service who are over the age of 21.

For each of the years ended March 31, 2024, 2023 and 2022, the Bank purchased 25,000 shares of common stock, on the open market and contributed such shares to the ESOP as a discretionary employer contribution.

For each of the years ended March 31, 2025, 2024 and 2023, the Bank purchased 25,000 shares of common stock, on the open market and contributed such shares to the ESOP as a discretionary

employer contribution.

As of March 31, 2025, 2024 and 2023, all shares of common stock purchased for the ESOP have been allocated to participant accounts.

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SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL REQUIREMENTS

The Bank is a state-chartered, federally insured institution subject to various regulatory capital requirements administered by the FDIC .

The Bank is a state-chartered, federally insured institution subject to various regulatory capital requirements administered by the FDIC and WDFI .

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

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The Company completed the March 2022 repurchase program on September 8, 2022, repurchasing 718,734 shares at an average price of $ 6.96 per share and at a total cost of $ 5.0 million.

All shares repurchased under the March 2022 program were retired as of September 30, 2022.

All shares repurchased under the March 2022 repurchase program were retired as of September 30, 2022.

On November 17, 2022, the Company announced that its Board of Directors authorized a stock repurchase programs (the “November 2022 repurchase program”).

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Shares repurchased under the November 2022 repurchase program were retired as settled.

On September 26, 2024, the Company’s Board of Directors announced the adoption of a stock repurchase program (the “September 2024 repurchase program”), authorizing the Company to purchase up to $ 2.0 million of the Company’s outstanding shares of common stock, in the open market, based on prevailing market prices, or in privately negotiated transactions.

The September 2024 repurchase program became effective on October 29, 2024 and was set to continue until the earlier of the completion of the repurchase limit or 12 months after the effective date, depending upon market conditions.

The Company completed the September 2024 repurchase program on February 5, 2025, having repurchased a total of 358,631 shares at an average price of $ 5.58 per share and at a total cost of $ 2.0 million.

All shares repurchased under the September 2024 repurchase program were retired as settled .

FAIR VALUE MEASUREMENTS

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As necessary, management compares prices received from the pricing service to discounted cash flow models or by performing independent valuations of inputs and assumptions similar to those used by the pricing service in order to help ensure prices represent a reasonable estimate of fair value.

There were no assets that are measured at estimated fair value on a nonrecurring basis at March 31, 2024.

The following table presents assets that are measured at estimated fair value on a nonrecurring basis at the date indicated (in thousands):

Estimated Fair Value

Measurements Using

March 31, 2023

Impaired loans

The following table presents quantitative information about Level 3 inputs for financial instruments measured at fair value on a nonrecurring basis at March 31, 2024 and 2023:

Significant Unobservable

March 31, 2023

Impaired loans

Appraised value

Adjustment for market conditions

Discounted cash flows

Discount rate

(1) There were no adjustments to appraised values of impaired loans as of March 31, 2023.

There were no assets measured at estimated fair value on a nonrecurring basis at March 31, 2025 and 2024.

For information regarding the Company’s method for estimating the fair value of individually evaluated loans, see Note 1 – Summary of Significant Accounting Policies – ACL on Loans.

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Cash and cash equivalents

Certificates of deposit held for investment

Investment securities available for sale

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REVENUE FROM CONTRACTS WITH CUSTOMERS

In accordance with ASC Topic 606 “Revenues from Contracts with Customers” (“ASC 606”), revenues are recognized when goods or services are transferred to the customer in exchange for the consideration the Company expects to be entitled to receive.

In accordance with ASC Topic 606 “Revenues from Contracts with Customers” (“ASC 606”), revenues are recognized when goods or services are transferred to the client in exchange for the consideration the Company expects to be entitled to receive.

The largest portion of the Company’s revenue is from interest income, which is not within the scope of ASC 606.

All of the Company’s revenue from contracts with customers within the scope of ASC 606 is recognized in non-interest income with the exception of gains on sales of REO and premises and equipment, which are included in non-interest expense.

All of the Company’s revenue from contracts with clients within the scope of ASC 606 is recognized in non-interest income with the exception of gains on sales of REO and premises and equipment, which are included in non-interest expense.

If a contract is determined to be within the scope of ASC 606, the Company recognizes revenue as it satisfies a performance obligation.

Payments from customers are generally collected at the time services are rendered, monthly, or quarterly.

For contracts with customers within the scope of ASC 606, revenue is either earned at a point in time or revenue is earned over time.

Payments from clients are generally collected at the time services are rendered, monthly, or quarterly.

For contracts with clients within the scope of ASC 606, revenue is either earned at a point in time or revenue is earned over time.

Examples of revenue earned at a point in time are automated teller machine (“ATM”) transaction fees, wire transfer fees, overdraft fees and interchange fees.

Revenue earned at a point in time is primarily based on the number and type of transactions that are generally derived from transactional information accumulated by the Company’s systems and is recognized immediately as the transactions occur or upon providing the service to complete the customer’s transaction.

The Company is generally the principal in these contracts, with the exception of interchange fees, in which case the Company is acting as the agent and records revenue net of expenses paid to the principal.

Examples of revenue earned over time, which generally occur on a monthly basis, are deposit account maintenance fees, investment advisory fees, merchant revenue, trust and investment management fees and safe deposit box fees.

Revenue is generally derived from transactional information accumulated by the Company’s systems or those of third-parties and is recognized as the related transactions occur or services

are rendered to the customer.

Revenue is generally derived from transactional information accumulated by the Company’s systems or those of third-parties and is recognized as the related transactions occur or services are rendered to the client.

For the years ended March 31, 2025, 2024 and 2023, substantially all of the Company’s revenues within the scope of ASC 606 were for performance obligations satisfied at a point in time.

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Asset management fees :

Asset management fees are variable, since they are based on the customer’s underlying portfolio value, which is subject to market conditions and amounts invested by clients through the Trust Company.

Asset management fees are variable, since they are based on the client’s underlying portfolio value, which is subject to market conditions and amounts invested by clients through the Trust Company.

Asset management fees are recognized over the period that services are provided, and when the portfolio values are known or can be estimated at the end of each quarter.

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Deposit related fees :

Fees are earned on the Bank’s deposit accounts for various products offered to or services performed for the Bank’s customers.

Fees are earned on the Bank’s deposit accounts for various products offered to or services performed for the Bank’s clients.

Fees include business account fees, non-sufficient fund fees, stop payment fees, wire services, safe deposit box and others.

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These fees are recognized on a daily, monthly, quarterly or annual basis, depending on the type of service.

Fees earned on other services, such as merchant services or occasional non-recurring type services, are recognized at the time of the event or the applicable billing cycle.

Fees earned on other services, such as merchant services or occasional non-recurring type services or events, are recognized at the time of the event or the applicable billing cycle.

Contract Balances

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COMMITMENTS AND CONTINGENCIES

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

Off-balance sheet arrangements – In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk in order to meet the financing needs of its clients.

These financial instruments generally include commitments to originate mortgage, commercial and consumer loans.

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Collateral is not required to support commitments.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a client to a third-party.

These guarantees are primarily used to support public and private borrowing arrangements.

The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to clients.

Collateral held varies and is required in instances where the Company deems it necessary.

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We usually are unable to determine whether a favorable or unfavorable outcome is remote, reasonably likely, or probable, or to estimate the amount or range of a probable or reasonably likely loss, until relatively late in the process.

The Company is currently involved in a lawsuit for which certain parties participated in a mediation in May 2023 and a stay of proceedings is in place to allow for continued settlement efforts.

At March 31, 2024, based on the most recent information available, management has concluded that a loss was probable and could be reasonably estimated.

Accordingly, the Company determined that as of March 31, 2024, there was a potential liability resulting from pending litigation involving a former Riverview business client related to their real estate investments offered by a business owned by that client.

Given the recent development of a proposed global settlement of the litigation, the Company recorded a $ 2.3 million expense in other non-interest expense during the quarter ended March 31, 2024.

This expense reflects Riverview’s estimate of litigation costs that exceed the Company’s insurance coverage.

The settlement of the litigation remains subject to approval by the court.

The Company was involved in litigation with a former business client concerning real estate investments offered by a business owned by that client.

In May 2023, the parties participated in mediation, after which a stay of proceedings was issued to facilitate continued settlement discussions.

As of March 31, 2024, based on available information, including the likelihood of a proposed global settlement, management determined that a loss was probable and could be reasonably estimated.

Consequently, the Company recorded a $ 2.3 million expense in other non-interest expense for the three months ended March 31, 2024.

This amount reflected the Company’s estimate of litigation costs exceeding its insurance coverage.

In July 2024, the settlement was approved by all relevant courts, and in August 2024, the Company made the final settlement payment of $ 2.3 million.

The settlement fully released the Company from all claims related to the litigation.

Following the settlement, the Company received approximately $ 930,000 in legal expense recoveries.

Of this amount, approximately $ 844,000 was recognized in non-interest income, and approximately $ 86,000 was recorded as a reduction of professional fees within non-interest expense.

The Company has a finance lease for the shell of the building constructed as the Company’s operations center which expires in November 2039.

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During the years ended March 31, 2025, 2024 and 2023, the Company did not record any ROU assets that were exchanged for operating lease liabilities.

During the year ended March 31, 2022, the Company recorded operating lease ROU assets that were exchanged for operating lease liabilities of $ 441,000 .

The following table reconciles the undiscounted cash flows for the periods presented related to the Company’s lease liabilities as of March 31, 2025 (in thousands):

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Non-interest expense

Income (loss) before income taxes

Provision (benefit) for income taxes

Net income (loss)

Basic earnings (loss) per common share (1)

Diluted earnings (loss) per common share (1)

Income before income taxes

Provision for income taxes

Basic earnings per common share (1)

Diluted earnings per common share (1)

Interest and dividend income

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Net interest income

Provision for loan losses

Provision for credit losses

Non-interest income, net

Non-interest expense

Income before income taxes

Provision for income taxes

Basic earnings per common share (1)

Diluted earnings per common share (1)

Income (loss) before income taxes

Provision (benefit) for income taxes

Net (loss) income

Basic earnings (loss) per common share (1)

Diluted earnings (loss) per common share (1)

(1) Quarterly earnings per common share may vary from annual earnings per common share due to rounding .

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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 8. Financial Statements and Supplementary Data