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Monroe Federal Bancorp, Inc._December 31, 2024

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2024

☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File No. 000-56702

Monroe Federal Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Maryland	99-3587922
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

24 East Main Street, Tipp City, Ohio	45371
(Address of Principal Executive Offices)	(Zip Code)

(937) 667-8461

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of Each Exchange on Which Registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company	☒
	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒

526,438 shares of the registrant’s common stock, par value $0.01 per share, were issued and outstanding as of February 14, 2025.

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Monroe Federal Bancorp, Inc.

Form 10-Q

Index


		Page

Part I. – Financial Information		1

Item 1.	Consolidated Financial Statements	1

	Consolidated Balance Sheets as of December 31, 2024 (unaudited) and March 31, 2024	1

	Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2024 and 2023 (unaudited)	2

	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended December 31, 2024 and 2023 (unaudited)	3

	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended December 31, 2024 and 2023 (unaudited)	4

	Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2024 and 2023 (unaudited)	5

	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46

Item 4.	Controls and Procedures	46

Part II. – Other Information		47

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	47

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	47

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Mine Safety Disclosures	47

Item 5.	Other Information	47

Item 6.	Exhibits	47

	Signature Page	49

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Part I — Financial Information

Item 1. Financial Statements

MONROE FEDERAL BANCORP, INC.

Consolidated Balance Sheets


	December 31,		March 31,
	2024		2024
		(Unaudited)
Assets
Cash and due from banks	$	1,348,499	$	2,981,089
Interest-bearing deposits in other financial institutions		393,605		7,529,609
Federal funds sold		710,000		107,000
Cash and cash equivalents		2,452,104		10,617,698

Available-for-sale securities		23,204,214		25,181,361
Loans receivable		108,165,466		108,724,627
Allowance for credit losses		(915,129)		(855,455)
Net loans		107,250,337		107,869,172

Premises and equipment		5,183,049		5,339,998
Restricted stock		901,700		515,000
Bank owned life insurance		3,575,237		3,491,015
Accrued interest receivable		447,413		483,027
Net deferred federal income taxes		1,395,408		1,328,523
Other assets		478,349		511,468
Total assets	$	144,887,811	$	155,337,262

Liabilities and Stockholders' Equity
Liabilities
Deposits
Demand	$	46,144,767	$	48,459,382
Savings and money market		51,118,526		51,227,399
Time		32,835,398		42,405,531
Total deposits		130,098,691		142,092,312
Advances from the Federal Home Loan Bank		1,000,000		3,000,000
Advances by borrowers for taxes and insurance		573,323		329,730
Directors plan liability		288,460		762,416
Accrued interest payable and other liabilities		1,129,867		588,099
Total liabilities		133,090,341		146,772,557

Stockholders' Equity
Preferred stock - $.01 par value, 1,000,000 shares authorized		—		—
Common stock - $.01 par value, 14,000,000 shares authorized, 526,438 shares issued at December 31, 2024		5,264		—
Additional paid in capital		3,858,126		—
Unallocated common stock of ESOP		(350,084)		—
Retained earnings		12,595,524		12,917,702
Treasury stock - 21,000 shares		(210,000)		—
Deferred compensation plan - Rabbi Trust - 21,000 shares		210,000		—
Accumulated other comprehensive loss		(4,311,360)		(4,352,997)
Total stockholders' equity		11,797,470		8,564,705
Total liabilities and stockholders' equity	$	144,887,811	$	155,337,262

See notes to consolidated financial statements.

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MONROE FEDERAL BANCORP, INC.

Consolidated Statements of Operations

(Unaudited)


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2024		2023		2024		2023
Interest income
Loans	$	1,322,355	$	1,259,155	$	3,912,948	$	3,727,402
Investment securities		120,897		132,349		371,165		403,748
Interest-bearing deposits and other		28,467		40,565		140,659		126,867

Total interest income		1,471,719		1,432,069		4,424,772		4,258,017

Interest expense
Deposits		463,986		425,861		1,398,353		1,128,170
Borrowings		74,499		119,386		267,329		356,055

Total interest expense		538,485		545,247		1,665,682		1,484,225

Net interest income		933,234		886,822		2,759,090		2,773,792

Provision for (recovery of) credit losses		60,932		(32,051)		78,157		(38,819)

Net interest income after provision for (recovery of) credit losses		872,302		918,873		2,680,933		2,812,611

Noninterest income
Service fees on deposits		44,397		45,479		132,923		133,956
Late charges and fees on loans		2,433		2,884		6,768		7,623
Loan servicing fees		4,086		3,773		12,226		10,883
Increase in cash surrender value of bank owned life insurance		28,956		25,366		84,222		74,706
Other income		9,599		9,001		26,416		32,755

Total noninterest income		89,471		86,503		262,555		259,923

Noninterest expense
Salaries and employee benefits		532,039		543,503		1,636,625		1,554,431
Directors fees		30,700		29,701		91,700		89,598
Occupancy and equipment		135,828		135,770		412,468		401,085
Data processing fees		136,290		139,940		397,625		400,551
Franchise taxes		16,916		—		51,832		40,626
FDIC insurance premiums		24,919		39,999		70,056		78,601
Professional services		72,840		37,242		286,716		118,191
Advertising		15,995		17,478		58,979		67,673
Other		123,049		126,301		342,714		356,261

Total noninterest expense		1,088,576		1,069,934		3,348,715		3,107,017

Loss before income taxes		(126,803)		(64,558)		(405,227)		(34,483)

Provision (benefit) for income taxes		(6,373)		(20,222)		(83,049)		(40,235)

Net (loss) income	$	(120,430)	$	(44,336)	$	(322,178)	$	5,752

Earnings (loss) per average share - basic and diluted	$	(0.25)		n/a	$	(0.66)		n/a

See notes to consolidated financial statements.

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MONROE FEDERAL BANCORP, INC.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2024		2023		2024		2023
Net (loss) income	$	(120,430)	$	(44,336)	$	(322,178)	$	5,752

Other comprehensive (loss) income:
Net unrealized (losses) gains on available-for-sale securities		(860,188)		1,940,215		52,706		228,141

Tax benefit (expense)		180,639		(407,445)		(11,069)		(47,910)

Other comprehensive (loss) income		(679,549)		1,532,770		41,637		180,231

Comprehensive (loss) income	$	(799,979)	$	1,488,434	$	(280,541)	$	185,983

See notes to consolidated financial statements.

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MONROE FEDERAL BANCORP, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)



For the three months ended									Accumulated
December 31, 2023 and					Unallocated				Other				Deferred
	Common		Additional		Common Stock		Retained		Comprehensive		Treasury			Compensation Plan
December 31, 2024	Stock		Paid-in-Capital		of ESOP		Earnings		Income (Loss)		Stock		Rabbi Trust		Total
Balance at October 1, 2023	$	—	$	—	$	—	$	12,908,020	$	(5,710,205)	$		$	—	$	7,197,815

Net loss		—		—		—		(44,336)		—				—		(44,336)

Other comprehensive income		—		—		—		—		1,532,770				—		1,532,770

Balance at December 31, 2023	$	—	$	—	$	—	$	12,863,684	$	(4,177,435)	$		$	—	$	8,686,249

Balance at October 1, 2024	$	—	$	—	$	—	$	12,715,954	$	(3,631,811)	$		$	—	$	9,084,143

Net loss		—		—		—		(120,430)		—				—		(120,430)

Proceeds from issuance of shares of common stock		5,264		3,858,126		—		—		—				—		3,863,390

Purchase of ESOP shares		—		—		(368,510)		—		—				—		(368,510)

Release of ESOP shares						18,426										18,426

Purchase of treasury stock (deferred compensation plans)		—		—		—		—		—		(210,000)		—		(210,000)

Treasury stock held (deferred compensation plans)		—		—		—		—		—				210,000		210,000

Other comprehensive loss		—		—		—		—		(679,549)				—		(679,549)

Balance at December 31, 2024	$	5,264	$	3,858,126	$	(350,084)	$	12,595,524	$	(4,311,360)	$	(210,000)	$	210,000	$	11,797,470

For the nine months ended December 31, 2023 and December 31, 2024
Balance at April 1, 2023	$	—	$	—	$	—	$	13,143,242	$	(4,357,666)	$		$	—	$	8,785,576

Effect of change in accounting principle - ASC 326		—		—		—		(285,310)		—				—		(285,310)

Net income		—		—		—		5,752		—				—		5,752

Other comprehensive income		—		—		—		—		180,231				—		180,231

Balance at December 31, 2023	$	—	$	—	$	—	$	12,863,684	$	(4,177,435)	$		$	—	$	8,686,249

Balance at April 1, 2024	$	—	$	—	$	—	$	12,917,702	$	(4,352,997)	$		$	—	$	8,564,705

Net loss		—		—		—		(322,178)		—				—		(322,178)

Proceeds from issuance of shares of common stock		5,264		3,858,126		—		—		—				—		3,863,390

Purchase of ESOP shares		—		—		(368,510)		—		—				—		(368,510)

Release of ESOP shares						18,426										18,426

Shares purchased by trust		—		—		—		—		—		(210,000)				(210,000)

Shares held by trust		—		—		—		—		—				210,000		210,000

Other comprehensive income		—		—		—		—		41,637				—		41,637

Balance at December 31, 2024	$	5,264	$	3,858,126	$	(350,084)	$	12,595,524	$	(4,311,360)	$	(210,000)	$	210,000	$	11,797,470

See notes to consolidated financial statements.

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MONROE FEDERAL BANCORP, INC.

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
	December 31,
	2024		2023
Operating Activities
Net (loss) income	$	(322,178)	$	5,752
Items not requiring (providing) cash:
Depreciation and amortization		192,884		189,210
Amortization of premiums and discounts		117,505		135,549
Amortization of deferred loan fees		(35,925)		67,165
Provision (Benefit) for deferred income taxes		(77,954)		(21,539)
Provision for (recovery of) credit losses		78,157		(38,819)
Increase in cash surrender value of bank owned life insurance		(84,222)		(74,706)
Release of ESOP shares		18,426		—
Changes in:
Accrued interest receivable		35,614		(36,143)
Other assets		33,119		59,886
Accrued interest payable and other liabilities		256,686		(409,977)

Net cash provided by (used in) operating activities		212,112		(123,622)

Investing Activities
Proceeds from calls, maturities and paydowns of available-for-sale securities		1,912,348		1,597,596
Net change in loans		597,729		(2,298,153)
Purchase of premises and equipment		(35,935)		(95,329)
Purchase of restricted stock		(386,700)		(186,000)
Proceeds from redemption of restricted stock		—		260,600

Net cash provided by (used in) investing activities		2,087,442		(721,286)

Financing Activities
Net (decrease) increase in deposit accounts		(11,993,621)		16,374,881
Net decrease in federal funds purchased		—		(865,000)
Proceeds from Federal Home Loan Bank advances		41,059,000		18,400,000
Repayment of Federal Home Loan Bank advances		(43,059,000)		(27,900,000)
Increase in advances from borrowers for taxes and insurance		243,593		268,167
Gross proceeds from stock offering		5,269,644		—
Stock offering costs, net		(1,406,254)		—
Purchase of ESOP shares		(368,510)		—
Purchase of treasury stock (deferred compensation plans)		(210,000)		—
Net cash (used in) provided by financing activities		(10,465,148)		6,278,048

(Decrease) Increase in Cash and Cash Equivalents		(8,165,594)		5,433,140

Cash and Cash Equivalents, Beginning of Period		10,617,698		2,927,788

Cash and Cash Equivalents, End of Period	$	2,452,104	$	8,360,928

Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest on deposits and borrowings	$	1,711,279	$	1,496,638
Income taxes paid		—		45,000

Supplemental Disclosure of Noncash Investing Activities
Transfers from loans to assets acquired through foreclosure	$	—	$	12,481

See notes to consolidated financial statements.

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Note 1:Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

Monroe Federal Bancorp, Inc. (“Monroe Federal Bancorp” or the “Company”) is a Maryland corporation incorporated on May 21, 2024 to serve as the savings and loan holding company for Monroe Federal Savings and Loan Association (the “Bank”) in connection with the Bank’s conversion from the mutual form of organization to the stock form of organization (the “Conversion”). The Conversion was completed on October 23, 2024. In connection with the Conversion, Monroe Federal Bancorp acquired 100% ownership of Monroe Federal Savings and Loan Association and the Company sold 526,438 shares of its common stock at $10.00 per share, for gross offering proceeds of $5,264,380. The cost of the conversion and issuance of common stock was approximately $1.4 million, which was deducted from the gross offering proceeds. The Company’s employee stock ownership plan purchased 36,851 shares of the common stock sold by the Company, which was equal to 7% of the shares of common stock issued by the Company. The ESOP purchased the shares using a loan from the Company. The Company contributed $2.0 million of the net proceeds from the offering to the Bank, loaned $368,510 of the net proceeds to the ESOP and retained approximately $1.9 million of the net proceeds.

Monroe Federal Savings and Loan Association is a federally chartered mutual thrift engaged primarily in the business of providing a variety of deposit and lending services to individual customers in western Ohio. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential and commercial mortgages, commercial, home equity lines of credit and installment loans. Its operations are conducted through its four office locations in Tipp City, Vandalia and Dayton, Ohio. The Company faces competition from other financial institutions and is subject to the regulation of certain federal agencies and undergoes periodic examinations by those regulatory authorities.

The financial statements included herein as of December 31, 2024, and for the interim three- and nine-month periods ended December 31, 2024 and 2023 are unaudited. The unaudited interim financial statements and the notes thereto have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and in the opinion of management, contains all normal recurring adjustments necessary to present fairly the financial position, results of operations, changes in equity and cash flows as of and for the periods presented. Such adjustments are the only adjustments contained in the financial statements. The results of operations for the three- and nine – months ended December 31, 2024 are not necessarily indicative of the results of operations for the full fiscal year.

The accompanying unaudited financial statements and related notes should be read in conjunction with the Bank’s audited financial statements and the notes thereto included in the Company’s prospectus dated August 9, 2024, as filed by Monroe Federal Bancorp with the Securities and Exchange Commission on August 19, 2024.

Principles of Consolidation

The consolidated financial statements as of and for the three and nine months ended December 31, 2024, include the accounts of the Company and the Bank, its wholly-owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. The financial statements as of and for the period ended December 31, 2023 represent the Bank only, as the conversion to stock form, including the formation of Monroe Federal Bancorp, was completed on October 23, 2024. References herein to the “Company” for periods prior to the completion of the stock conversion should be deemed to refer to the “Bank.”

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Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, valuation of deferred tax assets and fair values of financial instruments.

Allowance for Credit Losses

The allowance for credit losses (ACL) is a valuation allowance for expected credit losses. The allowance for credit losses is established through a provision for credit losses charged to income. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The Company adopted Accounting Standards Update (ASU) No. 2016-13 Financial Instruments—Credit Losses (Topic 326), effective April 1, 2023, using the modified retrospective method for financial assets measured at amortized cost and off-balance-sheet credit exposures. ASC 326 replaced the incurred loss impairment methodology with a new “current expected credit loss” (CECL) methodology that reflects expected credit losses over the lives of the credit instruments and requires consideration of a broader range of information to estimate credit losses. ASC 326 requires an estimate of all expected credit losses for financial assets measured at amortized cost, including loans and held-to-maturity debt securities, based on historical experience, current conditions, and reasonable and supportable forecasts.

Available-for-sale securities

For available for sale securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income.

For securities available for sale that do not meet the above criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost and adverse conditions related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.

If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of tax. The Company elected to use zero loss estimates for securities issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major agencies and have a long history of no credit losses.

Loans

The ACL is a valuation allowance that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Management’s determination of the adequacy of the ACL is based on the assessment of the expected credit losses on loans over the expected life of the loan. The ACL is increased by provision expense and decreased by charge-offs, net of recoveries of amounts previously charged off and expected to be charged off. Accrued interest receivable on loans totaled $318,628 and $348,007 at December 31, 2024 and March 31, 2024,

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respectively. The Company made the policy election to exclude accrued interest receivable on loans from the estimate of credit losses.

Management estimates the ACL balance using relevant available information from both internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience of the Company is paired with economic forecasts to provide the basis for the quantitatively modeled estimates of expected credit losses. The Company adjusts its quantitative model, as necessary, to reflect conditions not already considered by the quantitative model. These adjustments are commonly known as the qualitative factors.

The ACL is measured on a collective (pool) basis when similar risk characteristics exist. The Company uses publicly available data, based on regulatory filings of larger banks, to derive initial proxy expected lifetime loss rates. Reasonable and supportable forecasts are incorporated into the development of these proxy loss rates, which generally revert back to historical and qualitative loss considerations after 12-24 months. The loss rates are adjusted, if necessary, based on management’s assessment of certain criteria, including economic and business conditions, that may affect the Company’s loan portfolio, to arrive at factors that best represent the estimated credit risk in the loan portfolio.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a loan modification will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

A loan for which the terms have been modified, resulting in a concession and for which the borrower is experiencing financial difficulties, is considered within the determination of the ACL using the same method as all other loans held for investment, except when the value of a concession cannot be measured using a method other than the discounted cash flow method. When the value of a concession is measured using the discounted cash flow method, the ACL is determined by discounting the expected future cash flows at the original interest rate of the loan.

Unfunded Commitments

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The ACL on unfunded commitments is adjusted through the provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life consistent with the related ACL methodology. The ACL on unfunded commitments totaled $77,217 and $56,091 at December 31, 2024 and March 31, 2024, respectively, and is included in other liabilities on the balance sheet.

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The following table illustrates the impact of adopting ASC 326:


	April 1, 2023
			Adoption
	Pre-Adoption		Impact		As Reported
Assets
Real estate loans:
Residential	$	360,908	$	11,949	$	372,857
Multi-family		13,350		(13,350)		—
Commercial		166,345		137,324		303,669
Construction and land		43,631		94,031		137,662
Home equity line of credit (HELOC)		16,034		(16,034)		—
Commercial and industrial		34,110		23,741		57,851
Consumer		7,958		24,833		32,791
Total ACL on loans		642,336		262,494		904,830
Liabilities
ACL for off-balance sheet exposure		—		98,654		98,654
	$	642,336	$	361,148	$	1,003,484

The Company has evaluated multi-family real estate loans and home equity line of credit loans within, and under similar risk characteristics as, the residential loan category, upon adoption of the CECL methodology.

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Note 2:Investment Securities

The amortized cost and fair values, together with gross unrealized gains and losses on securities are as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available-for-sale Securities:
December 31, 2024
U.S. Government agencies	$	3,250,839	$	—	$	(572,034)	$	2,678,805
Mortgage-backed Government Sponsored Enterprises (GSEs)		11,759,060		—		(2,118,105)		9,640,955
State and political subdivisions		12,904,817		—		(2,695,747)		10,209,070
Time deposits		746,916		—		(71,532)		675,384
	$	28,661,632	$		$	(5,457,418)	$	23,204,214


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available-for-sale Securities:
March 31, 2024
U.S. Government agencies	$	3,250,909	$	—	$	(590,612)	$	2,660,297
Mortgage-backed Government Sponsored Enterprises (GSEs)		12,949,053		—		(2,231,211)		10,717,842
State and political subdivisions		13,244,761		—		(2,587,679)		10,657,082
Time deposits		1,246,762		—		(100,622)		1,146,140

	$	30,691,485	$	—	$	(5,510,124)	$	25,181,361

The amortized cost and fair value of available-for-sale securities at December 31, 2024, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties:


	Amortized		Fair
	Cost		Value
December 31, 2024
Within one year	$	—	$	—
One to five years		1,047,859		943,685
Five to ten years		5,108,060		4,330,393
After ten years		10,746,653		8,289,181
		16,902,572		13,563,259
Mortgage-backed GSEs		11,759,060		9,640,955

Totals	$	28,661,632	$	23,204,214

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was approximately $6,423,000 and $1,051,000 at December 31, 2024 and March 31, 2024, respectively.

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Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Based on evaluation of available evidence, including recent changes in market interest rates and information obtained from regulatory filings, management believes the declines in fair value for these securities are not credit related.

Should the fair value decline of any of these securities be attributed to credit-related reasons, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period identified.

The following table shows the number of securities and aggregate fair value depreciation at December 31, 2024 and March 31, 2024.


	December 31, 2024			March 31, 2024
	Number of	Aggregate		Number of	Aggregate
Description of Securities	securities	Depreciation		securities	Depreciation
Available for sale
U.S. Government agencies	9	(17.6)	%	9	(18.2)	%
Mortgage-backed Government Sponsored Enterprises (GSEs)	41	(18.0)	%	42	(17.2)	%
State and political subdivisions	34	(20.9)	%	35	(19.5)	%
Time deposits	3	(9.6)	%	5	(8.1)	%

Total portfolio	87	(19.0)	%	91	(18.0)	%

The following tables show the Company’s investments’ gross unrealized losses and fair value of the Company’s investments with unrealized losses, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2024 and March 31, 2024.


	December 31, 2024
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Losses		Value		Losses		Value		Losses
Available for sale
U.S. Government agencies	$	—	$	—	$	2,678,805	$	(572,034)	$	2,678,805	$	(572,034)
Mortgage-backed Government Sponsored Enterprises (GSEs)		—		—		9,640,955		(2,118,105)		9,640,955		(2,118,105)
State and political subdivisions		—		—		10,209,070		(2,695,747)		10,209,070		(2,695,747)
Time deposits		—		—		675,384		(71,532)		675,384		(71,532)

Total portfolio	$	—	$	—	$	23,204,214	$	(5,457,418)	$	23,204,214	$	(5,457,418)


	March 31, 2024
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Losses		Value		Losses		Value		Losses
Available for sale
U.S. Government agencies	$	—	$	—	$	2,660,297	$	(590,612)	$	2,660,297	$	(590,612)
Mortgage-backed Government Sponsored Enterprises (GSEs)		—		—		10,717,842		(2,231,211)		10,717,842		(2,231,211)
State and political subdivisions		—		—		10,657,082		(2,587,679)		10,657,082		(2,587,679)
Time deposits		—		—		1,146,140		(100,622)		1,146,140		(100,622)

Total portfolio	$	—	$	—	$	25,181,361	$	(5,510,124)	$	25,181,361	$	(5,510,124)

U.S. Government Agencies and State and Political Subdivisions

Unrealized losses on these securities have not been recognized because the issuers’ bonds are of high credit quality, values have only been impacted by changes in interest rates since the securities were purchased, and the Company has

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the intent and ability to hold the securities for the foreseeable future. The fair value is expected to recover as the bonds approach the maturity date. Because the decline in market value was attributable to changes in interest rates, and not credit quality, and because the Company typically does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company determined that no credit loss provisions were required.

Mortgage-backed GSEs

The unrealized losses on the Company’s investment in residential mortgage-backed government sponsored enterprises were caused primarily by changes in interest rates. The Company expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates, and not credit quality, and because the Company typically does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company determined that no credit loss provisions were required.

Time Deposits

The unrealized losses on the Company’s investment in time deposits were caused primarily by changes in interest rates. The Company expects to recover the amortized cost basis over the term of the deposits. Because the decline in market value is attributable to changes in interest rates, and not credit quality, and because the Company typically does not intend to sell the deposits and it is not more likely than not the Company will be required to sell the deposits before recovery of their amortized cost basis, which may be maturity, the Company determined that no credit loss provisions were required.

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Note 3:Loans and Allowance for Credit Losses

Categories of loans were as follows:


	December 31,		March 31,
	2024		2024
Real estate loans:
Residential	$	70,552,508	$	69,160,096
Multi-family		1,923,762		1,909,791
Commercial		24,076,150		24,001,533
Construction and land		1,601,808		3,087,855
Home equity line of credit (HELOC)		4,465,967		4,191,076
Commercial and industrial		4,409,370		4,889,602
Consumer		1,461,232		1,792,888

Total loans		108,490,797		109,032,841

Less:
Net deferred loan fees		325,331		308,214
Allowance for credit losses		915,129		855,455

Net loans	$	107,250,337	$	107,869,172

Loan participations where the Company serves as lead lender and services the participation interests for other participating lenders are not included in the accompanying balance sheets. The unpaid principal balances of these loans were approximately $6,549,000 and $6,506,000 at December 31, 2024 and March 31, 2024, respectively.

Risk characteristics of each loan portfolio segment are described as follows:

Residential Real Estate

These loans include first liens and junior liens on 1-4 family residential real estate and are generally owner-owner occupied. The Company generally establishes a maximum loan-to-value and requires private mortgage insurance if that ratio is exceeded. The main risks for these loans are changes in the value of the collateral and stability of the local economic environment and its impact on the borrowers’ employment. Management specifically considers unemployment and changes in real estate values in the Company’s market area.

Multi-family Real Estate

These loans include loans on residential real estate secured by property with five or more units. The main risks are changes in the value of the collateral, ability of borrowers to collect rents, vacancy and changes in the tenants’ employment status. Management specifically considers unemployment and changes in real estate values in the Company’s market area.

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Commercial Real Estate

These loans are secured by both owner-occupied and non-owner-occupied commercial real estate with diverse characteristics and geographic location almost entirely in the Company’s market area. The main risks are changes in the value of the collateral and ability of borrowers to successfully conduct their business operations. Management generally avoids financing single purpose projects unless other underwriting factors are present to mitigate risks. Management specifically considers unemployment and changes in real estate values in the Company’s market area.

Construction and Land Real Estate

These loans include construction loans for 1-4 family residential and commercial properties (both owner and non-owner occupied) and first liens on land. The main risks for construction loans include uncertainties in estimating costs of construction and in estimating the market value of the completed project. The main risks for land loans are changes in the value of the collateral and stability of the local economic environment. Management specifically considers unemployment and changes in real estate values in the Company’s market area.

HELOC

These loans are generally secured by subordinate interests in owner-occupied 1-4 family residences. The main risks for these loans are changes in the value of the collateral and stability of the local economic environment and its impact on the borrowers’ employment. Management specifically considers unemployment and changes in real estate values in the Company’s market area.

Commercial and Industrial

The commercial and industrial portfolio includes loans to commercial customers for use in financing working capital needs, equipment purchases and expansions. The loans in this category are repaid primarily from the cash flow of a borrower’s principal business operation. Credit risk in these loans is driven by creditworthiness of the borrower and the economic conditions that impact the cash flow stability from business operations.

Consumer Loans

These loans include vehicle loans, share loans and unsecured loans. The main risks for these loans are the depreciation of the collateral values (vehicles) and the financial condition of the borrowers. Major employment changes are specifically considered by management.

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The following tables present the activity in the allowance for credit losses based on portfolio segment for the three months and nine months ended December 31, 2024 and December 31, 2023:


	Three Months Ended December 31, 2024
			Provision
			for
	Balance		(recovery of)						Balance
	September 30, 2024		credit losses		Charge-offs		Recoveries		December 31, 2024
Loans:
Real estate loans:
Residential	$	375,614	$	53,794	$	—	$	—	$	429,408
Multi-family		7,073		1,669		—		—		8,742
Commercial		330,798		20,613		—		—		351,411
Construction and land		61,141		(36,653)		—		—		24,488
Home equity line of credit (HELOC)		19,325		4,993		—		—		24,318
Commercial and industrial		46,987		(1,777)		—		—		45,210
Consumer		34,380		(3,127)		—		299		31,552

Total loans		875,318		39,512		—		299		915,129

Off-balance sheet commitments		55,797		21,420		—		—		77,217

Total allowance for credit losses	$	931,115	$	60,932	$	—	$	299	$	992,346


	Three Months Ended December 31, 2023
			Provision
			for
			(recovery
	Balance		of)						Balance
	September 30, 2023		credit losses		Charge-offs		Recoveries		December 31, 2023
Real estate loans:
Residential	$	402,870		16,610	$	—	$	—	$	419,480
Multi-family		—		—		—		—		—
Commercial		338,974		(3,576)		—		—		335,398
Construction and land		87,819		(29,476)		—		—		58,343
Home equity line of credit (HELOC)		—		—		—		—		—
Commercial and industrial		45,871		2,049		—		947		48,867
Consumer		43,771		(2,810)		—		200		41,161

Total loans	$	919,305	$	(17,203)	$	—	$	1,147	$	903,249

Off-balance sheet commitments		84,898		(14,848)		—		—		70,050

Total allowance for credit losses	$	1,004,203	$	(32,051)	$	—	$	1,147	$	973,299

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	Nine Months Ended December 31, 2024
			Provision
			for
	Balance		(recovery of)						Balance
	March 31, 2024		credit losses		Charge-offs		Recoveries		December 31, 2024
Loans:
Real estate loans:
Residential	$	394,445	$	34,963	$	—	$	—	$	429,408
Multi-family		—		8,742		—		—		8,742
Commercial		333,596		17,815		—		—		351,411
Construction and land		46,672		(22,184)		—		—		24,488
Home equity line of credit (HELOC)		—		24,318		—		—		24,318
Commercial and industrial		41,764		1,803		—		1,643		45,210
Consumer		38,978		(8,426)		—		1,000		31,552

Total loans		855,455		57,031		—		2,643		915,129

Off-balance sheet commitments		56,091		21,126		—		—		77,217

Total allowance for credit losses	$	911,546	$	78,157	$	—	$	2,643	$	992,346


	Nine Months Ended December 31, 2023
					Provision
					for
			Effect of		(recovery
	Balance		adoption of		of)						Balance
	March 31, 2023		ASC 326		credit losses		Charge-offs		Recoveries		December 31, 2023
Real estate loans:
Residential	$	360,908	$	11,949	$	46,623	$	—	$	—	$	419,480
Multi-family		13,350		(13,350)		—		—		—		—
Commercial		166,345		137,324		20,994		—		10,735		335,398
Construction and land		43,631		94,031		(79,319)		—		—		58,343
Home equity line of credit (HELOC)		16,034		(16,034)		—		—		—		—
Commercial and industrial		34,110		23,741		(11,852)		—		2,868		48,867
Consumer		7,958		24,833		13,339		(5,551)		582		41,161

Total loans		642,336		262,494		(10,215)		(5,551)		14,185		903,249

Off-balance sheet commitments		—		98,654		(28,604)		—		—		70,050

Total allowance for credit losses	$	642,336	$	361,148	$	(38,819)	$	(5,551)	$	14,185	$	973,299

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The following tables present a breakdown of the allowance for credit losses and the recorded investment in loans by segment, disaggregated based on the evaluation method as of December 31, 2024 and March 31, 2024.


	Allowance for credit losses				Loans
	Ending balance, evaluated for credit losses				Ending balance, evaluated for credit losses
	Individually		Collectively		Individually		Collectively
December 31, 2024
Real estate loans:
Residential	$	47,692	$	381,716	$	403,887	$	70,148,621
Multi-family		—		8,742		48,804		1,874,958
Commercial		12,870		338,541		515,373		23,560,777
Construction and land		—		24,488		—		1,601,808
Home equity line of credit (HELOC)		—		24,318		—		4,465,967
Commercial and industrial		6,619		38,591		398,193		4,011,177
Consumer		—		31,552		—		1,461,232

Total loans	$	67,181	$	847,948	$	1,366,257	$	107,124,540


	Allowance for credit losses				Loans
	Ending balance, evaluated for credit losses				Ending balance, evaluated for credit losses
	Individually		Collectively		Individually		Collectively
March 31, 2024
Real estate loans:
Residential	$	37,008	$	357,437	$	561,319	$	68,598,777
Multi-family		—		—		—		1,909,791
Commercial		10,198		323,398		587,295		23,414,238
Construction and land		—		46,672		—		3,087,855
Home equity line of credit (HELOC)		—		—		—		4,191,076
Commercial and industrial		—		41,764		449,386		4,440,216
Consumer		—		38,978		—		1,792,888

Total loans	$	47,206	$	808,249	$	1,598,000	$	107,434,841

The Company has adopted a standard loan grading system for all loans, as follows:

Pass. Loans of sufficient quality, which generally are protected by the current net worth and paying capacity of the obligor or by the value of the asset or underlying collateral.

Special Mention. Loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.

Substandard. Loans which are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Usually, this classification includes all 90 days or more, non-accrual, and past due loans.

Doubtful. Loans which have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss Loans considered uncollectible and of such little value that continuance as an asset without the establishment of a specific reserve is not warranted.

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Information regarding the credit quality indicators most closely monitored for other than residential real estate loans and consumer loans, by class as of December 31, 2024 and March 31, 2024, follows:


	Term Loans Amortized Cost Basis by Origination Year
	For the Nine Months Ended December 31, 2024
		2025		2024		2023		2022		2021		Prior		Total
Multi-family
Risk rating:
Pass	$	499,392	$	—	$	—	$	219,372	$	250,082	$	954,916	$	1,923,762
Special Mention		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—
Total	$	499,392	$	—	$	—	$	219,372	$	250,082	$	954,916	$	1,923,762

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate
Risk rating:
Pass	$	700,219	$	4,489,047	$	2,744,461	$	6,536,166	$	1,224,825	$	8,032,200	$	23,726,918
Special Mention		—		—		—		—		—		349,232		349,232
Substandard		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—
Total	$	700,219	$	4,489,047	$	2,744,461	$	6,536,166	$	1,224,825	$	8,381,432	$	24,076,150

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction and land
Risk rating:
Pass	$	1,348,345		189,070	$	64,393	$	—	$	—	$	—	$	1,601,808
Special Mention		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—
Total	$	1,348,345	$	189,070	$	64,393	$	—	$	—	$	—	$	1,601,808

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial and industrial
Risk rating:
Pass	$	117,286	$	663,362	$	250,657	$	202,531	$	222,172	$	2,540,259	$	3,996,267
Special Mention		50,763		—		264,909		—		—		97,431		413,103
Substandard		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—
Total	$	168,049	$	663,362	$	515,566	$	202,531	$	222,172	$	2,637,690	$	4,409,370

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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The Company monitors the credit risk profile by payment activity for residential, home equity and consumer loan classes. Loans past due 90 days or more and loans on nonaccrual status are considered nonperforming. Nonperforming loans are reviewed monthly. The following table presents the amortized cost in residential, home equity and consumer loans based on payment activity:


	Term Loans Amortized Cost Basis by Origination Year
	For the Nine Months Ended December 31, 2024
	2025		2024		2023		2022		2021		Prior		Total
Residential real estate
Payment performance
Performing	$	4,690,032	$	5,930,094	$	14,808,675	$	23,080,785	$	9,717,579	$	11,837,838	$	70,065,003
Nonperforming		—		—		290,209		—		131,191		66,105		487,505
Total	$	4,690,032	$	5,930,094	$	15,098,884	$	23,080,785	$	9,848,770	$	11,903,943	$	70,552,508

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home Equity
Payment performance
Performing	$	619,594	$	778,123	$	1,755,851	$	193,899	$	222,301	$	779,856	$	4,349,624
Nonperforming		—		93,796		—		—		22,547		—		116,343
Total	$	619,594	$	871,919	$	1,755,851	$	193,899	$	244,848	$	779,856	$	4,465,967

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer
Payment performance
Performing	$	264,689	$	456,332	$	449,329	$	141,051	$	5,526	$	58,737	$	1,375,664
Nonperforming		—		85,568		—		—		—		—		85,568
Total	$	264,689	$	541,900	$	449,329	$	141,051	$	5,526	$	58,737	$	1,461,232

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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	Term Loans Amortized Cost Basis by Origination Year
	For the Year-Ended March 31, 2024
		2024		2023		2022		2021		2020		Prior		Total
Multi-family
Risk rating:
Pass	$	—	$	—	$	226,337	$	263,765	$	352,634	$	1,067,055	$	1,909,791
Special Mention		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—
Total	$	—	$	—	$	226,337	$	263,765	$	352,634	$	1,067,055	$	1,909,791

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate
Risk rating:
Pass	$	2,684,218	$	3,796,346	$	6,733,297	$	1,411,061	$	2,017,296	$	6,951,510	$	23,593,728
Special Mention		—		—		—		—		—		407,805		407,805
Substandard		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—
Total	$	2,684,218	$	3,796,346	$	6,733,297	$	1,411,061	$	2,017,296	$	7,359,315	$	24,001,533

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction and land
Risk rating:
Pass	$	2,521,518	$	503,750	$	—	$	—	$	62,587	$	—	$	3,087,855
Special Mention		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—
Total	$	2,521,518	$	503,750	$	—	$	—	$	62,587	$	—	$	3,087,855

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial and industrial
Risk rating:
Pass	$	1,116,530	$	321,234	$	41,517	$	310,621	$	2,314,123	$	336,191	$	4,440,216
Special Mention		—		250,000		—		37,114		—		162,272		449,386
Substandard		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—
Total	$	1,116,530	$	571,234	$	41,517	$	347,735	$	2,314,123	$	498,463	$	4,889,602

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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	Term Loans Amortized Cost Basis by Origination Year
	For the Year Ended March 31, 2024
	2024		2023		2022		2021		2020		Prior		Total
Residential real estate
Payment performance
Performing	$	5,066,684		16,011,420	$	24,329,104	$	10,659,716	$	2,980,257	$	10,112,915	$	69,160,096
Nonperforming		—		—		—		—		—		—		—
Total	$	5,066,684	$	16,011,420	$	24,329,104	$	10,659,716	$	2,980,257	$	10,112,915	$	69,160,096

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home Equity
Payment performance
Performing	$	998,457	$	1,870,198	$	202,789	$	198,098	$	94,262	$	827,272	$	4,191,076
Nonperforming		—		—		—		—		—		—		—
Total	$	998,457	$	1,870,198	$	202,789	$	198,098	$	94,262	$	827,272	$	4,191,076

Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer
Payment performance
Performing	$	818,884	$	655,684	$	197,152	$	16,455	$	52,012	$	52,701	$	1,792,888
Nonperforming		—		—		—		—		—		—		—
Total	$	818,884	$	655,684	$	197,152	$	16,455	$	52,012	$	52,701	$	1,792,888

Current period gross charge-offs	$	—	$	—	$	5,551	$	—	$	—	$	—	$	5,551

The Company evaluates the loan risk grading system definitions on an ongoing basis. No significant changes were made during the three and nine months ended December 31, 2024 and the year ended March 31, 2024.

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The following tables present the Company’s loan portfolio aging analysis of the recorded investment in loans as of December 31, 2024 and March 31, 2024:


	December 31, 2024
					90 Days								Total Loans >
	30-59 Days		60-89 Days		or Greater		Total				Total Loans		90 Days &
	Past Due		Past Due		Past Due		Past Due		Current		Receivable		Accruing
Real estate loans:
Residential	$	822,296	$	238,159	$	66,105	$	1,126,560	$	69,425,948	$	70,552,508	$	—
Multi-family		—		—		—		—		1,923,762		1,923,762		—
Commercial		48,983		—		—		48,983		24,027,167		24,076,150		—
Construction and land		—		—		—		—		1,601,808		1,601,808		—
Home equity line of credit (HELOC)		134,841		73,088		93,796		301,725		4,164,242		4,465,967		—
Commercial and industrial		97,300		—		—		97,300		4,312,070		4,409,370		—
Consumer		135,883		—		—		135,883		1,325,349		1,461,232		—

Total	$	1,239,303	$	311,247	$	159,901	$	1,710,451	$	106,780,346	$	108,490,797	$	—


	March 31, 2024
					90 Days								Total Loans >
	30-59 Days		60-89 Days		or Greater		Total				Total Loans		90 Days &
	Past Due		Past Due		Past Due		Past Due		Current		Receivable		Accruing
Real estate loans:
Residential	$	198,028	$	—	$	—	$	198,028	$	68,962,068	$	69,160,096	$	—
Multi-family		—		—		—		—		1,909,791		1,909,791		—
Commercial		—		—		—		—		24,001,533		24,001,533		—
Construction and land		—		—		—		—		3,087,855		3,087,855		—
Home equity line of credit (HELOC)		19,975		—		—		19,975		4,171,101		4,191,076		—
Commercial and industrial		—		—		—		—		4,889,602		4,889,602		—
Consumer		13,208		—		—		13,208		1,779,680		1,792,888		—

Total	$	231,211	$	—	$	—	$	231,211	$	108,801,630	$	109,032,841	$	—

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The following table presents the amortized cost basis and collateral type of collateral dependent loans by class as of December 31, 2024 and March 31, 2024:


	Real		Business
December 31, 2024	estate		assets		Total
Real estate loans:
Residential	$	—	$	—	$	—
Multi-family		—		—		—
Commercial		349,232		—		349,232
Construction and land		—		—		—
Home equity line of credit (HELOC)		—		—		—
Commercial and industrial		—		398,194		398,194
Consumer		—		—		—

	$	349,232	$	398,194	$	747,426

	Real		Business
March 31, 2024	estate		assets		Total
Real estate loans:
Residential	$	—	$	—	$	—
Multi-family		—		—		—
Commercial		407,805		—		407,805
Construction and land		—		—		—
Home equity line of credit (HELOC)		—		—		—
Commercial and industrial		—		449,386		449,386
Consumer		—		—		—

	$	407,805	$	449,386	$	857,191

Nonaccrual loans were as follows at December 31, 2024:


		Nonaccrual Loans	Nonaccrual Loans
	Without an		With an		Total
	Allowance		Allowance		Nonaccrual Loans
Real estate loans
Residential	$	487,506		$	487,506
Home equity line of credit (HELOC)		116,343			116,343
Commercial and industrial		14,909			14,909
Consumer		85,568			85,568
Total nonaccrual loans	$	704,326		$	704,326

The Company had no nonaccrual loans at March 31, 2024.

No loans were modified during the three month period ending December 31, 2024. There was one commercial and industrial loan in the amount of $52,000, or 1.2%, of total commercial and industrial loans, modified for a borrower experiencing financial difficulties during the nine months ended December 31, 2024. This modification increased the loan balance from $30,000 to $52,000 and extended the loan term by 3 years. The loan is performing at December 31, 2024. No loans were modified during the three month or nine month period ended December 31, 2023.

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Note 4:Time Deposits

Time deposits in denominations of $250,000 or more were approximately $5,968,000 and $10,304,000 at December 31, 2024 and March 31, 2024, respectively.

At December 31, 2024, the scheduled maturities of time deposits were as follows:


	December 31,
	2024
Within one year	$	21,974,364
One year to two years		8,019,727
Two years to three years		761,310
Three years to four years		939,998
Four years to five years		920,405
Thereafter		219,594

	$	32,835,398

At December 31, 2024 and March 31, 2024, the Company had one significant customer deposit account with a total deposit balance of approximately $16,456,000 and $21,092,000, respectively.

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Note 5:Borrowings

Federal Home Loan Bank (FHLB) advances consisted of the following as of December 31, 2024 and March 31, 2024:


	December 31, 2024				March 31, 2024
	Interest				Interest
	Rate		Amount		Rate		Amount
Scheduled to mature year ending March 31,
2025					1.64	%	$	1,000,000
2025					5.75			1,000,000
2026	4.90	%	$	1,000,000	5.90			1,000,000
			$	1,000,000			$	3,000,000

The Company has made a collateral pledge to the FHLB consisting of all shares of FHLB stock owned by the Company and a blanket pledge of approximately $68,929,000 and $67,719,000 of its qualifying mortgage assets as of December 31, 2024 and March 31, 2024, respectively. Based on this collateral, the Company was eligible to borrow up to a total of approximately $44,381,000 and $44,887,000 as of December 31, 2024 and March 31, 2024, respectively.

Maturities of FHLB advances were as follows at December 31, 2024:


	December 31,
	2024
Within one year	$	1,000,000

The Company had an available line of credit with the Federal Reserve Bank totaling $7.5 million and $9.0 million at December 31, 2024 and March 31, 2024, respectively. The line of credit was collateralized by a pledge of certain commercial loans totaling $15,095,000 and $19,203,000 as of December 31, 2024 and March 31, 2024, respectively. The Company had no outstanding borrowings on this line at December 31, 2024 and March 31, 2024.

The Company also has an available line of credit with United Bankers Bank totaling $4,542,000 and $4,365,000 at December 31, 2024 and March 31, 2024, respectively. The Company had no outstanding borrowings on this line at December 31, 2024 and March 31, 2024.

Note 6:Employee Stock Option Plan (ESOP)

In connection with the Conversion, the Company established an Employee Stock Ownership Plan (“ESOP”) for the exclusive benefit of eligible employees. It is expected that the Bank will make annual contributions to the ESOP in amounts as defined by the ESOP loan documents. The contributions will be used to repay the ESOP loan. Certain ESOP shares are pledged as collateral for the ESOP loan. As the ESLP loan is repaid, shares are released from collateral and allocated to eligible participants, based on the proportion of loan repayments paid in the year. Shares allocated to eligible participants will become 100% vested upon completion of three years of service with the Bank, including years of service prior to the formation of the ESOP.

In connection with the Company’s Conversion, the ESOP borrowed $368,510 from the Company for the purpose of purchasing shares of the Company’s stock. A total of 36,851 shares were purchased with the loan proceeds. Company stock purchased by the ESOP is shown as a reduction of stockholders’ equity. The ESOP loan is expected to be repaid over a period of 20 years.

The annual contribution to the ESOP was made during the period ending December 31, 2024, as loan payments are made annually on December 31of each year. Compensation expense is recognized over the service period based on the average fair value of the shares and totaled $12.88 for the period ending December 31, 2024. There was no ESOP compensation expense for the period ending December 31, 2023.

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At December 31, 2024, there were no shares allocated to participants. There were 1,843 shares committed to be released to participants and 35,008 unallocated shares. The fair value of unallocated ESOP shares totaled $451,000 at December 31, 2024.

Note 7:Earnings (Loss) Per Share

Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Unallocated common shares held by the ESOP are shown as a reduction in stockholders’ equity and are excluded from weighted-average common shares outstanding for both basic and diluted earnings per share calculations until they are committed to be released.

The Company had no dilutive or potentially dilutive securities during the period ended December 31, 2024.


	Three months ended		Nine months ended
	December 31		December 31
	2024		2024

Net Loss	$	(120,430)	$	(322,178)

Weighted-average shares issued		526,438		526,438
Less weighted-average unearned ESOP shares		36,825		36,825
Weighted-average shares outstanding		489,613		489,613

Loss per share - basic and diluted	S	(0.25)	S	(0.66)

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Note 8:Regulatory Matters

The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance-sheet items as calculated under U.S. GAAP reporting requirements and regulatory capital standards. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, the Company’s regulators could require adjustments to regulatory capital not reflected in these financial statements.

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

Federal regulators finalized and adopted a regulatory capital rule in 2019 establishing a new community bank leverage ratio (CBLR), which became effective on January 1, 2020. The intent of the CBLR is to provide a simple alternative measure of capital adequacy for electing qualifying depository institutions and depository institution holding companies, as directed under the Economic Growth, Regulatory Relief, and Consumer Protection Act.

If a qualifying depository institution, or depository institution holding company, elects to use such measure, such institution or holding company will be considered well capitalized if its ratio of Tier 1 capital to average total consolidated assets (i.e., leverage ratio) exceeds 9.0%, subject to a limited two quarter grace period, during which the leverage ratio cannot go 100 basis points below the then applicable threshold, and will not be required to calculate and report risk-based capital ratios.

The Company elected to begin using the CBLR during the quarter ended December 31, 2024. The Company’s CBLR was 9.8% as of December 31, 2024.

The Company’s regulatory capital ratios as of March 31, 2024 are presented in the table below. Management believes, as of March 31, 2024 and December 31, 2024, that the Company met all capital adequacy requirements to which it is subject.

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The Company’s actual and required capital amounts and ratios as of March 31, 2024 were as follows:



									To Be Well Capitalized
									Under
					For Capital Adequacy				Prompt Corrective Action
	Actual				Purposes				Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio

	(Dollars in thousands)
As of March 31, 2024
Total Capital
(to Risk-Weighted Assets)	$	13,829	15.0	%	$	7,380	8.0	%	$	9,226	10.0	%

Tier 1 Capital
(to Risk-Weighted Assets)	$	13,132	14.2	%	$	5,535	6.0	%	$	7,380	8.0	%

Common Equity Tier I Capital
(to Risk-Weighted Assets)	$	13,132	14.2	%	$	4,151	4.5	%	$	5,997	6.5	%

Tier I Capital
(to Average Total Assets)	$	13,132	8.7	%	$	6,056	4.0	%	$	7,570	5.0	%

As of December 31, 2024, the most recent notification from the regulators categorized the Company as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Company’s category.

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Note 9:Disclosures about Fair Value of Assets and Liabilities

Fair value is the exchange price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1

Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2

Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3

Significant unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Recurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2024 and March 31, 2024:


			Fair Value Measurements Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	Fair		Identical Assets		Observable Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2024
U.S. Government agencies	$	2,678,806	$	—	$	2,678,805	$	—
Mortgage-backed Government Sponsored Enterprises (GSEs)		9,640,955		—		9,640,955		—
State and political subdivisions		10,209,070		—		10,209,070		—
Time deposits		675,384		—		675,384		—

March 31, 2024
U.S. Government agencies	$	2,660,297	$	—	$	2,660,297	$	—
Mortgage-backed Government Sponsored Enterprises (GSEs)		10,717,842		—		10,717,842		—
State and political subdivisions		10,657,082		—		10,657,082		—
Time deposits		1,146,140		—		1,146,140		—

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There are no liabilities measured at fair value on a recurring basis. There have been no significant changes in the valuation techniques during the nine months ended December 31, 2024 and the year ended March 31, 2024.

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Available-for-sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 are not available, securities are classified within Level 3 of the hierarchy. The Company had no Level 3 securities.

Nonrecurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying balance sheet measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2024.


			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2024
Collateral dependent loans	$	44,144	$	—	$	—	$	44,144


	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-average)
December 31, 2024
Collateral dependent loans	$	44,144	Estimated sales price	Adjustments for discounts to reflect current market conditions	20% - 50% (46%)

The Company had no assets recognized in the accompanying balance sheets measured at fair value on a nonrecurring basis at March 31, 2024.

The estimated fair values of the Company’s financial instruments not carried at fair value on the balance sheets as of December 31, 2024 and March 31, 2024 are as follows:


	Carrying		Fair		Fair Value Measurements Using
	Value		Value		Level 1		Level 2		Level 3
December 31, 2024
Financial assets:
Cash and cash equivalents	$	2,452,104	$	2,452,104		2,452,104	$	—	$	—
Loans, net		107,250,337		99,561,000		—		—		99,561,000
Restricted stock		901,700		901,700		—		901,700		—
Bank owned life insurance		3,575,237		3,575,237		3,575,237		—		—
Accrued interest receivable		447,413		447,413		447,413		—		—

Financial liabilities:
Deposits		130,098,691		129,637,293		97,263,293		—		32,374,000
FHLB advances		1,000,000		1,002,000		—		—		1,002,000
Accrued interest payable		20,352		20,352		20,352		—		—

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	Carrying		Fair		Fair Value Measurements Using
	Value		Value		Level 1		Level 2		Level 3
March 31, 2024
Financial assets:
Cash and cash equivalents	$	10,617,698	$	10,617,698	$	10,617,698	$	—	$	—
Loans, net		107,869,172		99,786,000		—		—		99,786,000
Restricted stock		515,000		515,000		—		515,000		—
Bank owned life insurance		3,491,015		3,491,015		3,491,015		—		—
Accrued interest receivable		483,027		483,027		483,027		—		—

Financial liabilities:
Deposits		142,092,312		141,311,781		99,686,781		—		41,625,000
FHLB advances		3,000,000		2,993,000		—		—		2,993,000
Accrued interest payable		25,245		25,245		25,245		—		—

Limitations: Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Fair value estimates may not be realizable in an immediate settlement of the instrument. In some instances, there are no quoted market prices for the Company’s various financial instruments, in which case fair values may be based on estimates using present value or other valuation techniques, or based on judgments regarding future expected loss experience, current economic conditions, risk characteristic of the financial instruments, or other factors.

Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. Subsequent changes in assumptions could significantly affect the estimates.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis is intended to enhance your understanding of our financial condition and results of operations. The financial information in this section is derived from the accompanying unaudited financial statements. You should read the financial information in this section in conjunction with the business and financial information contained in this report and in the Company’s definitive prospectus dated August 9, 2024, filed with the Securities and Exchange Commission.

Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

●

statements of our goals, intentions and expectations;

●

statements regarding our business plans, prospects, growth and operating strategies;

●

statements regarding the asset quality of our loan and investment portfolios; and

●

estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

●

general economic conditions, either nationally or in our market area, which are worse than expected;

●

changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses;

●

our ability to access cost-effective funding;

●

our ability to maintain adequate liquidity, primarily through deposits;

●

fluctuations in real estate values and in the conditions of the residential real estate and commercial real estate markets;

●

demand for loans and deposits in our market area;

●

our ability to implement and change our business strategies;

●

competition among depository and other financial institutions;

●

inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of our financial instruments, or our level of loan originations, or increase the level of defaults, losses and prepayments within our loan portfolio;

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●

adverse changes in the securities markets;

●

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums;

●

changes in the quality or composition of our loan or investment portfolios;

●

technological changes that may be more difficult or expensive than expected;

●

the inability of third-party providers to perform as expected;

●

a failure or breach of our operational or information security systems or infrastructure, including cyberattacks;

●

our ability to manage market risk, credit risk and operational risk;

●

our ability to enter new markets successfully and capitalize on growth opportunities;

●

changes in consumer spending, borrowing and savings habits;

●

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

●

our ability to retain key employees; and

●

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, we assume no obligation and disclaims any obligation to update any forward-looking statements.

Critical Accounting Policies and Use of Critical Accounting Estimates

The discussion and analysis of the financial condition and results of operations are based on our financial statements, which are prepared in conformity with generally accepted accounting principles used in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.

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The following represent our critical accounting policies:

Allowance for Credit Losses. The allowance for credit losses is the estimated amount considered necessary to cover inherent, but unconfirmed, credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for credit losses which is charged against income. In determining the allowance for credit losses, management makes significant estimates and has identified this policy as one of our most critical accounting policies.

Management performs a quarterly evaluation of the allowance for credit losses on loans and unfunded commitments. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change.

The allowance for credit losses is evaluated following the accounting guidance in Accounting Standards Update (ASU) No. 2016-13 Financial Instruments – Credit Losses (Topic 326) for the fiscal year ended March 31, 2024. ASC 326 replaced the incurred loss impairment methodology with a new current expected credit loss (CECL) methodology that reflects expected credit losses over the lives of the credit instruments and requires consideration of a broader range of information to estimate credit losses. ASC 326 requires an estimate of all expected credit losses for loans based on historical experience, current conditions, and reasonable and supportable forecasts.

Before April 1, 2023, the analysis of the allowance for credit losses had two components, specific and general allowances. The specific percentage allowance was for unconfirmed losses related to loans that were determined to be impaired. Impairment was measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. If the fair value of the loan was less than the loan’s carrying value, a charge was recorded for the difference. The general allowance, which was for loans reviewed collectively, was determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We also analyzed historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis established historical loss percentages and qualitative factors that were applied to the loan groups to determine the amount of the allowance for credit losses necessary for loans that were reviewed collectively. The qualitative component was critical in determining the allowance for credit losses as certain trends may indicate the need for changes to the allowance for credit losses based on factors beyond the historical loss history. Not incorporating a qualitative component could misstate the allowance for credit losses.

Actual loan losses may be significantly more than the allowances we have established which could result in a material negative effect on our financial results.

Deferred Tax Assets. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Determining the proper valuation allowance for deferred taxes is critical in properly valuing the deferred tax asset and the related recognition of income tax expense or benefit. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets.

Fair Value Measurements. The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. We estimate the fair value of a financial instrument and any related asset impairment using a variety of valuation methods. Where financial instruments are actively traded and have quoted market prices, quoted market prices are used

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for fair value. When the financial instruments are not actively traded, other observable market inputs, such as quoted prices of securities with similar characteristics, may be used, if available, to determine fair value. When observable market prices do not exist, we estimate fair value. These estimates are subjective in nature and imprecision in estimating these factors can impact the amount of gain or loss recorded.

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

Total Assets. Total assets were $144.9 million at December 31, 2024, a decrease of $10.4 million, or 6.7%, from $155.3 at March 31, 2024. The decrease was primarily comprised of a decrease in cash and cash equivalents of $8.2 million and a decrease in available for sale investment securities of $2.0 million.

Cash and Cash Equivalents. Cash and cash equivalents decreased $8.2 million, or 76.9%, to $2.5 million at December 31, 2024 from $10.6 million at March 31, 2024. The decrease was due primarily to a decrease in deposits during the nine months ended December 31, 2024 and a decrease of $2.0 million in advances from the Federal Home Loan Bank of Cincinnati during the nine months ended December 31, 2024, which were partially offset by net proceeds from the issuance of common stock of $3.5 million.

Investment Securities. Investment securities available for sale decreased $2.0 million, or 7.9%, to $23.2 million at December 31, 2024, from $25.2 million at March 31, 2024. The decrease was primarily attributable to calls, maturities and repayments of securities totaling $1.9 million during the nine months ended December 31, 2024. The unrealized loss on securities decreased during the nine months ended December 31, 2024, to $53,000, or 1%, at December 31, 2024.

Net Loans. Net loans decreased $619,000, or 0.6%, to $107.3 million at December 31, 2024 from $107.9 million at March 31, 2024. During the nine months ended December 31, 2024, loan originations totaled $13.1 million, comprised primarily of $5.0 million of loans secured by one- to four-family residential real estate, $3.9 million of construction and land loans, $2.3 million home equity loans, $1.4 of commercial real estate loans and $200,000 of commercial and industrial loans. Consumer loan originations totaled $284,000, the majority of which were auto loans.

During the nine months ended December 31, 2024, residential real estate loans increased $1.4 million, or 2.0%, to a total of $70.6 million at December 31, 2024 and home equity lines of credit increased $275,000, or 6.6%, to $4.5 million at December 31, 2024. These increases were partially offset by a decrease in construction and land loans of $1.5 million, or 48.1%, to $1.6 million at December 31, 2024, a decrease in commercial and industrial loans of $480,000, or 9.8%, to $4.4 million at December 31, 2024 and a decrease in consumer loans of $332,000, or 18.5%, to $1.5 million at December 31, 2024.

The decrease in the Company’s loan portfolio has been due to an intentional slowdown of marketing efforts for new loans and strong competition for one- to four-family residential mortgage loans and commercial loans in our market area.

The Company’s strategy includes maintaining the loan portfolio, continuing to focus primarily on owner-occupied one-to-four family residential real estate loans and commercial real estate loans.

Deposits. Deposits decreased by $12.0 million, or 8.4%, to $130.1 million at December 31, 2024 from $142.1 million at March 31, 2024. Core deposits decreased $2.4 million, or 2.4%, to $97.3 million at December 31, 2024 from $99.7 million at March 31, 2024. Certificates of deposit decreased $9.6 million, or 22.6%, to $32.8 million at December 31, 2024 from $42.4 million at March 31, 2024. The decrease in core deposits was due primarily to a $4.6 million decrease in the account held by a significant commercial customer whose account balance fluctuates routinely in the normal course of its business. The decrease in certificates of deposit was due primarily to outflows of higher rate accounts as management elected not to compete on interest rates during the period.

During the nine months ended December 31, 2024, management continued its strategy of pursuing growth in demand accounts and other lower cost core deposits, in part by enhancing products and services offered and increased marketing. Management intends to continue its efforts to increase core deposits, with an emphasis on growth in consumer and business demand deposits.

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Advances from the Federal Home Loan Bank. Advances from the Federal Home Loan Bank totaled $1.0 million at December 31, 2024, a decrease of $2.0 million, or 66.7%, from the $3.0 million balance at March 31, 2024. Management elected to repay these advances by drawing from existing cash balances during the period.

Stockholders’ Equity. Stockholders’ equity increased $3.2 million, or 37.2%, to $11.8 million at December 31, 2024, from $8.6 million at March 31, 2024. The increase was due primarily to an influx of capital from the common stock issuance of $3.5 million during the period. The Bank also purchased 21,000 shares of stock, totaling $210,000, which are being held in trust for the directors’ deferred compensation plan.

Average Balances and Yields. The following table sets forth average balance sheets, average yields and rates, and other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects are immaterial. Average balances are calculated using daily average balances. Non-accrual loans are included in average balances only. The average balance of available-for-sale securities does not include unrealized losses during the periods. Average yields include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Net deferred loan fees/costs are immaterial.



	For the Three Months Ended December 31,
	2024							2023
	Average							Average
	Outstanding					Average		Outstanding					Average
	Balance			Interest		Yield/Rate		Balance			Interest		Yield/Rate


Interest-earning assets:
Interest-bearing deposits and other	$	2,207		$	29	5.26	%	$	2,762		$	41	5.94	%
Available-for-sale securities		29,054			121	1.67			32,108			132	1.64
Loans		108,522			1,322	4.87			111,511			1,259	4.52
Total interest-earning assets		139,783			1,472	4.21			146,381			1,432	3.91
Noninterest earning assets		8,068							4,998
Allowance for credit losses		(876)							(920)
Total assets	$	146,975						$	150,459

Interest-bearing liabilities:
Interest-bearing demand accounts	$	35,243			2	0.02	%	$	31,885			2	0.03	%
Savings accounts		19,773			10	0.20			20,671			4	0.08
Money market accounts		29,373			131	1.78			30,073			61	0.81
Certificates of deposit		33,328			321	3.85			39,366			359	3.65
Total interest-bearing deposits		117,717			464	1.58			121,995			426	1.40
Federal funds purchased		107			2	7.48			90			1	4.44
Federal Home Loan Bank advances		5,767			73	5.06			8,914			118	5.30
Total interest-bearing liabilities		123,591			539	1.74			130,999			545	1.66
Noninterest-bearing demand deposits		6,854							10,020
Other noninterest-bearing liabilities		4,722							2,183
Total liabilities		135,167							143,202
Total stockholders' equity		11,808							7,257
Total liabilities and stockholders' equity		146,975							150,459
Net interest income				$	933						$	887
Net interest rate spread (1)						2.47	%						2.25	%
Net interest-earning assets (2)	$	16,192						$	15,382
Net interest margin (3)						2.67	%						2.42	%
Average interest-earning assets to interest-bearing liabilities		113.10	%						111.74	%

(1)Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)Net interest margin represents net interest income divided by average total interest-earning assets.

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	For the Nine Months Ended December 31,
	2024							2023
	Average							Average
	Outstanding					Average		Outstanding					Average
	Balance			Interest		Yield/Rate		Balance			Interest		Yield/Rate


Interest-earning assets:
Interest-bearing deposits and other	$	3,200		$	141	5.88	%	$	3,005		$	127	5.64	%
Available-for-sale securities		29,790			371	1.66			32,639			404	1.65
Loans		109,148			3,913	4.78			111,308			3,727	4.46
Total interest-earning assets		142,138			4,425	4.15			146,952			4,258	3.86
Noninterest earning assets		7,741							6,254
Allowance for credit losses		(868)							(942)
Total assets	$	149,011						$	152,264

Interest-bearing liabilities:
Interest-bearing demand accounts	$	36,155			5	0.02	%	$	32,440			5	0.02	%
Savings accounts		19,250			20	0.14			22,543			14	0.08
Money market accounts		29,259			303	1.38			30,142			161	0.71
Certificates of deposit		36,486			1,071	3.91			37,811			948	3.34
Total interest-bearing deposits		121,150			1,399	1.54			122,936			1,128	1.22
Federal funds purchased		72			3	5.56			142			6	5.63
Federal Home Loan Bank advances		6,836			264	5.15			9,328			350	5.00
Total interest-bearing liabilities		128,058			1,666	1.73			132,406			1,484	1.49
Noninterest-bearing demand deposits		7,595							9,476
Other noninterest-bearing liabilities		3,763							2,386
Total liabilities		139,416							144,268
Total stockholders' equity		9,595							7,996
Total liabilities and stockholders' equity		149,011							152,264
Net interest income				$	2,759						$	2,774
Net interest rate spread ⁽¹⁾						2.42	%						2.37	%
Net interest-earning assets ⁽²⁾	$	14,080						$	14,546
Net interest margin ⁽³⁾						2.59	%						2.52	%
Average interest-earning assets to interest-bearing liabilities		111.00	%						110.99	%

(1)Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)Net interest margin represents net interest income divided by average total interest-earning assets.

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Rate/Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. Changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume.


		Three Months Ended December 31,
		2024 vs. 2023
						Total
		Increase (decrease) due to				Increase
		Volume		Rate		(Decrease)

		(In thousands)
Interest-earning assets:
Other interest-earning assets	$	(7)	$	(5)	$	(12)
Investment securities		(13)		2		(11)
Loans		(34)		97		63
Total interest-earning assets		(54)		94		40

Interest-bearing liabilities:
Interest-bearing demand		-		-		-
Savings accounts		-		6		6
Money market		(1)		71		70
Certificates of deposit		(57)		19		(38)
Total deposits		(58)		96		38
Federal Home Loan Bank advances		(40)		(5)		(45)
Federal funds purchased		-		1		1
Total interest-bearing liabilities		(98)		92		(6)

Change in net interest income	$	44	$	2	$	46


	Nine Months Ended December 31,
	2024 vs. 2023
	Increase (Decrease)				Total
	Due to:				Increase
	Volume		Rate		(Decrease)

	(In thousands)
Interest-earning assets:
Loans, net	$	(73)	$	259	$	186
Available-for-sale securities		(35)		2		(33)
Other interest-earning assets		9		5		14
Total interest-earning assets		(99)		266		167

Interest-bearing liabilities:
Interest-bearing demand accounts		(1)		1		—
Savings accounts		(2)		8		6
Money market accounts		(5)		147		142
Certificates of deposit		(34)		157		123
Total deposits		(42)		313		271
Federal funds purchased		(3)		—		(3)
Federal Home Loan Bank advances		(96)		10		(86)
Total interest-bearing liabilities		(141)		323

Change in net interest income	$	42	$	(57)	$	(15)

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

General. The Company reported a net loss for the three months ended December 31, 2024 of $120,000, a $76,000 increase from the net loss of $44,000 for the three months ended December 31, 2023. The increase in the net loss was primarily due to a $93,000, or 290.1%, increase in the provision for credit losses, which was partially offset by a $46,000, or 5.2%, increase in net interest income.

Interest Income. Interest income increased $40,000, or 2.8%, to $1.5 million for the three months ended December 31, 2024 from $1.4 million for the three months ended December 31, 2023. This increase was attributable to a $63,000, or 5.0%, increase in loan interest income. This was partially offset by a $11,000 decrease, or 8.7%, decrease in interest on investment securities and a $12,000, or 29.8%, decrease in interest on interest-bearing deposits and other assets.

The average yield on loans increased by 35 basis points to 4.87% for the three months ended December 31, 2024 from 4.52% for the three months ended December 31, 2023, while the average balance of loans decreased by $3.0 million, or 2.7%, during the three months ended December 31, 2024 compared to the average balance for the three months ended December 31, 2023. The increase in average yield on loans reflects the increase in the overall interest rate environment period-to-period. The increases in interest rates have provided higher yields on newly originated loans, as well as the Company’s adjustable-rate loans, which have adjusted upward and should continue to rise provided the higher interest rate environment persists.

The average balance of investment securities decreased $3.0 million, or 9.3%, to $29.1 million for the three months ended December 31, 2024 from $32.1 million for the three months ended December 31, 2023, while the average yield on investment securities increased by three basis points to 1.67% for the three months ended December 31, 2024 from 1.64% for the three months ended December 31, 2023.

Interest income on other interest-bearing deposits, comprised primarily of overnight deposits and stock in the Federal Home Loan Bank, decreased $12,000, or 29.8%, for the three months ended December 31, 2024, due to a decrease in the average yield of 68 basis points, to 5.26% for the three months ended December 31, 2024 from 5.94% for the three months ended December 31, 2023, and a decrease in the average balance of $555,000, or 20.1%.

Interest Expense. Total interest expense decreased $6,000, or 1.2%, to $539,000 for the three months ended December 31, 2024 from $545,000 for the three months ended December 31, 2023. Interest expense on deposits increased $38,000, or 9.0%, due primarily to an increase of 18 basis points in the average cost of deposits to 1.58% for the three months ended December 31, 2024 from 1.40% for the three months ended December 31, 2023, which was offset by a decrease of $4.3 million, or 3.5%, in the average balance of interest-bearing deposits to $117.7 million for the three months ended December 31, 2024 from $122.0 million for the three months ended December 31, 2023.

Interest expense on borrowings decreased $44,000, or 37.6%, to $75,000 for the three months ended December 31, 2024, compared to $119,000 for the three months ended December 31, 2023. The decrease was due to a $3.1 million, or 34.4%, decrease in the average balance outstanding, to $5.9 million for the three months ended December 31, 2024 from $9.0 million for the three months ended December 31, 2023, and a 24 basis point decrease in the weighted-average rate, to 5.06% for the three months ended December 31, 2024 compared to 5.30% for the three months ended December 31, 2023.

Net Interest Income. Net interest income increased $46,000, or 5.1%, to $933,000 for the three months ended December 31, 2024 compared to $887,000 for the three months ended December 31, 2023. The increase reflected an increase in the interest rate spread to 2.47% for the three months ended December 31, 2024 from 2.25% for the three months ended December 31, 2023, while the average net interest earning assets increased $810,000 period-to-period. The net interest margin increased to 2.67% for the three months ended December 31, 2024 from 2.42% for the three months ended December 31, 2023. The interest rate spread and net interest margin were impacted by a series of interest rate increases in the economy during 2023 and 2022 and to a lesser extent, a recent 100 basis point reduction in the federal funds rate by the Federal Reserve Board.

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Provision for (Recovery of) Credit Losses. The Company recorded an increase in the provision for credit losses of $93,000 or 290.1%, for the three months ended December 31, 2024, to a provision for credit losses of $61,000 compared to a recovery for credit losses of $32,000 recorded for the three months ended December 31, 2023. The allowance for credit losses on loans was $915,000 at December 31, 2024, an increase of $60,000, or 7.0%, over the $855,000 total at March 31, 2024. The allowance for credit losses on off-balance sheet commitments was $77,000 at December 31, 2024, an increase of $21,000, or 37.5%, over the $56,000 total at March 31, 2024. The allowance for credit losses on loans represented 0.84% of total loans at December 31, 2024, and 0.79% at March 31, 2024.

The determination of the adequacy of the allowance for credit losses included consideration of the balances of nonperforming loans, delinquent loans and net charge-offs in both periods. The Company’s nonperforming loans totaled $704,000 at December 31, 2024, compared to no nonperforming loans at March 31, 2024. Classified loans totaled $580,000 at December 31, 2024, compared to $67,000 at March 31, 2024, and total loans past due greater than 30 days were $1.7 million and $231,000 at those respective dates.

The allowance for credit losses reflects the estimate management believes to be appropriate to cover incurred probable losses which were inherent in the loan portfolio at December 31, 2024 and March 31, 2024. While management believes the estimates and assumptions used in the determination of the adequacy of the allowance are reasonable, such estimates and assumptions could be proven incorrect in the future, and the actual amount of future provisions may exceed the amount of past provisions, and the increase in future provisions that may be required may adversely impact the Company’s financial condition and results of operations. In addition, bank regulatory agencies periodically review the allowance for credit losses and may require an increase in the provision for credit losses or the recognition of loan charge-offs, based on judgments different than those of management.

Noninterest Income. Noninterest income totaled $90,000 for the three months ended December 31, 2024, an increase of $3,000, or 3.4%, from $87,000 for the three months ended December 31, 2023. The increase was attributable primarily to a $4,000, or 14.2%, increase in the cash surrender value of life insurance, which was partially offset by a $1,000, or 2.4%, decrease in service fees on deposits and a $1,000, or 15.6%, decrease in late charges and fees on loans.

Noninterest Expense. Noninterest expense increased $19,000, or 1.7%, to $1.1 million for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The increase was due primarily to a $36,000, or 95.6%, increase in professional services. This was partially offset by an $11,000, or 2.1%, decrease in salaries and employee benefits and a $15,000, or 37.8% decrease in FDIC insurance premiums.

The increase in professional services was due primarily to costs associated with the reporting requirements of a public stock company. The decrease in salaries and employee benefits was due to a decline in the bank’s staffing complement which was lower by one FTE period to period, partially offset by ESOP compensation expense and normal merit increases.

Noninterest expense can be expected to increase because of costs associated with operating as a public company and increased compensation costs related to the implementation of a stock-based benefit plan.

Income Taxes. The Company’s income tax benefit decreased by $14,000, or 68.5%, with a benefit provision of $6,000 for the three months ended December 31, 2024, compared to a benefit provision of $20,000 the three months ended December 31, 2023. The decrease in the income tax benefit provision was due primarily to true-up the Company’s deferred tax provision. The tax benefit provision and effective tax rates reflect the Company’s nontaxable interest income in each period.

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

General. The Company reported a net loss of $322,000 for the nine months ended December 31, 2024, a $328,000 decrease from net income of $6,000 the nine months ended December 31, 2023. The decrease in net income was primarily due to a $15,000, or .5% ,decrease in net interest income, a $117,000, or 301.3% increase in the provision for credit losses and a $242,000, or 7.8%, increase in noninterest expenses, which were partially offset by a $43,000, or 106.4%, increase in the income tax benefit provision.

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Interest Income Interest income increased $167,000, or 3.9%, to $4.4 million for the nine months ended December 31, 2024 compared to $4.2 million for the nine months ended December 31, 2023. This increase was attributable to a $186,000, or 5.0%, increase in interest on loans receivable and a $14,000, or 10.9%, increase in interest on interest-bearing deposits and other assets, which were partially offset by a $33,000, or 8.1%, decrease in interest on investment securities.

The average yield on loans increased by 32 basis points to 4.78% for the nine months ended December 31, 2024 from 4.46% for the nine months ended December 31, 2023, while the average balance of loans decreased by $2.2 million, or 2.0%, during the nine months ended December 31, 2024 compared to the average balance for the nine months ended December 31, 2023. The increase in average yield on loans reflects the increase in the overall interest rate environment period-to-period. The increases in interest rates have provided higher yields on newly originated loans, as well as the Company’s adjustable-rate loans, which have adjusted upward and should continue to rise provided the higher interest rate environment persists.

The average balance of investment securities decreased $2.8 million to $29.8 million for the nine months ended December 31, 2024 from $32.6 million for the nine months ended December 31, 2023, while the average yield on investment securities increased by one basis point to 1.66% for the nine months ended December 31, 2024 from 1.65% for the nine months ended December 31, 2023.

Interest income on other interest-bearing deposits, comprised primarily of overnight deposits and stock in the Federal Home Loan Bank, increased $14,000 or 10.9%, for the nine months ended December 31, 2024, due to an increase in the average yield of 24 basis points, to 5.88% for the nine months ended December 31, 2024 from 5.64% for the nine months ended December 31, 2023, and an increase in the average balance of $195,000, or 6.5%. The increase in average yield was due to the increase in interest rates in the overall economy period-to-period.

Interest Expense Total interest expense increased $182,000, or 12.1%, to $1.7 million for the nine months ended December 31, 2024 from $1.5 million for the nine months ended December 31, 2023. Interest expense on deposits increased $271,000, or 24.0%, due primarily to an increase of 32 basis points in the average cost of deposits to 1.54% for the nine months ended December 31, 2024 from 1.22% for the nine months ended December 31, 2023, which was partially offset by a decrease of $1.8 million, or 1.5%, in the average balance of interest-bearing deposits to $121.2 million for the nine months ended December 31, 2024 from $123.0 million for the nine months ended December 31, 2023.

Interest expense on borrowings decreased $89,000 or 25.0%, to $267,000 for the nine months ended December 31, 2024, compared to $356,000 for the nine months ended December 31, 2023. The decrease was due to a $2.6 million, or 27.4%, decrease in the average balance outstanding, to $6.9 million for the nine months ended December 31, 2024 from $9.5 million for the nine months ended December 31, 2023, and by a 7 basis point decrease in the weighted-average rate, to 5.56% for the nine months ended December 30, 2024 compared to 5.63% for the nine months ended December 31, 2023.

Net Interest Income. Net interest income decreased $15,000, or 0.5%, to $2.7 million for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. An increase in the interest rate spread to 2.42% for the nine months ended December 31, 2024 from 2.37% for the nine months ended December 31, 2023, was partially offset by the average net interest earning assets decrease of $466,000 period-to-period. The net interest margin increased to 2.59% for the nine months ended December 31, 2024 from 2.52% for the nine months ended December 31, 2023. The interest rate spread and net interest margin were impacted by a series of interest rate increases in the economy during 2023 and 2022, and to a lesser extent, a recent 100 basis point reduction in the federal funds rate by the Federal Reserve Board.

Provision for Credit Losses. The company recorded an increase in the provision for credit losses of $117,000, or 301.3%, for for the nine months ended December 31, 2024 to a provision for credit losses of $78,000 compared to a recovery for credit losses of $39,000 recorded for the nine months ended December 31, 2023. The allowance for credit losses on loans was $915,000 at December 31, 2024, an increase of $60,000, or 7.0%, compared to $855,000 at March 31, 2024. The allowance for credit losses on off-balance sheet commitments was $77,000 at December 31, 2024, an

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increase of $21,000, or 37.5%, over the $56,000 total at March 31, 2024. The allowance for credit losses on loans represented 0.84% of total loans at December 31, 2024, and 0.79% at March 31, 2024.

Non-Interest Income. Noninterest income increased $3,000, or 1.0%, to $263,000 for the nine months ended December 31, 2024 from $260,000 for the nine months ended December 31, 2023. A $10,000, or 12.7%, increase in the cash surrender value of life insurance was partially offset by a $6,000, or 19.4%, decrease in other income.

Noninterest Expense. Noninterest expense increased $242,000, or 7.8%, to $3.3 million for the nine months ended December 31, 2024, compared to $3.1 million for the nine months ended December 31, 2023. The increase was due primarily to a $169,000 or 142.6%, increase in professional services, and an $82,000, or 5.3%, increase in salaries and employee benefits. This was partially offset by a $14,000 or 3.8%, decrease in other expenses, and a $9,000, or 12.9%, decrease in advertising.

The increase in professional services expense was due primarily to an increase in audit fees as the Company’s financial statements were reaudited in connection with the mutual-to-stock conversion transaction. The increase in salaries and employee benefits was due primarily to an increase in staffing related to the new branch office, compensation related to the new ESOP, and normal merit increases year-to-year.

Provision (Benefit) for Income Taxes. The Company’s income tax benefit provision increased by $43,000, or 106.4%, to a total of $83,000 for the nine months ended December 31, 2024, compared to a benefit provision of $40,000 during the nine months ended December 31, 2023. The increase in the income tax benefit provision was due primarily to a $371,000 increase in pretax loss. The tax benefit provision and effective tax rates reflect the Company’s nontaxable interest income in each period.

Management of Market Risk

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. The board of directors establishes policies and guidelines for managing interest rate risk. All directors participate in discussions during the regular board meetings evaluating the interest rate risk inherent in our assets and liabilities, and the level of risk that is appropriate. These discussions take into consideration our business strategy, operating environment, capital, liquidity and performance objectives consistent with the policy and guidelines approved by them.

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The board of directors delegates the responsibility for interest rate risk management to the asset/liability management committee consisting of the Company’s executive officers. The asset/liability management committee provides quarterly reports to the board of directors. If an exception to the interest rate risk policy tolerance limits arise, the asset/liability management committee documents and communicates it to the board of directors at its next scheduled meeting along with a recommended course of action to address the exception consistent with established policy and guidelines.

Our asset/liability management strategy attempts to manage the impact of changes in interest rates on net interest income, our primary source of earnings. Among the techniques we are using to manage interest rate risk are:

●

maintaining capital levels that exceed the thresholds for well-capitalized status under federal regulations;

●

maintaining a high level of liquidity;

●

growing our core deposit accounts;

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managing our investment securities portfolio so as to reduce the average maturity and effective life of the portfolio; and

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continuing to diversify our loan portfolio by adding more commercial real estate loans and commercial and industrial loans, which typically have shorter maturities and/or balloon payments.

●

By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.

We maintain a significant deposit account with a commercial customer. The asset/liability management committee monitors the status of the account at its monthly meeting and the account is segregated as a separate line item on the deposit reports reviewed by the committee. Furthermore, there is regular verbal communication between senior management and the depositor regarding any expected changes in the depositor’s business that could result in material inflows and outflow from the account in the short-term so that we may proactively manage any risks due to expected fluctuations in the account balance.

We maintain uninsured deposits that exceed the Federal Deposit Insurance Corporation insurance limit. Senior management reviews uninsured deposit balances monthly to manage any risks due to fluctuations in the balances of uninsured deposits. We do not maintain any internal policy limits on concentrations in uninsured deposits in total or by type of depositor. We may accept brokered deposits up to an internal policy limit of 15% of total assets from brokers approved by the board of directors. Before a broker is approved by the board of directors, we conduct financial analysis and due diligence on the broker. We had no brokered deposits at December 31, 2024.

Historically, we have not sold loans we have originated. We plan to develop the infrastructure necessary to sell one- to four-family residential mortgage loans, particularly longer term one- to four-family residential mortgage loans, to further help mitigate our interest rate risk exposure.

We have not engaged in hedging activities, such as engaging in futures or options. We do not anticipate entering into similar transactions in the future.

Economic Value of Equity. We compute amounts by which the net present value of our assets and liabilities (economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases instantaneously by 100, 200 and 300 basis point increments or decreases instantaneously by 100, 200 and 300 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

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The following table sets forth, as of December 31, 2024, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve. The estimated changes presented in the table are within the policy limits established by our board of directors except that the decrease in EVE at the positive 200 and 300 basis point levels exceeded policy limits.


At December 31, 2024
							EVE as a Percentage of
							Present
							Value of Assets ⁽³⁾
			Estimated Increase
			(Decrease) in						Increase
			EVE						(Decrease)
Change in Interest	Estimated								(basis
Rates (basis points) ⁽¹⁾	EVE ⁽²⁾		Amount		Percent		EVE Ratio ⁽⁴⁾		points)

			(Dollars in thousands)
300	$	14,076	$	(6,325)	(31.00)	%	11.48	%	(328)
200	$	16,248	$	(4,153)	(20.36)	%	12.73	%	(202)
100	$	18,842	$	(1,559)	(7.64)	%	14.18	%	(57)
Level	$	20,401		—		%	14.75	%	—
(100)	$	21,612	$	1,211	5.93	%	15.04	%	29
(200)	$	22,024	$	1,623	7.96	%	14.83	%	8
(300)	$	21,454	$	1,053	5.16	%	14.05	%	(70)

(1)	Assumes an immediate uniform change in interest rates at all maturities. One basis point equals 0.01%.

(2)	EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3)	Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4)	EVE Ratio represents EVE divided by the present value of assets.

The table above indicates that at December 31, 2024, we would have experienced a 20.36% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 7.96% increase in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.

Change in Net Interest Income. The table sets forth, as of December 31, 2024, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve. All estimated changes presented in the table are within the policy limits established by the Company’s board of directors.


At December 31, 2024
Change in Interest Rates	Net Interest Income Year 1
(basis points) ⁽¹⁾	Forecast		Year 1 Change from Level
		(Dollars in thousands)
300	$	4,016	(1.94)	%
200	$	4,077	(0.45)	%
100	$	4,163	1.63	%
Level	$	4,096	—
(100)	$	4,033	(1.54)	%
(200)	$	3,919	(4.32)	%
(300)	$	3,761	(8.18)	%

(1)	Assumes an immediate uniform change in interest rates at all maturities. One basis point equals 0.01%.

The table above indicates that as of December 31, 2024, we would have experienced a .45% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 4.32% decrease in net interest income in the event of an instantaneous 200 basis point decrease in market interest rate.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurement. Modeling changes in EVE and NII require making certain assumptions that may or may not reflect the manner in which

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actual yields and costs respond to changes in market interest rates. For instance, the EVE and NII tables presented above assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. However, the shape of the yield curve changes constantly and the value and pricing of our assets and liabilities, including our deposits, may not closely correlate with changes in market interest rates. Accordingly, although the EVE and NII tables may provide an indication of our interest rate risk exposure at a particular point in time and in the context of a particular yield curve, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on EVE and NII and will differ from actual results.

EVE and net interest NII calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures.

Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We also have the ability to borrow from the Federal Home Loan Bank of Cincinnati, the Federal Reserve Bank of Cleveland and a correspondent bank. At December 31, 2024, we had the ability to borrow up to $44.4 million from the Federal Home Loan Bank of Cincinnati under a collateral pledge facility. At December 31, 2024, we had $1.0 million of outstanding advances under this facility. At December 31, 2024, we had no outstanding borrowings from the Federal Reserve Bank of Cleveland but had the capacity to borrow up to $7.5 million. At December 31, 2024, we had no outstanding borrowings from the correspondent bank but had the capacity to borrow up to $4.5 million.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets depend on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. For the nine months ended December 31, 2024, cash flows from operating, investing, and financing activities resulted in a net decrease in cash and cash equivalents of $8.2 million. Net cash provided by investing activities amounted to $2.1 million, net cash used in financing activities amounted to $10.5 million, and net cash provided by operating activities amounted to $212,000.

We believe we maintain a strong liquidity position, and are committed to maintaining it. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

Monroe Federal Bancorp is a separate legal entity from Monroe Federal Savings and Loan Association Bank and must provide for its own liquidity to fund its operating expenses and other financial obligations. Its primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to Monroe Federal Bancorp is governed by applicable regulations. At December 31, 2024, Monroe Federal Bancorp (on an unconsolidated basis) had liquid assets of $1.5 million.

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At December 31, 2024, the Company was categorized as well-capitalized under regulatory capital guidelines. Management is not aware of any conditions or events since the most recent notification that would change our category. For further information, see note 6 to the notes to financial statements.

Off-Balance Sheet Arrangements. At December 31, 2024, we had $15.0 million of outstanding commitments, consisting of $72,000 in commitments to originate loans and $14.9 million of undisbursed funds on previously originated loans. At December 31, 2024, certificates of deposit that are scheduled to mature on or before December 31, 2025, totaled $22.0 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize Federal Home Loan Bank of Cincinnati advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information in Item 2 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Management of Market Risk” is incorporated in this Item 3 by reference.

Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of December 31, 2024. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended December 31, 2024, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II — Other Information

Item 1. Legal Proceedings

The Company is subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s financial condition or results of operations.

Item 1A. Risk Factors

Not applicable, as the Company is a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

Effective October 23, 2024, Monroe Federal Bancorp, Inc. (“Monroe Federal Bancorp”) completed its initial public stock offering in connection with the Company’s conversion from the mutual form of organization to the stock form of organization. Monroe Federal Bancorp sold 526,438 shares of its common stock at $10.00 per share pursuant to a Registration Statement on Form S-1, as amended (SEC File No. 333-280165), which was declared effective by the Securities and Exchange Commission on August 9, 2024. The stock offering resulted in gross offering proceeds of $5.3 million and net offering proceeds (after payment of offering expenses) of approximately $3.9 million. From the net offering proceeds, the Company lent $368,510 to the Company’s employee stock ownership plan (which used those funds to purchase 36,851 shares of Monroe Federal Bancorp common stock in the stock offering), invested $1.9 million in the Company as a capital contribution, and retained the remaining $1.6 million for general corporate purposes. Performance Trust Capital Partners, LLC served as Monroe Federal Bancorp’s marketing agent in connection with the stock offering.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended December 31, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement“ (as such term is defined in Item 408 of SEC Regulation S-K).

Item 6. Exhibits

3.1	Articles of Incorporation of Monroe Federal Bancorp, Inc. ⁽¹⁾

3.2	Bylaws of Monroe Federal Bancorp, Inc. ⁽²⁾

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101	The following materials for the quarter ended December 31, 2024, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Balance Sheets, (ii) Statements of Income, (iii) Statements of Comprehensive (Loss) Income, (iv) Statements of Changes in Equity Capital, (v) Statements of Cash Flows, and (vi) Notes to Financial Statements

104	Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)

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(1)	Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-280165), initially filed on June 13, 2024.

(2)	Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-280165), initially filed on June 13, 2024.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	MONROE FEDERAL BANCORP, INC.

		/s/ Lewis R. Renollet
Date: February 14, 2025		Lewis R. Renollet
		President and Chief Executive Officer (Duly Authorized Representative and Principal Executive Officer)

Date: February 14, 2025		/s/ Lisa M. Bird
		Lisa M. Bird
		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer