What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-10 compared with 2021-11-09 · 164 added, 263 removed, 718 unchanged (37% of the section changed)

4 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

2022 December 31,

1 unchanged sentence

Available-for-sale securities, at fair value 10,223 8,419

Held-to-maturity securities, at amortized cost 2,223 —

Loans held-for-sale 1,297 3,094

23 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, 2,617,425 and 2,592,587 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Common stock, $ 0.01 par value, 40,000,000 shares authorized, 2,621,531 and 2,613,768 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital 28,154 27,956

Unearned shares - Employee Stock Ownership Plan (“ESOP”) ( 28 ) ( 113 )

Retained earnings 66,139 65,237

7 unchanged sentences

(In thousands, except share and per share amounts)

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

2021 2020 2021 2020

Three Months Ended March 31,

INTEREST INCOME

4 unchanged sentences

Deposits 427 1,295

Borrowings — 87 — 209

Subordinated notes 168 168

32 unchanged sentences

(In thousands)

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

2021 2020 2021 2020

Three Months Ended March 31,

Net income $ 1,723 $ 2,451

Available for sale securities:

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

Unrealized losses arising during the period ( 770 ) ( 59 )

Income tax benefit related to unrealized losses 162 12

Other comprehensive loss, net of tax ( 608 ) ( 47 )

Comprehensive income $ 1,115 $ 2,404

3 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

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

For the Three Months Ended March 31, 2022 and 2021 (unaudited)

(In thousands, except share and per share amounts)

1 unchanged sentence

Stock Additional Paid

-in Capital Unearned

ESOP Shares Retained

-in Capital Retained

Earnings Accumulated

Comprehensive

Income, net of tax Total

Income/(Loss), net of tax Total

Stockholders’

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

Share-based compensation — — 65 — — — 65

Cash dividends paid on common stock ($ 0.17 per share)

— — — — ( 445 ) — ( 445 )

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 September 30, 2021

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

Balance, at December 31, 2021

10 unchanged sentences

Common stock options exercised 2,421 — 43 — — 43

Allocation of ESOP shares — — 262 85 — — 347

Balance, at September 30, 2021

Balance, at March 31, 2022

2,621,531 $ 26 $ 28,154 $ 66,139 $ ( 469 ) $ 93,850

9 unchanged sentences

Comprehensive

Income, net of tax Total

Income/(Loss), net of tax Total

Stockholders’

Balance, at June 30, 2020

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

Net income — — — — 2,335 — 2,335

Other comprehensive loss, net of tax — — — — — ( 3 ) ( 3 )

Share-based compensation — — 52 — — — 52

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

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

— — — — ( 389 ) — ( 389 )

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

Allocation of ESOP shares — — 49 28 — — 77

Balance, at September 30, 2020

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

Balance, at December 31, 2020

10 unchanged sentences

Allocation of ESOP shares — — 72 28 — — 100

Balance, at September 30, 2020

Balance, at March 31, 2021

2,609,806 $ 26 $ 27,447 $ ( 85 ) $ 59,975 $ 193 $ 87,556

4 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

19 unchanged sentences

Other liabilities 598 4,353

Net cash provided by (used in) operating activities 12,047 ( 9,587 )

Net cash provided by operating activities 2,904 7,780

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Proceeds from principal payments, maturities and sales of available-for-sale securities 215 1,047

Purchase of held-to-maturity securities ( 2,226 ) —

Proceeds from principal payments of held-to-maturity securities 3 —

Net increase in loans ( 21,382 ) ( 1,079 )

5 unchanged sentences

Net increase in deposits 37,771 68,712

Proceeds from borrowings — 87,991

Repayment of borrowings — ( 87,991 )

Proceeds from subordinated debt, net — 11,676

FHLB stock purchased ( 71 ) ( 175 )

10 unchanged sentences

Interest paid on deposits and borrowings 757 1,699

Loans transferred from loans held-for-portfolio to OREO and repossessed assets 84 —

See notes to condensed consolidated financial statements

17 unchanged sentences

Note 2 – Accounting Pronouncements Recently Issued or Adopted

The Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), signed into law on March 27, 2020, provides relief from certain accounting and financial reporting requirements under U.S.

Section 4013 of the CARES Act provides temporary relief from the accounting and reporting requirements for troubled debt restructurings (“TDRs”) under Accounting Standards Codification ("ASC") 310-40 for loan modifications related to the novel coronavirus disease 2019 ("COVID-19") pandemic.

In addition, on April 7, 2020, a group of banking agencies issued an interagency statement (“Interagency Statement”) for evaluating whether loan modifications that occur in response to the COVID-19 pandemic are TDRs.

The Interagency Statement was originally issued on March 22, 2020, but the banking agencies revised it to address the relationship between their TDR accounting and disclosure guidance and the TDR guidance in Section 4013 of the CARES Act.

Section 4013 of the CARES Act permits the suspension of ASC 310-40 for loan modifications that are made by financial institutions in response to the COVID-19 pandemic if (1) the borrower was not more than 30 days past due as of December 31, 2019, and (2) the modifications are related to arrangements that defer or delay the payment of principal or interest, or change the interest rate on the loan.

The Interagency Statement indicates that a lender can conclude that a borrower is not experiencing financial difficulty if either (1) short-term (e.g., six months) modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented, or (2) the modification or deferral program is mandated by the federal government or a state government.

Accordingly, any loan modification made in response to the COVID-19 pandemic that meets either of these practical expedients would not be considered a TDR.

The Company adopted this guidance effective March 27, 2020.

On December 27, 2020, the Consolidated Appropriations Act 2021 (“CAA 2021”) was signed into law.

Among other purposes, CAA 2021 provides coronavirus emergency response and relief, including extending relief offered under the CARES Act related to restructured loans as a result of COVID-19 through January 1, 2022 or 60 days after the end of the national emergency declared by the President, whichever is earlier.

In October 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-08, “ Receivables – Nonrefundable Fees and Other Costs ” (“ASU 2020-08”).

ASU 2020-08 clarifies that the Company should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period.

ASU 2020-08 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The adoption of ASU 2018-13 did not have a material impact on the Company's consolidated financial statements.

On March 2020, the FASB issued ASU No.

On March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2020-04, " Reference Rate Reform" ("Topic 848").

9 unchanged sentences

The Company does not expect the adoption of ASU 2020-04 to have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

This ASU simplifies the accounting for income taxes by removing the exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items, removing the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, and removing the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The adoption of ASU 2019-12 did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20):

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans.

This ASU modifies disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

Disclosure requirements removed from FASB Subtopic 715-20 include the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, the amount and timing of plan assets expected to be returned to the employer, related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan, and, for public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic benefit costs and benefit obligation for postretirement health care benefits.

Disclosure requirements added to FASB Subtopic 715-20 include the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates, and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period.

This ASU is effective for fiscal years ending after December 15, 2020.

The adoption of ASU No.

2018-14 did not have a material impact on the Company's consolidated financial statements.

In June 2016, the FASB issued ASU No.

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

Measurement of Credit Losses on Financial Instruments .

Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance in November 2018, ASU No.

2018-19, April 2019, ASU 2019-04, May 2019, ASU 2019-05, November 2019, ASU 2019-11, February 2020, ASU 2020-02, and March 2020, ASU 2020-03, all of which clarifies codification and corrects unintended application of the guidance.

This ASU replaces the existing incurred loss impairment methodology that recognizes credit losses when a probable loss has been incurred with new methodology where loss estimates are based upon lifetime expected credit losses.

The amendments in this ASU require a financial asset that is measured at amortized cost to be presented at the net amount expected to be collected.

The income statement would then reflect the measurement of credit losses for newly recognized financial assets as well as changes to the expected credit losses that have taken place during the reporting period.

income statement would then reflect the measurement of credit losses for newly recognized financial assets as well as changes to the expected credit losses that have taken place during the reporting period.

The change in allowance recognized as a result of adoption will occur through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the ASU is adopted.

5 unchanged sentences

The Bank meets the requirements of a smaller reporting company and will delay implementation of ASU No.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures .

The ASU eliminates the accounting guidance for troubled debt restructured loans (“TDRs”) by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

Additionally, the ASU requires public business entities to disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases.

This ASU will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, upon the Company’s adoption of the amendments in ASU 2016-13, which is commonly referred to as the current expected credit loss methodology.

Note 3 – Investments

The amortized cost and fair value of our available-for-sale (“AFS”) securities and the corresponding amounts of gross unrealized gains and losses at the dates indicated were as follows (in thousands):

The Company classifies its debt investment securities in two categories:

held-to-maturity (“HTM”) or available-for-sale (“AFS”).

Unrealized holding gains or losses, net of the related tax effect, on AFS securities are excluded from income and are reported as a separate component of shareholders’ equity as accumulated other comprehensive income net of applicable taxes until realized.

Recognized gains and losses from the sale of AFS securities are determined on a specific-identification basis.

These securities are adjusted for the amortization or accretion of premiums or discounts.

Securities classified as HTM are those that the Company has the positive intent and ability to hold until maturity.

These securities are carried at amortized cost, adjusted for the amortization or accretion of premiums or discounts.The Company does not own any debt securities classified as trading or equity securities.

The amortized cost and fair value of our AFS securities and the corresponding amounts of gross unrealized gains and losses at the dates indicated were as follows (in thousands):

Losses Estimated

September 30, 2021

March 31, 2022

Municipal bonds $ 6,724 $ 74 $ ( 520 ) $ 6,278

5 unchanged sentences

Total $ 8,243 $ 201 $ ( 25 ) $ 8,419

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

The amortized cost and fair value of our HTM securities and the corresponding amounts of gross unrealized gains and losses at the dates indicated were as follows (in thousands):

Losses Estimated

March 31, 2022

Municipal bonds $ 705 $ — $ ( 87 ) $ 618

Agency mortgage-backed securities 1,518 — ( 80 ) 1,438

Total $ 2,223 $ — $ ( 167 ) $ 2,056

December 31, 2021

Municipal bonds $ — $ — $ — $ —

Agency mortgage-backed securities — — — —

Total $ — $ — $ — $ —

The amortized cost and fair value of AFS and HTM securities at March 31, 2022, 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.

September 30, 2021

March 31, 2022

Available-for-sale Held-to-maturity

Value Amortized

Due within one year $ 260 $ 262 $ — $ —

4 unchanged sentences

Total $ 10,817 $ 10,223 $ 2,223 $ 2,056

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.

There were no pledged securities at March 31, 2022 or December 31, 2021.

There were no sales of AFS securities during the three months ended March 31, 2022 or 2021.

There were no sales of HTM securities during the three months ended March 31, 2022.

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):

September 30, 2021

March 31, 2022

Less Than 12 Months 12 Months or Longer Total

2 unchanged sentences

Value Unrealized

Available-for-sale securities

Municipal bonds $ 3,488 $ ( 520 ) $ — $ — $ 3,488 $ ( 520 )

Agency mortgage-backed securities 2,792 ( 117 ) 355 ( 45 ) 3,147 ( 162 )

Total $ 1,094 $ ( 17 ) $ — $ — $ 1,094 $ ( 17 )

Total available-for-sale securities $ 6,280 $ ( 637 ) $ 355 $ ( 45 ) $ 6,635 $ ( 682 )

Held-to-maturity securities

Municipal bonds $ 618 $ ( 87 ) $ — $ — $ 618 $ ( 87 )

Agency mortgage-backed securities 1,438 ( 80 ) — — 1,438 ( 80 )

Total held-to-maturity securities $ 2,056 $ ( 167 ) $ — $ — $ 2,056 $ ( 167 )

December 31, 2021

3 unchanged sentences

Value Unrealized

Municipal bonds $ 1,632 $ ( 13 ) $ — $ — $ 1,632 $ ( 13 )

Agency mortgage-backed securities $ — $ — $ 402 $ ( 12 ) $ 402 $ ( 12 )

Total $ 1,632 $ ( 13 ) $ 402 $ ( 12 ) $ 2,034 $ ( 25 )

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.

There were no credit losses recognized in earnings related to other than temporary impairments during the three months ended March 31, 2022 or 2021.

At March 31, 2022, the total securities portfolio consisted of 12 agency mortgage-backed securities and twelve municipal bonds with a total portfolio fair value of $ 12.3 million.

At December 31, 2021, the securities portfolio consisted of 10 agency mortgage-backed securities and ten municipal bonds with a fair value of $ 8.4 million.

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.

At March 31, 2022, there were 13 securities in an unrealized loss position for less than 12 months, and one security in an unrealized loss position for more than 12 months.

Of the 13 securities in an unrealized loss position for less than 12 months, two securities were classified as HTM.

At December 31, 2021, there were two securities in an unrealized loss position for less than 12 months, and one security in an unrealized loss position for more than 12 months.

The unrealized losses were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities, and not related to the underlying credit of the issuers or the underlying collateral.

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 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.

The unrealized losses on these investments are not considered other-than-temporary impairment ("OTTI") as of March 31, 2022, 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 .

Note 4 – Loans

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

September 30,

2022 December 31,

12 unchanged sentences

Total loans held-for-portfolio 710,709 687,868

Premiums for purchased loans (1)

Deferred fees, net ( 2,012 ) ( 2,367 )

2 unchanged sentences

Total loans held-for-portfolio, net $ 703,078 $ 680,092

(1) Includes premiums resulting from purchased loans of $ 548 thousand related to one-to-four family loans, $ 65 thousand related to commercial and multifamily loans, and $ 175 thousand related to commercial business loans as of March 31, 2022.

Includes premiums resulting from purchased loans of $ 556 thousand related to one-to-four family loans, $ 181 thousand related to commercial and multifamily loans, and $ 160 thousand related to commercial business loans as of December 31, 2021.

The Company was automatically authorized to participate in the U.S.

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

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.

As of March 31, 2022, the Bank had funded PPP loans totaling $ 119.2 million, $ 2.1 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):

September 30, 2021

March 31, 2022

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 September 30, 2021

Allowance Charge-offs Recoveries Provision (Recapture) Ending

One-to-four family $ 1,292 $ — $ — $ 28 $ 1,320

Home equity 111 — 2 ( 19 ) 94

Commercial and multifamily 1,987 — — ( 130 ) 1,857

Construction and land 700 — — 76 776

Manufactured homes 367 — 1 ( 65 ) 303

Floating homes 318 — — 65 383

Other consumer 201 ( 8 ) — 13 206

Commercial business 693 — — ( 267 ) 426

Unallocated 488 — — 474 962

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

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Allowance Charge-offs Recoveries Provision (Recapture) Ending

9 unchanged sentences

Total $ 6,306 $ ( 32 ) $ 8 $ 125 $ 6,407

Three Months Ended September 30, 2020

Allowance Charge-offs Recoveries (Recapture) Provision Ending

One-to-four family $ 1,149 $ ( 20 ) $ 4 $ 37 $ 1,170

Home equity 154 ( 2 ) 7 ( 17 ) 142

Commercial and multifamily 1,991 — — 16 2,007

Construction and land 623 — — ( 43 ) 580

Manufactured homes 362 — 1 ( 33 ) 330

Floating homes 324 — — ( 31 ) 293

Other consumer 127 ( 4 ) 2 ( 10 ) 115

Commercial business 501 ( 306 ) — 68 263

Unallocated 800 — — 288 1,088

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

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

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):

September 30, 2021

March 31, 2022

four family Home

25 unchanged sentences

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):

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

One-to-four family $ 1,676 $ 2,207

4 unchanged sentences

Floating homes — 493

Other consumer 244 —

Commercial business 170 176

1 unchanged sentence

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):

September 30, 2021

March 31, 2022

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):

September 30, 2021

March 31, 2022

equity Commercial

25 unchanged sentences

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

September 30, 2021

March 31, 2022

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 September 30,

Investment Interest Income

Recognized Average

Investment Interest Income

One-to-four family $ 3,069 $ 60 $ 6,027 $ 69

Home equity 321 3 336 3

Commercial and multifamily — — 465 16

Construction and land 166 11 315 20

Manufactured homes 225 3 349 5

Floating homes 507 5 405 15

Other consumer 109 1 127 —

Commercial business 93 1 1,076 12

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

Nine Months Ended September 30,

Three Months Ended March 31,

Investment Interest Income

10 unchanged sentences

Total $ 7,273 $ 68 $ 5,800 $ 48

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.

Forgone interest on nonaccrual loans was $ 64 thousand and $ 40 thousand for the three months ended March 31, 2022 and 2021, respectively.

There were no commitments to lend additional funds to borrowers whose loans were classified as nonaccrual or impaired at March 31, 2022 and December 31, 2021.

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 September 30, 2021 and December 31, 2020, respectively, and are included in impaired loans.

Loans classified as TDRs totaled $ 2.3 million and $ 2.6 million at March 31, 2022 and December 31, 2021, 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 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.

There were no loans modified as a TDR during the three months ended March 31, 2022 and March 31, 2021.

There were no TDRs that were paid off during the three months ended March 31, 2022 and March 31, 2021.

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 months ended March 31, 2022 and March 31, 2021.

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 months ended March 31, 2022 and March 31, 2021.

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

In March 2020, the Company began offering short-term loan modifications to assist borrowers during the COVID-19 pandemic.

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

As of March 31, 2022, 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 September 30, 2021 were determined based on these requirements.

The Company’s fair values for financial instruments at March 31, 2022 were determined based on these requirements.

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

Cash and cash equivalents - The estimated fair value is equal to the carrying amount.

Available-for-Sale Securities – Available-for-sale securities are recorded at fair value based on quoted market prices, if available.

Available-for-sale securities – AFS securities are recorded at fair value based on quoted market prices, if available.

If quoted market prices are not available, management utilizes third-party pricing services or broker quotations from dealers in the specific instruments.

1 unchanged sentence

government securities.

Held-to-maturity securities – HTM securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts.

The fair value is based on quoted market prices, if available.

If quoted market prices are not available, management utilizes third-party pricing services or broker quotations from dealers in the specific instruments.

Level 2 securities include those traded on an active exchange, as well as U.S.

government securities.

Loans held-for-sale - One-to-four family mortgage loans held-for-sale are recorded at the lower of cost or fair value.

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

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.

At March 31, 2022 and December 31, 2021, 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.

The estimated fair values of loans held for portfolio reflect exit price assumptions.

5 unchanged sentences

Borrowings - The fair value of borrowings are estimated using the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Subordinated Debt - The fair value of subordinated debt is estimated using discounted cash flows based on current lending rates for similar long-term debt instruments with similar terms and remaining time to maturity.

Subordinated notes - The fair value of subordinated notes is estimated using discounted cash flows based on current lending rates for similar long-term debt instruments with similar terms and remaining time to maturity.

A description of the valuation methodologies used for impaired loans and OREO is as follows:

6 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 nine months ended September 30, 2021 and 2020.

There were no transfers between levels during the three months ended March 31, 2022 and 2021.

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):

September 30, 2021 Fair Value Measurements Using:

March 31, 2022 Fair Value Measurements Using:

Value Estimated

3 unchanged sentences

Available-for-sale securities 10,223 10,223 — 10,223 —

Held-to-maturity securities 2,223 2,056 — 2,056 —

Loans held-for-sale 1,297 1,297 — 1,297 —

21 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 September 30, 2021

Fair Value at March 31, 2022

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:

September 30, 2021

March 31, 2022

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 nine months ended September 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 September 30, 2021

Fair Value at March 31, 2022

Total Level 1 Level 2 Level 3

5 unchanged sentences

Impaired loans 7,725 — — 7,725

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

There were no liabilities carried at fair value, measured on a recurring or nonrecurring basis, at March 31, 2022 and December 31, 2021.

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:

September 30, 2021

March 31, 2022

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

4 unchanged sentences

Third Party Appraisals No discounts N/A

(1) Represents troubled debt restructurings included within impaired loans.

(2) Excludes troubled debt restructurings.

(1) Represents TDRs included within impaired loans.

(2) Excludes TDRs.

December 31, 2021

6 unchanged sentences

Third Party Appraisals No discounts N/A

(1) Represents troubled debt restructurings included within impaired loans.

(2) Excludes troubled debt restructurings.

(1) Represents TDRs included within impaired loans.

(2) Excludes TDRs.

Note 6 – Mortgage Servicing Rights

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.

The Company’s mortgage servicing rights portfolio totaled $ 502.5 million at March 31, 2022 compared to $ 508.1 million at December 31, 2021.

Of this total balance, the unpaid principal balance of loans serviced for Federal National Mortgage Association (“Fannie Mae”) at March 31, 2022 and December 31, 2021 were $ 499.4 million and $ 504.1 million, respectively.

The unpaid principal balance of loans serviced for other financial institutions at March 31, 2022 and December 31, 2021, totaled $ 3.1 million and $ 4.0 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Beginning balance, at fair value $ 4,273 $ 3,780

2 unchanged sentences

Due to changes in model inputs or assumptions and other (1)

( 125 ) ( 623 ) ( 694 ) ( 1,423 )

Ending balance, at fair value $ 4,668 $ 4,109

1 unchanged sentence

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Prepayment speed (Public Securities Association “PSA” model) 164 % 205 %

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 $ 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.

mortgage servicing income on the Condensed Consolidated Statements of Income and totaled $ 320 thousand for the three months ended March 31, 2022 and $ 312 thousand for the three months ended March 31, 2021.

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 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:

At March 31, 2022 and December 31, 2021, the amount available to borrow under this credit facility was $ 413.9 million and $ 417.7 million, respectively, subject to eligible pledged collateral.

At March 31, 2022, the credit facility was collateralized as follows:

one-to-four family mortgage loans with an advance equivalent of $ 57.3 million, commercial and multifamily mortgage loans with an advance equivalent of $ 51.0 million and home equity loans with an advance equivalent of $ 467 thousand.

At December 31, 2021, the credit facility was collateralized as follows:

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 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 $ 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.

one-to-four family mortgage loans with an advance equivalent of $ 59.7 million, commercial and multifamily mortgage loans with an advance equivalent of $ 52.9 million and home equity loans with an advance equivalent of $ 482 thousand.

The Company had no outstanding borrowings under this arrangement at both March 31, 2022 and December 31, 2021.

Additionally, the Company had outstanding letters of credit from the FHLB of Des Moines with a notional amount of $ 13.0 million and $ 11.5 million at March 31, 2022 and December 31, 2021, respectively, to secure public deposits.

The remaining amount available to borrow as of March 31, 2022 and December 31, 2021, was $ 95.8 million and $ 101.5 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 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.

At March 31, 2022 and December 31, 2021, the Company had an investment of $ 1.1 million and $ 1.0 million, 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 (“PCBB”).

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

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.

As of March 31, 2022, the amount available under this line of credit was $ 20.0 million.

There was no balance on this line of credit as of March 31, 2022 and December 31, 2021, respectively.

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

2 unchanged sentences

The subordinated notes mature on May 15, 2030.

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

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 subordinated 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 March 31, 2022 and December 31, 2021, 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Net income $ 1,723 $ 2,451

6 unchanged sentences

$ 0.65 $ 0.93

(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.

(1) The basic and diluted earnings per share amounts for the three months ended March 31, 2022 and 2021 include the impact of income allocated to participating securities of $ 12 thousand and $ 12 thousand, respectively.

(2) The difference between the basic and diluted earnings per share amounts for the three months ended March 31, 2022 and 2021 under the Treasury Stock Method and the Two-Class Method, as prescribed in FASB ASC 260-10, Earnings Per Share, is immaterial.

There were 2,656 anti-dilutive securities at March 31, 2022 and 2,793 anti-dilutive securities at March 31, 2021.

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 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.

As of March 31, 2022, on an adjusted basis, awards for stock options totaling 284,202 shares and awards for restricted stock totaling 151,651 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 $ 203 thousand and $ 166 thousand for the three months ended March 31, 2022 and March 31, 2021, respectively.

Stock Option Awards

2 unchanged sentences

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 September 30, 2021 (dollars in thousands, except per share amounts):

Shares Weighted-

Exercise Price Weighted-Average

Remaining Contractual

Term in Years Aggregate

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

Exercised ( 3,616 ) 17.55

Forfeited ( 250 ) 33.58

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

Exercisable 72,843 22.28 4.12 1,650

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

91,336 $ 24.59 5.02 $ 1,858

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):

The following is a summary of the Company’s stock option award activity during the three months ended March 31, 2022 (dollars in thousands, except per share amounts):

Shares Weighted-

6 unchanged sentences

Forfeited ( 452 ) 32.53

Expired ( 70 ) 34.29

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

Outstanding at March 31, 2022 101,243 26.98 5.21 1,186

Exercisable 79,331 23.97 4.18 1,134

1 unchanged sentence

101,243 $ 26.98 5.21 $ 1,186

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

As of March 31, 2022, there was $ 164 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 3.0 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 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,

The fair value of options granted for the three months ended March 31, 2022 and 2021 were determined using the following weighted-average assumptions as of the grant date.

Three Months Ended March 31,

Annual dividend yield 1.59 % 1.60 %

3 unchanged sentences

Weighted-average grant date fair value per option granted $ 9.95 $ 5.64

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

There were 12,800 and 12,248 options granted during the three months ended March 31, 2022 and 2021, respectively.

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 September 30, 2021:

Shares Weighted-Average

Grant-Date Fair

Value Per Share Aggregate Intrinsic Value Per Share

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

Forfeited ( 420 ) 33.45

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 nine months ended September 30, 2021:

The following is a summary of the Company’s non-vested restricted stock award activity during the three months ended March 31, 2022:

Shares Weighted-Average

5 unchanged sentences

Forfeited ( 250 ) 32.63

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

Non-Vested at March 31, 2022 18,604 $ 37.59 $ 38.10

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

18,604 $ 37.59 $ 38.10

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

As of March 31, 2022, there was $ 647 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 2.8 years.

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

The total fair value of shares vested for the three months ended March 31, 2022 and 2021 was $ 306 thousand and $ 264 thousand, respectively.

Employee Stock Ownership Plan

1 unchanged sentence

In August 2012, in conjunction with the Company’s conversion to a full stock company from the mutual holding company structure, the ESOP borrowed an additional $ 1.1 million from the Company to purchase common stock of the Company.

The loan is being repaid principally by the Bank through contributions to the ESOP over a period of ten years .

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

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 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.

The loan was being repaid principally by the Bank through contributions to the ESOP over a period of ten years .

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

As of March 31, 2022, the ESOP loan was repaid in full.

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

The fair value of the 144,740 shares held by the ESOP trust was $ 5.5 million at March 31, 2022.

ESOP compensation expense included in salaries and benefits was $ 205 thousand and $ 170 thousand for the three months ended March 31, 2022 and March 31, 2021, 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 less than 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 one year to seven 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):

September 30, 2021 December 31,

March 31, 2022 December 31,

Operating lease right-of-use assets $ 5,777 $ 5,811

1 unchanged sentence

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Operating lease expense

Office leases $ 283 $ 273

Equipment leases — 5 — 15

Sublease income ( 3 ) ( 3 )

Net lease expense $ 280 $ 270

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

September 30, 2021

The following table presents the maturity of lease liabilities at the date indicated (in thousands):

March 31, 2022

Remainder of 2022

4 unchanged sentences

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

September 30,

2022 December 31,

1 unchanged sentence

Office leases 6.7 years 7.0 years

Equipment leases 0.00 years 1.42 years

Weighted-average discount rate (annualized):

Office leases 2.64 % 2.67 %

Equipment leases — % 1.62 %

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

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

2021 2020 2021 2020

Three Months Ended March 31,

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

1 unchanged sentence

Office leases $ 265 $ 258

Equipment leases $ — $ 5 $ — $ 15

Note 12 – Subsequent Events

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.

On April 26, 2022, the Board of Directors of the Company declared a quarterly cash dividend of $ 0.17 per common share, payable on May 24, 2022 to stockholders of record at the close of business on May 10, 2022.

On April 26, 2022, the Company’s Board of Directors authorized an extension of the previously announced stock repurchase program authorizing the Company to repurchase up to $ 2.0 million of its outstanding shares of common stock during the period ending October 29, 2022.

Repurchases may be made by the Company from time to time in the open market, based on prevailing market prices, or in privately negotiated transactions, or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission.

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