What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-13 · 131 added, 123 removed, 850 unchanged (23% of the section changed)

4 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

2021 December 31,

26 unchanged sentences

Preferred stock, $ 0.01 par value, 10,000,000 shares authorized, none issued or outstanding

Common stock, $ 0.01 par value, 40,000,000 shares authorized, 2,614,329 and 2,592,587 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Common stock, $ 0.01 par value, 40,000,000 shares authorized, 2,617,425 and 2,592,587 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 27,835 27,106

9 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

40 unchanged sentences

(In thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

1 unchanged sentence

Available for sale securities:

Unrealized gains (losses) arising during the period 3 134 ( 57 ) 110

Income tax (expense) benefit related to unrealized gains/losses ( 1 ) ( 28 ) 12 ( 23 )

Other comprehensive income (loss), net of tax 2 106 ( 45 ) 87

Unrealized (losses) gains arising during the period ( 34 ) ( 4 ) ( 91 ) 106

Income tax benefit (expense) related to unrealized gains/losses 7 1 19 ( 22 )

Other comprehensive (loss) income, net of tax ( 27 ) ( 3 ) ( 72 ) 84

Comprehensive income $ 2,565 $ 2,332 $ 7,222 $ 5,527

3 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)

For the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)

(In thousands, except share and per share amounts)

7 unchanged sentences

Stockholders’

Balance, at March 31, 2021 2,609,806 $ 26 $ 27,447 $ ( 85 ) $ 59,975 $ 193 $ 87,556

Balance, at June 30, 2021

2,614,329 $ 26 $ 27,613 $ ( 57 ) $ 61,758 $ 195 $ 89,535

Net income — — — — 2,592 — 2,592

Other comprehensive income, net of tax — — — — — 2 2

Other comprehensive loss, net of tax — — — — — ( 27 ) ( 27 )

Share-based compensation — — 65 — — — 65

2 unchanged sentences

Common stock surrendered ( 100 ) — — — — — —

Restricted shares forfeited ( 420 ) — — — — — —

Common stock options exercised 3,616 — 59 — — — 59

Allocation of ESOP shares — — 98 29 — — 127

Balance, at June 30, 2021

Balance, at September 30, 2021

2,617,425 $ 26 $ 27,835 $ ( 28 ) $ 63,905 $ 168 $ 91,906

Balance, at December 31, 2020

2,592,587 $ 25 $ 27,106 $ ( 113 ) $ 58,226 $ 240 $ 85,484

Net income — — — — 7,294 — 7,294

4 unchanged sentences

— — — — ( 1,594 ) — ( 1,594 )

Common stock repurchased — — ( 9 ) — ( 21 ) — ( 30 )

Common stock surrendered ( 4,091 ) — — — — —

2 unchanged sentences

Allocation of ESOP shares — — 262 85 — — 347

Balance, at June 30, 2021

Balance, at September 30, 2021

2,617,425 $ 26 $ 27,835 $ ( 28 ) $ 63,905 $ 168 $ 91,906

11 unchanged sentences

Stockholders’

Balance, at March 31, 2020 2,591,494 $ 25 $ 26,776 $ ( 198 ) $ 51,488 $ 156 $ 78,247

Balance, at June 30, 2020

2,593,152 $ 25 $ 26,894 $ ( 170 ) $ 53,224 $ 262 $ 80,235

Net income — — — — 2,335 — 2,335

1 unchanged sentence

Share-based compensation — — 52 — — — 52

Restricted stock awards issued — — — — ( 389 ) — ( 389 )

Common stock surrendered ( 2,842 ) — — — — — —

Cash dividends paid on common stock ($ 0.15 per share)

— — — — ( 389 ) — ( 389 )

Common stock surrendered ( 1,510 ) — — — — — —

Common stock options exercised 4,979 — 23 — — — 23

Allocation of ESOP shares — — 49 28 — — 77

Balance, at June 30, 2020

Balance, at September 30, 2020

2,595,289 $ 25 $ 27,018 $ ( 142 ) $ 55,170 $ 259 $ 82,330

Balance, at December 31, 2019

2,567,389 $ 25 $ 26,343 $ ( 227 ) $ 51,410 $ 175 $ 77,726

Net income — — — — 5,443 — 5,443

1 unchanged sentence

Share-based compensation — — 283 — — — 283

Restricted stock awards issued — — — — ( 1,294 ) — ( 1,294 )

Common stock surrendered ( 3,423 ) — — — — — —

Cash dividends paid on common stock ($ 0.65 per share)

— — — — ( 1,683 ) — ( 1,683 )

Common stock surrendered ( 1,690 ) — — — — — —

Restricted shares forfeited 13,600 — — — — — —

Restricted stock forfeited ( 1,690 ) — — — — — —

Restricted stock awards issued 13,600 — — — — — —

Common stock options exercised 19,413 — 239 — — — 239

Allocation of ESOP shares — — 153 85 — — 238

Balance, at June 30, 2020

Balance, at September 30, 2020

2,595,289 $ 25 $ 27,018 $ ( 142 ) $ 55,170 $ 259 $ 82,330

4 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

24 unchanged sentences

Net increase in loans ( 54,370 ) ( 68,622 )

(Purchase of) reduction in BOLI ( 3,057 ) 55

Purchase of BOLI ( 6,057 ) ( 14 )

Purchases of premises and equipment, net ( 173 ) ( 396 )

5 unchanged sentences

Repayment of borrowings — ( 87,991 )

Proceeds from subordinated debt, net — 11,676

FHLB stock purchased ( 175 ) ( 4 )

87 unchanged sentences

Losses Estimated

June 30, 2021

September 30, 2021

Municipal bonds $ 4,216 $ 160 $ ( 6 ) $ 4,370

5 unchanged sentences

Total $ 9,915 $ 309 $ ( 6 ) $ 10,218

The amortized cost and fair value of AFS securities at June 30, 2021, by contractual maturity, are shown below (in thousands).

The amortized cost and fair value of AFS securities at September 30, 2021, by contractual maturity, are shown below (in thousands).

Expected maturities of AFS securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Investments not due at a single maturity date, primarily mortgage-backed investments, are shown separately.

June 30, 2021

September 30, 2021

Due within one year $ 226 $ 226

4 unchanged sentences

Total $ 6,847 $ 7,060

There were no pledged securities at June 30, 2021 or December 31, 2020.

There were no sales of AFS securities during the three and six months ended June 30, 2021 or 2020.

There were no pledged securities at September 30, 2021 or December 31, 2020.

There were no sales of AFS securities during the three and nine months ended September 30, 2021 or 2020.

The following table summarizes the aggregate fair value and gross unrealized loss by length of time of those investments that have been in a continuous unrealized loss position at the dates indicated (in thousands):

June 30, 2021

September 30, 2021

Less Than 12 Months 12 Months or Longer Total

12 unchanged sentences

Total $ 1,618 $ ( 6 ) $ — $ — $ 1,618 $ ( 6 )

There were no credit losses recognized in earnings related to other than temporary impairments during the three and six months ended June 30, 2021 or 2020.

At June 30, 2021, the securities portfolio consisted of 11 agency mortgage-backed securities and nine municipal bonds with a total portfolio fair value of $ 7.5 million.

There were no credit losses recognized in earnings related to other than temporary impairments during the three and nine months ended September 30, 2021 or 2020.

At September 30, 2021, the securities portfolio consisted of 11 agency mortgage-backed securities and nine municipal bonds with a total portfolio fair value of $ 7.1 million.

At December 31, 2020, the securities portfolio consisted of 16 agency mortgage-backed securities and ten municipal bonds with a fair value of $ 10.2 million.

At June 30, 2021, there were three securities in an unrealized loss position for less than 12 months, and there were no securities in an unrealized loss position for more than 12 months.

At September 30, 2021, there were three securities in an unrealized loss position for less than 12 months, and there were no securities in an unrealized loss position for more than 12 months.

At December 31, 2020, there were three securities in an unrealized loss position for less than 12 months, and there were no securities in an unrealized loss position for more than 12 months.

1 unchanged sentence

It is expected that these securities will not be settled at a price less than the amortized cost of each investment.

The unrealized losses on these investments are not considered other-than-temporary impairment ("OTTI") as of June 30, 2021, because the decline in fair value is not attributable to credit quality and because we do not intend, and it is not likely that we will be required, to sell these securities before recovery of their amortized cost basis .

The unrealized losses on these investments are not considered other-than-temporary impairment ("OTTI") as of September 30, 2021, because the decline in fair value is not attributable to credit quality and because we do not intend, and it is not likely that we will be required, to sell these securities before recovery of their amortized cost basis .

Deterioration in market and economic conditions related to the COVID-19 pandemic may, however, have an adverse impact on credit quality in the future and result in OTTI charges.

1 unchanged sentence

The composition of the loans-held-for portfolio at the dates indicated, excluding loans held-for-sale, was as follows (in thousands):

September 30,

2021 December 31,

18 unchanged sentences

Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), as a qualified lender since the inception of the program.

As of June 30, 2021, the Bank had funded PPP loans totaling $ 119.2 million, $ 36.0 million of which remained outstanding and are included in commercial business loans above.

As of September 30, 2021, the Bank had funded PPP loans totaling $ 119.2 million, $ 11.8 million of which remained outstanding and are included in commercial business loans above.

PPP loans are 100% guaranteed by the SBA.

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of the dates indicated (in thousands):

June 30, 2021

September 30, 2021

Individually evaluated for impairment Allowance:

32 unchanged sentences

The following tables summarize the activity in the allowance for loan losses for the periods indicated (in thousands):

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Allowance Charge-offs Recoveries Provision (Recapture) Ending

9 unchanged sentences

Total $ 6,157 $ ( 8 ) $ 3 $ 175 $ 6,327

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Allowance Charge-offs Recoveries Provision (Recapture) Ending

9 unchanged sentences

Total $ 6,000 $ ( 113 ) $ 15 $ 425 $ 6,327

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Allowance Charge-offs Recoveries (Recapture) Provision Ending

9 unchanged sentences

Total $ 6,031 $ ( 332 ) 0 $ 14 $ 275 $ 5,988

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Allowance Charge-offs Recoveries (Recapture) Provision Ending

19 unchanged sentences

The following tables present the internally assigned grades as of the dates indicated, by type of loan (in thousands):

June 30, 2021

September 30, 2021

four family Home

9 unchanged sentences

Substandard 3,190 335 7,158 1,756 191 504 21 573 13,728

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total $ 194,346 $ 14,012 $ 246,794 $ 81,576 $ 21,459 $ 58,358 $ 15,732 $ 36,620 $ 668,897

11 unchanged sentences

Substandard 2,330 464 3,364 645 220 518 24 1,962 9,527

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total $ 130,657 $ 16,265 $ 265,774 $ 62,752 $ 20,941 $ 39,868 $ 15,024 $ 64,217 $ 615,498

1 unchanged sentence

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due.

Loans are placed on nonaccrual once the loan is 90 days past due or sooner if, in management’s opinion, the borrower may be unable to meet payment of obligations as they become due, as well as when required by regulatory provisions.

Loans are placed on nonaccrual once the loan is 90 days past due or sooner if,

in management’s opinion, the borrower may be unable to meet payment of obligations as they become due, as well as when required by regulatory provisions.

The following table presents the recorded investment in nonaccrual loans as of the dates indicated, by type of loan (in thousands):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

One-to-four family $ 1,915 $ 1,668

7 unchanged sentences

The following tables present the aging of the recorded investment in past due loans as of the dates indicated, by type of loan (in thousands):

June 30, 2021

September 30, 2021

Past Due 60-89 Days

26 unchanged sentences

The following tables present the credit risk profile of our loan portfolio based on payment activity as of the dates indicated, by type of loan (in thousands):

June 30, 2021

September 30, 2021

equity Commercial

25 unchanged sentences

Impaired loans at the dates indicated, by type of loan were as follows (in thousands):

June 30, 2021

September 30, 2021

Recorded Investment

30 unchanged sentences

The following table presents the average recorded investment and interest income recognized on impaired loans for the periods indicated, by loan types (in thousands):

Three Months Ended June 30,

2021 Three Months Ended 2020

Three Months Ended September 30,

Investment Interest Income

10 unchanged sentences

Total $ 4,490 $ 84 $ 9,100 $ 140

Six Months Ended June 30,

2021 Three Months Ended 2020

Nine Months Ended September 30,

Investment Interest Income

10 unchanged sentences

Total $ 5,143 $ 170 $ 10,084 $ 325

Forgone interest on nonaccrual loans was $ 49 thousand and $ 109 thousand for the six months ended June 30, 2021 and 2020, respectively.

There were no commitments to lend additional funds to borrowers whose loans were classified as nonaccrual or impaired at June 30, 2021 and December 31, 2020.

Forgone interest on nonaccrual loans was $ 89 thousand and $ 62 thousand for the three months ended September 30, 2021 and 2020, respectively, and $ 138 thousand and $ 126 thousand for the nine months ended September 30, 2021 and 2020, respectively.

There were no commitments to lend additional funds to borrowers whose loans were classified as nonaccrual or impaired at September 30, 2021 and December 31, 2020.

Troubled debt restructurings.

2 unchanged sentences

Once a TDR has performed according to its modified terms for six months and the collection of principal and interest under the revised terms is deemed probable, we remove the TDR from nonperforming status.

Loans classified as TDRs totaled $ 2.6 million and $ 3.2 million at June 30, 2021 and December 31, 2020, and are included in impaired loans.

Loans classified as TDRs totaled $ 2.6 million and $ 3.2 million at September 30, 2021 and December 31, 2020, respectively, and are included in impaired loans.

The Company has granted, in its TDRs, a variety of concessions to borrowers in the form of loan modifications.

9 unchanged sentences

Any other type of modification, including the use of multiple categories above.

There were no loans modified as a TDR during the three and six months ended June 30, 2021.

There were two TDR loans totaling $ 484 thousand that were paid off during the three and six months ended June 30, 2021.

There was one loan totaling $ 431 thousand modified as a TDR during the three months ended June 30, 2020 and three loans totaling $ 649 thousand were modified as TDRs during the six months ended June 30, 2020.

There was one TDR loan totaling $ 2.8 million paid off during the six months ended June 30, 2020.

There were no post-modification changes for the unpaid principal balance in loans, net of partial charge-offs, that were recorded as a result of the TDRs for the three and six months ended June 30, 2021 and 2020.

There were no loans modified as a TDR for which there was a payment default within the first 12 months of modification and no charge-offs relating to TDRs during the three and six months ended June 30, 2021.

There was one loan totaling $ 161 thousand modified as a TDR for which there was a payment default within the first 12 months of modification during the six months ended June 30, 2020.

There were no loans modified as a TDR during the three and nine months ended September 30, 2021.

There were two TDRs totaling $ 484 thousand that were paid off during the nine months ended September 30, 2021.

There was one loan totaling $ 146 thousand modified as a TDR during the three months ended September 30, 2020 and four loans totaling $ 795 thousand modified as TDRs during the nine months ended September 30, 2020.

There were two TDR loan totaling $ 2.9 million that were paid off during the nine months ended September 30, 2020.

There were no post-modification changes for the unpaid principal balance in loans, net of partial charge-offs, that were recorded as a result of the TDRs for the three and nine months ended September 30, 2021 and 2020.

There were no loans modified as a TDR for which there was a payment default within the first 12 months of modification during the three and nine months ended September 30, 2021.

There was one loan totaling $ 161 thousand modified as a TDR for which there was a payment default within the first 12 months of modification during the nine months ended September 30, 2020.

The Company had no commitments to extend additional credit to borrowers owing receivables whose terms have been modified into TDRs.

1 unchanged sentence

The CARES Act, and the Interagency Statement provides that a short-term modification made to a loan in response to COVID-19 which meets certain criteria does not need to be placed on nonaccrual status or accounted for as a TDR pursuant to applicable accounting and regulatory guidance until the earlier of 60 days after the national emergency termination date or January 1, 2022.

The majority of these borrowers had resumed making payments as of June 30, 2021, and as of that date, only three commercial loans totaling $ 1.7 million and nine residential loans totaling $ 1.3 million, remained on deferral status under COVID-19 loan modification forbearance agreements.

The majority of these borrowers had resumed making payments as of September 30, 2021, and as of that date, there were six residential loans totaling $ 933 thousand on deferral status under COVID-19 loan modification forbearance agreements.

We continue to monitor these loans through our normal credit risk processes and any request for continuation of relief beyond the initial modification is reassessed at that time to determine if a further modification should be granted and if a downgrade in risk rating is appropriate.

As of June 30, 2021, there were two one-to-four family loans totaling $ 120 thousand that were in process of foreclosure.

As of September 30, 2021, there was one one-to-four family loans totaling $ 39 thousand that was in process of foreclosure.

Note 5 – Fair Value Measurements

2 unchanged sentences

ASC 820 defines fair values for financial instruments as the exit price, the price that would be received for an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date under current market conditions.

The Company’s fair values for financial instruments at June 30, 2021 were determined based on these requirements.

The Company’s fair values for financial instruments at September 30, 2021 were determined based on these requirements.

The following methods and assumptions were used to estimate the fair value of other financial instruments:

6 unchanged sentences

The fair value of fixed-rate one-to-four family loans is based on whole loan forward prices obtained from government sponsored enterprises.

At June 30, 2021 and December 31, 2020, loans held-for-sale were carried at cost, as no impairment was required.

At September 30, 2021 and December 31, 2020, loans held-for-sale were carried at cost, as no impairment was required.

Loans Held-for-Portfolio - The estimated fair value of loans-held-for portfolio consists of a credit adjustment to reflect the estimated adjustment to the carrying value of the loans due to credit-related factors and a yield adjustment, to reflect the estimated adjustment to the carrying value of the loans due to a differential in yield between the portfolio loan yields and estimated current market rate yields on loans with similar characteristics.

15 unchanged sentences

Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with the Company’s quarterly valuation process.

There were no transfers between levels during the three and six months ended June 30, 2021 and 2020.

There were no transfers between levels during the three and nine months ended September 30, 2021 and 2020.

The following tables present information about the level in the fair value hierarchy for the Company’s financial assets and liabilities, whether or not recognized or recorded at fair value as of the dates indicated (in thousands):

June 30, 2021 Fair Value Measurements Using:

September 30, 2021 Fair Value Measurements Using:

Value Estimated

26 unchanged sentences

The following tables present the balance of assets measured at fair value on a recurring basis as of the dates indicated (in thousands):

Fair Value at June 30, 2021

Fair Value at September 30, 2021

Description Total Level 1 Level 2 Level 3

8 unchanged sentences

The following tables provide a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring basis as of the dates indicated:

June 30, 2021

September 30, 2021

Financial Instrument Valuation Technique Unobservable Input(s) Range

10 unchanged sentences

An increase in the weighted-average life assumptions will result in a decrease in the constant prepayment rate and conversely, a decrease in the weighted-average life will result in an increase of the constant prepayment rate.

There were no assets or liabilities (excluding mortgage servicing rights) measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and six months ended June 30, 2021 and 2020.

Mortgage servicing rights are measured at fair value using a significant unobservable input (Level 3) on a recurring basis - additional information is included in “Note 6—Mortgage Servicing Rights.”

The following tables present the balance of assets measured at fair value on a nonrecurring basis at the dates indicated (in thousands):

Fair Value at June 30, 2021

Fair Value at September 30, 2021

Total Level 1 Level 2 Level 3

5 unchanged sentences

Impaired loans 5,940 — — 5,940

There were no liabilities carried at fair value, measured on a recurring or nonrecurring basis, at June 30, 2021 and December 31, 2020.

There were no liabilities carried at fair value, measured on a recurring or nonrecurring basis, at September 30, 2021 and December 31, 2020.

The following tables provide a description of the valuation technique, observable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a nonrecurring basis at the dates indicated:

June 30, 2021

September 30, 2021

Instrument Valuation Technique(s) Unobservable Input(s) Range (Weighted Average)

17 unchanged sentences

Note 6 – Mortgage Servicing Rights

The Company’s mortgage servicing rights portfolio totaled $ 518.7 million at June 30, 2021 compared to $ 488.7 million at December 31, 2020.

Of this total balance, the unpaid principal balance of loans serviced for Federal National Mortgage Association (“Fannie Mae”) at June 30, 2021 and December 31, 2020 were $ 512.1 million and $ 481.6 million, respectively.

The unpaid principal balance of loans serviced for other financial institutions at June 30, 2021 and December 31, 2020, totaled $ 6.6 million and $ 7.1 million, respectively.

The Company’s mortgage servicing rights portfolio totaled $ 514.0 million at September 30, 2021 compared to $ 488.7 million at December 31, 2020.

Of this total balance, the unpaid principal balance of loans serviced for Federal National Mortgage Association (“Fannie Mae”) at September 30, 2021 and December 31, 2020 were $ 507.8 million and $ 481.6 million, respectively.

The unpaid principal balance of loans serviced for other financial institutions at September 30, 2021 and December 31, 2020, totaled $ 6.2 million and $ 7.1 million, respectively.

Loans serviced for others are not included in the Company’s financial statements as they are not assets of the Company.

A summary of the change in the balance of mortgage servicing assets during the periods indicated were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

7 unchanged sentences

The key economic assumptions used in determining the fair value of mortgage servicing rights at the dates indicated are as follows:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Prepayment speed (Public Securities Association “PSA” model) 217 % 247 %

2 unchanged sentences

The amount of contractually specified servicing, late and ancillary fees earned on the mortgage servicing rights are included in

mortgage servicing income on the Condensed Consolidated Statements of Income and totaled $ 321 thousand and $ 633 thousand for the three and six months ended June 30, 2021, respectively, and $ 235 thousand and $ 479 thousand for the three and six months ended June 30, 2020, respectively.

mortgage servicing income on the Condensed Consolidated Statements of Income and totaled $ 328 thousand and $ 961 thousand for the three and nine months ended September 30, 2021, respectively, and $ 260 thousand and $ 739 thousand for the three and nine months ended September 30, 2020, respectively.

Note 7 – Commitments and Contingencies

5 unchanged sentences

The terms of the agreement call for a blanket pledge of a portion of the Company’s mortgage and commercial and multifamily loan portfolio based on the outstanding balance.

At June 30, 2021 and December 31, 2020, the amount available to borrow under this credit facility was $ 402.0 million and $ 390.5 million, respectively, subject to eligible pledged collateral.

At June 30, 2021, the credit facility was collateralized as follows:

At September 30, 2021 and December 31, 2020, the amount available to borrow under this credit facility was $ 397.9 million and $ 390.5 million, respectively, subject to eligible pledged collateral.

At September 30, 2021, the credit facility was collateralized as follows:

one-to-four family mortgage loans with an advance equivalent of $ 77.2 million, commercial and multifamily mortgage loans with an advance equivalent of $ 61.4 million and home equity loans with an advance equivalent of $ 569 thousand.

1 unchanged sentence

one-to-four family mortgage loans with an advance equivalent of $ 103.6 million, commercial and multifamily mortgage loans with an advance equivalent of $ 128.9 million and home equity loans with an advance equivalent of $ 2.8 million.

The Company had no outstanding borrowings under this arrangement at both June 30, 2021 and December 31, 2020.

The Company had no outstanding borrowings under this arrangement at both September 30, 2021 and December 31, 2020.

The weighted-average interest rate of the Company’s borrowings under this agreement at December 31, 2020 was 3.10 %.

Additionally, the Company had outstanding letters of credit from the FHLB of Des Moines with a notional amount of $ 19.6 million and $ 21.6 million at June 30, 2021 and December 31, 2020, respectively, to secure public deposits.

The remaining amount available to borrow as of June 30, 2021 and December 31, 2020, was $ 131.9 million and $ 213.7 million, respectively.

Additionally, the Company had outstanding letters of credit from the FHLB of Des Moines with a notional amount of $ 17.6 million and $ 21.6 million at September 30, 2021 and December 31, 2020, respectively, to secure public deposits.

The remaining amount available to borrow as of September 30, 2021 and December 31, 2020, was $ 121.6 million and $ 213.7 million, respectively.

As a member of the FHLB, the Company is required to maintain a minimum level of investment in FHLB of Des Moines stock based on specific percentages of its outstanding FHLB advances.

At June 30, 2021 and December 31, 2020, the Company had an investment of $ 1.1 million and $ 877 thousand, respectively in FHLB of Des Moines stock.

At September 30, 2021 and December 31, 2020, the Company had an investment of $ 1.1 million and $ 877 thousand, respectively in FHLB of Des Moines stock.

The Company has access to an unsecured Fed Funds line of credit from Pacific Coast Banker’s Bank.

The line has a one year term maturing on June 30, 2022 and is renewable annually.

As of June 30, 2021, the amount available under this line of credit was $ 20.0 million.

There was no balance on this line of credit as of June 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021, the amount available under this line of credit was $ 20.0 million.

There was no balance on this line of credit as of September 30, 2021 and December 31, 2020, respectively.

In September 2020, the Company issued $ 12.0 million of fixed to floating rate subordinated notes that mature in 2030.

3 unchanged sentences

Prior to October 1, 2025, the Company may redeem these notes, in whole but not in part, only under certain limited circumstances set forth in the notes and are redeemable by the Company in whole or in part beginning with the interest payment date of October 1, 2025.

As of both June 30, 2021 and December 31, 2020, the balance of the subordinated notes was $ 11.6 million.

As of both September 30, 2021 and December 31, 2020, the balance of the subordinated notes was $ 11.6 million.

Note 9 – Earnings Per Common Share

5 unchanged sentences

The following table summarizes the calculation of earnings per share for the periods indicated (in thousands, except per share data):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

Earnings per share, basic (1)(2)

$ 1.00 $ 0.90 $ 2.81 $ 2.11

Earnings per share, diluted (1)(2)

(1) The basic and diluted earnings per share amounts for the three and six months ended June 30, 2021 and 2020 are the same under both the Treasury Stock Method and the Two-Class Method as prescribed in FASB ASC 260-10, Earnings Per Share.

There were no anti-dilutive securities at June 30, 2021 and 6,809 anti-dilutive securities at June 30, 2020.

$ 0.98 $ 0.90 $ 2.76 $ 2.09

(1) The basic and diluted earnings per share amounts for the three and nine months ended September 30, 2021 include the impact of income allocated to participating securities of $ 17 thousand and $ 50 thousand, respectively.

(2) The difference between the basic and diluted earnings per share amounts for the three and nine months ended September 30, 2021 and 2020 under the Treasury Stock Method and the Two-Class Method, as prescribed in FASB ASC 260-10, Earnings Per Share, is immaterial.

There were no anti-dilutive securities at September 30, 2021 and 19,281 anti-dilutive securities at September 30, 2020.

Note 10 – Stock-based Compensation

5 unchanged sentences

Under the 2013 Plan, 181,750 shares of common stock were approved for awards for stock options and stock appreciation rights and 116,700 shares of common stock were approved for awards for restricted stock and restricted stock units.

As of June 30, 2021, on an adjusted basis, awards for stock options totaling 272,124 shares and awards for restricted stock totaling 142,621 shares of Company common stock have been granted, net of any forfeitures, to participants in the 2013 Plan and the 2008 Plan.

Share-based compensation expense was $ 65 thousand and $ 231 thousand for the three and six months ended months ended June 30, 2021, respectively, and was $ 46 thousand and $ 231 thousand for the three and six months ended June 30, 2020, respectively.

As of September 30, 2021, on an adjusted basis, awards for stock options totaling 271,874 shares and awards for restricted stock totaling 142,201 shares of Company common stock have been granted, net of any forfeitures, to participants in the 2013 Plan and the 2008 Plan.

Share-based compensation expense was $ 65 thousand and $ 295 thousand for the three and nine months ended months ended September 30, 2021, respectively, and was $ 52 thousand and $ 283 thousand for the three and nine months ended September 30, 2020, respectively.

Stock Option Awards

All stock option awards granted under the 2008 Plan vest in 20 % annual increments commencing one year from the grant date in accordance with the requirements of the 2008 Plan.

The stock option awards granted to date under the 2013 Plan provide

for immediate vesting of a portion of the award with the balance of the award vesting on the anniversary date of each grant date

in equal annual installments over periods of one -to- four years subject to the continued service of the participant with the

The stock option awards granted to date under the 2013 Plan provide for immediate vesting of a portion of the award with the balance of the award vesting on the anniversary date of each grant date in equal annual installments over periods of one -to- four years subject to the continued service of the participant with the Company.

All of the options granted under the 2008 Plan and the 2013 Plan are exercisable for a period of 10 years from the date of grant, subject to vesting.

The following is a summary of the Company’s stock option award activity during the three months ended June 30, 2021 (dollars in thousands, except per share amounts):

The following is a summary of the Company’s stock option award activity during the three months ended September 30, 2021 (dollars in thousands, except per share amounts):

Shares Weighted-

2 unchanged sentences

Term in Years Aggregate

Outstanding at April 1, 2021 100,687 $ 23.57 5.21 $ 1,818

Outstanding at July 1, 2021 95,202 $ 24.35 5.21 $ 1,818

Exercised ( 3,616 ) 17.55

Forfeited ( 250 ) 33.58

Outstanding at June 30, 2021 95,202 24.35 5.19 2,061

Outstanding at September 30, 2021 91,336 24.59 5.02 1,858

Exercisable 72,843 22.28 4.12 1,650

1 unchanged sentence

91,336 $ 24.59 5.02 $ 1,858

The following is a summary of the Company’s stock option award activity during the six months ended June 30, 2021 (dollars in thousands, except per share amounts):

The following is a summary of the Company’s stock option award activity during the nine months ended September 30, 2021 (dollars in thousands, except per share amounts):

Shares Weighted-

7 unchanged sentences

Expired ( 70 ) 34.29

Outstanding at June 30, 2021 95,202 24.35 5.19 2,061

Outstanding at September 30, 2021 91,336 24.59 5.02 1,858

Exercisable 72,843 22.28 4.12 1,650

1 unchanged sentence

91,336 $ 24.59 5.02 $ 1,858

As of June 30, 2021, there was $ 102 thousand of total unrecognized compensation cost related to non-vested stock options granted under the Plans.

As of September 30, 2021, there was $ 91 thousand of total unrecognized compensation cost related to non-vested stock options granted under the Plans.

The cost is expected to be recognized over the remaining weighted-average vesting period of approximately 2.6 years.

The fair value of each option grant is estimated as of the grant date using the Black-Scholes option-pricing model.

The fair value of options granted for the six months ended June 30, 2021 and 2020 were determined using the following weighted-average assumptions as of the grant date.

Six Months Ended June 30,

The fair value of options granted for the nine months ended September 30, 2021 and 2020 were determined using the following weighted-average assumptions as of the grant date.

Nine Months Ended September 30,

Annual dividend yield 1.60 % 1.60 %

3 unchanged sentences

Weighted-average grant date fair value per option granted $ 5.64 $ 7.14

There were no options granted during the three months ended June 30, 2021 or 2020.

There were no options granted during the three months ended September 30, 2021 or 2020.

Restricted Stock Awards

3 unchanged sentences

The restricted stock awards granted to date under the 2013 Plan provide for immediate vesting of a portion of the award with the balance of the award vesting on the anniversary date of each of the grant date in equal annual installments over periods of one -to- four years subject to the continued service of the participant with the Company.

The following is a summary of the Company’s non-vested restricted stock award activity during the three months ended June 30, 2021:

The following is a summary of the Company’s non-vested restricted stock award activity during the three months ended September 30, 2021:

Shares Weighted-Average

1 unchanged sentence

Value Per Share Aggregate Intrinsic Value Per Share

Non-Vested at April 1, 2021 18,050 $ 34.01

Non-Vested at July 1, 2021 18,050 $ 34.01

Forfeited ( 420 ) 33.45

Non-Vested at June 30, 2021 18,050 -0.0094814404432133 $ 34.01 $ 45.99

Non-Vested at September 30, 2021 17,630 -0.0094814404432133 $ 34.02 $ 44.94

Expected to vest assuming a 0 % forfeiture rate over the vesting term

17,630 $ 34.02 $ 44.94

The following is a summary of the Company’s non-vested restricted stock award activity during the six months ended June 30, 2021:

The following is a summary of the Company’s non-vested restricted stock award activity during the nine months ended September 30, 2021:

Shares Weighted-Average

5 unchanged sentences

Forfeited ( 1,890 ) 34.93

Non-Vested at June 30, 2021 18,050 $ 34.01 $ 45.99

Non-Vested at September 30, 2021 17,630 $ 34.02 $ 44.94

Expected to vest assuming a 0 % forfeiture rate over the vesting term

17,630 $ 34.02 $ 44.94

As of June 30, 2021, there was $ 521 thousand of unrecognized compensation cost related to non-vested restricted stock granted under the Plans.

As of September 30, 2021, there was $ 455 thousand of unrecognized compensation cost related to non-vested restricted stock granted under the Plans.

The cost is expected to be recognized over the weighted-average vesting period of 2.5 years.

The total fair value of shares vested for the six months ended June 30, 2021 and 2020 was $ 264 thousand and $ 236 thousand, respectively.

The total fair value of shares vested for the nine months ended September 30, 2021 and 2020 was $ 264 thousand and $ 236 thousand, respectively.

Employee Stock Ownership Plan

3 unchanged sentences

The interest rate on the loan is fixed at 2.25 % per annum.

As of June 30, 2021, the remaining balance of the ESOP loan was $ 126 thousand.

As of September 30, 2021, the remaining balance of the ESOP loan was $ 126 thousand.

Neither the loan balance nor the related interest expense is reflected on the condensed consolidated financial statements.

At June 30, 2021, the ESOP held and is committed to release 11,340 shares of the Company’s common stock to participants during 2021.

The fair value of the 148,266 shares held by the ESOP trust was $ 7.0 million at June 30, 2021.

ESOP compensation expense included in salaries and benefits was $ 180 thousand and $ 350 thousand for the three and six months ended June 30, 2021, respectively, and $ 174 thousand and $ 348 thousand for the three and six months ended June 30, 2020, respectively.

At September 30, 2021, the ESOP held and is committed to release 11,340 shares of the Company’s common stock to participants during 2021.

The fair value of the 147,766 shares held by the ESOP trust was $ 6.8 million at September 30, 2021.

ESOP compensation expense included in salaries and benefits was $ 180 thousand and $ 530 thousand for the three and nine months ended September 30, 2021, respectively, and $ 126 thousand and $ 474 thousand for the three and nine months ended September 30, 2020, respectively.

Note 11 – Leases

1 unchanged sentence

The lease term for our leases begins on the date we become legally obligated for the rent payments or we take possession of the building, whichever is earlier.

Generally, our real estate leases have initial terms of three to ten years and typically include one renewal option.

Our leases have remaining lease terms of one year to eight years .

Generally, our real estate leases have initial terms of three to ten years and

typically include one renewal option.

Our leases have remaining lease terms of less than one year to eight years .

The operating leases generally contain renewal options and require us to pay property taxes and operating expenses for the properties.

The following table presents the lease right-of-use assets and lease liabilities recorded on the condensed consolidated balance sheet at the dates indicated (in thousands):

June 30, 2021 December 31,

September 30, 2021 December 31,

Operating lease right-of-use assets $ 6,033 $ 6,722

1 unchanged sentence

The following table presents the components of lease expense for the periods indicated (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

5 unchanged sentences

The following table presents the maturity of lease liabilities at the date indicated:

June 30, 2021

September 30, 2021

Remainder of 2021

4 unchanged sentences

Lease term and discount rate by lease type consist of the following at the dates indicated:

September 30,

2021 December 31,

6 unchanged sentences

Supplemental cash flow information related to leases was as follows for the periods indicated (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

Note 12 – Subsequent Events

On July 28, 2021, the Board of Directors of the Company declared a quarterly cash dividend of $ 0.17 per common share, payable on August 24, 2021 to stockholders of record at the close of business on August 10, 2021.

On October 26, 2021, the Board of Directors of the Company declared a quarterly cash dividend of $ 0.17 per common share, payable on November 24, 2021 to stockholders of record at the close of business on November 10, 2021.

On October 26, 2021, the Company’s Board of Directors adopted a new stock repurchase program.

Under this new repurchase program, the Company may repurchase its outstanding shares in the open market in an amount up to $ 2.0 million, based on prevailing market prices, or in privately negotiated transactions, over a period beginning on October 29, 2021, continuing until the earlier of the completion of the repurchase or the next six months, depending upon market conditions.

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

What changed 10-Q

Item 1. Financial Statements