VWF Bancorp 10Q 2025 Q2 Quarterly report

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. 000-56459

VWF Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Maryland	88-1256373
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

976 South Shannon Street, Van Wert, Ohio	45891
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (419) 238-9662

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A

Securities registered pursuant to Section 12(b) of the Act: None


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 ☒

As of February 13, 2025, the Registrant had 1,951,765 shares of common stock issued, of which 1,911,413 are outstanding.

Table of Contents

VWF Bancorp, Inc.

Form 10-Q

Index


		Page
Part I. – Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of December 31, 2024 (unaudited) and June 30, 2024	3

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2024 and 2023 (unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended December 31, 2024 and 2023 (unaudited)	5

	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended December 31, 2024 and 2023 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2024 and 2023 (unaudited)	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

Item 4.	Controls and Procedures	34

Part II. – Other Information

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults upon Senior Securities	35

Item 4.	Mine Safety Disclosures	35

Item 5.	Other Information	35

Item 6.	Exhibits	36

	Signature Page	37

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Part I. – Financial Information

Item 1.Financial Statements

VWF Bancorp, Inc.

Condensed Consolidated Balance Sheets

December 31, 2024 and June 30, 2024


	December 31,		June 30,
	2024		2024
	(Unaudited)
Assets
Cash and due from banks	$	15,683,580	$	31,630,525
Available-for-sale debt securities		151,324,289		139,344,952
Loans, net of allowance for credit losses of $990,926 at December 31, 2024 and $772,969 June 30, 2024, respectively		148,515,448		126,391,092
Premises and equipment		3,044,902		2,261,260
Stock in correspondent banks		947,100		2,195,900
Bank owned life insurance		5,420,459		5,351,048
Accrued interest receivable		1,044,442		961,856
Right-of-use asset - operating lease		1,346,020		1,406,905
Other assets		1,863,359		1,710,583
Total assets	$	329,189,599	$	311,254,121

Liabilities and Shareholders' Equity

Liabilities
Deposits
Demand	$	43,874,287	$	26,493,048
Savings and money market		52,929,108		47,466,674
Time		192,864,993		135,350,608
Total deposits		289,668,388		209,310,330

Borrowings		—		62,000,000
Advances from borrowers		801,899		137,722
Operating lease liability		1,407,248		1,442,620
Accrued interest payable and other liabilities		1,577,505		1,815,617
Total liabilities		293,455,040		274,706,289

Commitments and Contingencies

Shareholders' Equity
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued		—		—
Common stock, $0.01 par value, 14,000,000 shares authorized, 1,911,413 and 1,914,965 outstanding at December 31, 2024 and June 30, 2024, respectively		19,229		19,229
Additional paid-in capital		18,114,342		18,006,472
Treasury stock, 40,352 and 36,800 shares at December 31, 2024 and June 30, 2024, respectively		(658,384)		(598,000)
Unearned ESOP		(1,307,588)		(1,346,047)
Retained earnings		19,944,445		22,843,782
Accumulated other comprehensive loss		(377,485)		(2,377,604)
Total shareholders' equity		35,734,559		36,547,832
Total liabilities and shareholders' equity	$	329,189,599	$	311,254,121

See Notes to Condensed Consolidated Financial Statements

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VWF Bancorp, Inc.

Condensed Consolidated Statements of Operations

For the Three and Six Months Ended December 31, 2024 and 2023


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2024		2023		2024		2023

	(Unaudited)				(Unaudited)
Interest Income
Loans	$	2,028,901	$	1,147,108	$	3,778,705	$	2,036,782
Investment securities		2,412,805		1,560,823		4,682,774		2,606,594
Interest-bearing deposits and other		175,168		133,325		297,697		278,625
Total interest income		4,616,874		2,841,256		8,759,176		4,922,001
Interest Expense
Deposits		2,606,073		1,019,634		4,729,086		1,722,967
Borrowings		149,685		535,879		545,517		828,860
Total interest expense		2,755,758		1,555,513		5,274,603		2,551,827
Net Interest Income		1,861,116		1,285,743		3,484,573		2,370,174

Provision for Credit Losses - Loans		152,365		90,233		217,957		219,255
Provision for Credit Losses - Off Balance Sheet Credit Exposure		95,769		3,432		118,822		3,075
Credit Loss Expense		248,134		93,665		336,779		222,330

Net Interest Income After Provision for Credit Losses		1,612,982		1,192,078		3,147,794		2,147,844
Noninterest Income
Bank owned life insurance		34,786		31,150		69,411		61,180
Other income		90,953		23,195		115,392		34,631
Total noninterest income		125,739		54,345		184,803		95,811
Noninterest Expense
Salaries and employee benefits		1,135,672		785,351		2,248,035		1,500,132
Directors fees		87,523		46,250		175,570		91,950
Occupancy and equipment		203,356		100,484		394,414		250,858
Data processing fees		178,268		147,236		377,669		231,505
Franchise taxes		68,383		41,196		136,765		82,391
FDIC insurance premiums		117,759		21,851		196,049		40,889
Professional services		171,529		219,516		417,202		415,462
Advertising and marketing		126,312		81,798		205,007		148,217
Loss on sale of investment securities		2,366,160		—		2,366,160		1,951
Foreclosed assets, net		—		(8,500)		—		(6,064)
Loss (Gain) on disposal of assets		(2,027)		—		7,188		(2,866)
Other		239,080		197,979		569,787		438,513
Total noninterest expense		4,692,015		1,633,161		7,093,846		3,192,938
Loss before income taxes		(2,953,294)		(386,738)		(3,761,249)		(949,283)
Provision for income taxes (benefits)		(686,675)		(87,416)		(861,912)		(211,102)
Net Loss	$	(2,266,619)	$	(299,322)	$	(2,899,337)	$	(738,181)

Basic Loss Per Share	$	(1.29)	$	(0.17)	$	(1.65)	$	(0.42)
Diluted Loss Per Share	$	(1.29)	$	(0.17)	$	(1.65)	$	(0.42)

See Notes to Condensed Consolidated Financial Statements

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VWF Bancorp, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three and Six Months Ended December 31, 2024 and 2023


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2024		2023		2024		2023

	(Unaudited)				(Unaudited)
Net loss	$	(2,266,619)	$	(299,322)	$	(2,899,337)	$	(738,181)
Other comprehensive income (loss):
Net unrealized gains (losses) on available-for-sale securities		(811,241)		681,859		165,636		71,701
Reclassification adjustment for losses included in net income		2,366,160		—		2,366,160		—
Tax (expense) benefit		(326,533)		(143,190)		(531,677)		(15,056)
Other comprehensive income		1,228,386		538,669		2,000,119		56,645
Comprehensive income (loss)	$	(1,038,233)	$	239,347	$	(899,218)	$	(681,536)

See Notes to Condensed Consolidated Financial Statements

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VWF Bancorp, Inc.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

For the Three and Six Months Ended December 31, 2024 and 2023


	Three Months Ended
											Accumulated
					Unearned						Other
	Common		Additional		ESOP		Retained		Treasury		Comprehensive		Shareholders'
	Stock		Paid-in Capital		Shares		Earnings		Stock, at Cost		Loss		Equity

		(Unaudited)
Balance at October 1, 2023	$	19,229	$	17,875,071	$	(1,461,422)	$	24,424,456	$	—	$	(3,333,383)	$	37,523,951
ESOP shares committed to be released		—		36,925		76,917		—		—		—		113,842
Net loss		—		—		—		(299,322)		—		—		(299,322)
Other comprehensive income		—		—		—		—		—		538,669		538,669
Balance at December 31, 2023	$	19,229	$	17,911,996	$	(1,384,505)	$	24,125,134	$	—	$	(2,794,714)	$	37,877,140

Balance at October 1, 2024	$	19,229	$	18,059,154	$	(1,326,817)	$	22,211,064	$	(598,000)	$	(1,605,871)	$	36,758,759
ESOP shares committed to be released		—		9,615		19,229		—		—		—		28,844
Net loss		—		—		—		(2,266,619)		—		—		(2,266,619)
Other comprehensive income		—		—		—		—		—		1,228,386		1,228,386
Purchase of treasury stock		—		—		—		—		(60,384)		—		(60,384)
Stock compensation expense		—		45,573		—		—		—		—		45,573
Balance at December 31, 2024	$	19,229	$	18,114,342	$	(1,307,588)	$	19,944,445	$	(658,384)	$	(377,485)	$	35,734,559

	Six Months Ended
											Accumulated
					Unearned						Other
	Common		Additional		ESOP		Retained		Treasury		Comprehensive		Shareholders'
	Stock		Paid-in Capital		Shares		Earnings		Stock, at Cost		Loss		Equity

		(Unaudited)
Balance at July 1, 2023	$	19,229	$	17,875,071	$	(1,461,422)	$	24,916,481	$	—	$	(2,851,359)	$	38,498,000
Cumulative-effect adjustment for adoption of ASU 2016-13		—		—		—		(53,166)		—		—		(53,166)
Balance at July 1, 2023, as adjusted for change in accounting principle		19,229		17,875,071		(1,461,422)		24,863,315		—		(2,851,359)		38,444,834
ESOP shares committed to be released		—		36,925		76,917		—		—		—		113,842
Net loss		—		—		—		(738,181)		—		—		(738,181)
Other comprehensive income		—		—		—		—		—		56,645		56,645
Balance at December 31, 2023	$	19,229	$	17,911,996	$	(1,384,505)	$	24,125,134	$	—	$	(2,794,714)	$	37,877,140

Balance at July 1, 2024	$	19,229	$	18,006,472	$	(1,346,047)	$	22,843,782	$	(598,000)	$	(2,377,604)	$	36,547,832
ESOP shares committed to be released		—		19,508		38,459		—		—		—		57,967
Net loss		—		—		—		(2,899,337)		—		—		(2,899,337)
Other comprehensive income		—		—		—		—		—		2,000,119		2,000,119
Purchase of treasury stock		—		—		—		—		(60,384)		—		(60,384)
Stock compensation expense		—		88,362		—		—		—		—		88,362
Balance at December 31, 2024	$	19,229	$	18,114,342	$	(1,307,588)	$	19,944,445	$	(658,384)	$	(377,485)	$	35,734,559

See Notes to Condensed Consolidated Financial Statements

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VWF Bancorp, Inc.

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended December 31, 2024 and 2023


	Six Months Ended
	December 31,
	2024		2023

	(Unaudited)
Operating Activities
Net loss	$	(2,899,337)	$	(738,181)
Items not requiring (providing) cash:
Depreciation and amortization		201,376		57,219
Amortization (accretion) of premiums and discounts, net		(118,751)		(145,195)
Deferred income taxes		(867,318)		123,066
Provision for credit losses		336,779		222,330
Loss on sale of investment securities		2,366,160		1,951
Net losses on sale of foreclosed assets		—		2,436
Interest capitalization on available-for-sale securities		(310,172)		—
Loss (Gain) on disposal of assets		7,188		(2,866)
Increase in cash surrender value of bank-owned life insurance		(69,411)		(61,180)
Stock and ESOP compensation expense		146,329		57,688
Changes in:
Accrued interest receivable		(82,586)		(317,784)
Operating lease liability		(35,372)		9,922
Other assets and liabilities		(174,069)		(55,982)
Net cash used in operating activities		(1,499,184)		(846,576)
Investing Activities
Purchases of available-for-sale securities		(48,787,757)		(86,183,713)
Proceeds from sales of available-for-sale securities		17,206,183		2,989,042
Proceeds from calls, maturities and paydowns of available-for-sale securities		20,196,796		27,851,825
Proceeds from sales of foreclosed assets		—		27,303
Net change in loans		(22,342,313)		(18,785,791)
Purchase of premises and equipment		(940,821)		(310,151)
Proceeds from sales of premises and equipment		9,500		—
Purchase of correspondent bank stock		(30,000)		(1,583,900)
Proceeds from redemption of correspondent bank stock		1,278,800		199,900
Net cash used in investing activities		(33,409,612)		(75,795,485)
Financing Activities
Net increase in deposit accounts		80,358,058		42,874,258
Proceeds from borrowings		31,101,000		74,500,000
Repayment of borrowings		(93,101,000)		(40,200,000)
Purchase of treasury stock		(60,384)		—
Net change in advances by borrowers		664,177		129,148
Net cash provided by financing activities		18,961,851		77,303,406

(Decrease) Increase in Cash and Cash Equivalents		(15,946,945)		661,345
Cash and Cash Equivalents, Beginning of Period		31,630,525		5,515,728
Cash and Cash Equivalents, End of Period	$	15,683,580	$	6,177,073

Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest on deposits and borrowings	$	5,772,309	$	2,302,732

Supplemental Disclosure of Noncash Financing Activities
ROU asset obtained in exchange for new operating lease liability	$	—	$	750,293
Loans transferred to OREO		—		70,943

See Notes to Condensed Consolidated Financial Statements

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

Principles of Consolidation

The consolidated financial statements include the accounts of VWF Bancorp, Inc. (“VWF Bancorp” or the “Company”) and its wholly owned subsidiary, GreenWay Bank (“Greenway” or the “Bank”), formerly known as Van Wert Federal Savings Bank. All intercompany transactions and balances have been eliminated in consolidation.

Nature of Operations

The Company, a Maryland corporation and registered savings and loan holding company, was incorporated by the Bank in February 2022, as part of the conversion of the Bank from the mutual to stock form of organization (the “Conversion”). The Conversion was completed on July 13, 2022. The Company’s shares trade on OTCQX under the symbol “VWFB”. In connection with the Conversion, the Company acquired 100% ownership of the Bank and the Company offered and sold shares of its common stock to certain depositors of the Bank, and others, including the Bank’s Employee Stock Ownership Plan.

Following the Conversion, voting rights in the Company are held and exercised exclusively by the shareholders of the Company. Deposit account holders continue to be insured by the FDIC. The Bank may not pay a dividend on its capital stock if the effect thereof would cause retained earnings to be reduced below regulatory capital requirements. In addition, the Company is subject to certain regulations related to the payment of dividends and the repurchase of its capital stock. The Conversion was accounted for as a change in corporate form with the historic basis of the Bank’s assets, liabilities and equity unchanged as a result.

The Bank, which is the sole subsidiary of the Company, is a federally chartered mutual thrift engaged primarily in the business of making residential mortgage loans, commercial loans and accepting deposits. Its operations are conducted through its offices located in Van Wert, Ohio and Fort Wayne, Indiana. The Bank faces competition from other financial institutions and is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities. The Bank has elected to operate as a “covered savings association” (“CSA”). A CSA has the same rights and privileges as a national bank that has its main office situated in the same location as the home office of the CSA and is subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations that would apply to such a national bank.

Basis of Presentation

The interim unaudited consolidated financial statements as of December 31, 2024, and for the three and six months ended December 31, 2024 and 2023, are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Such adjustments are the only adjustments contained in these unaudited consolidated financial statements. These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission and, therefore, certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been omitted. The results of operations for the three and six months ended December 31, 2024, are not necessarily indicative of the results to be achieved for the remainder of the year ending June 30, 2025, or any other period.

The accompanying consolidated financial statements have been derived from and should be read in conjunction with the audited financial statements as of and for the years ended June 30, 2024 and 2023 contained in the Company’s Form 10-K for the fiscal year ended June 30, 2024, filed with the Securities and Exchange Commission on September 27, 2024.

Significant Accounting Policies and Use of Estimates

Significant accounting policies are defined as those that are reflective of significant judgments and uncertainties and could reflect materially different results under different assumptions and conditions. Methodologies the Company uses when applying critical accounting policies and developing critical estimates are included in its Annual Report on Form 10-K for the year ended June 30, 2024. Our accounting policies for credit losses, investment securities, and income taxes comprise those that management believes involve the most critical estimates and aid in fully understanding and evaluating our reported financial results. There were no material changes from the significant accounting policies or critical accounting estimates previously disclosed in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024.

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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.

Debt Securities

Debt securities held by the Bank generally are classified and recorded in the consolidated financial statements as follows:

Classified as	Description	Recorded at
Held to maturity (HTM)	Certain debt securities that management has the positive intent and ability to hold to maturity	Amortized cost

Trading	Securities that are bought and held principally for the purpose of selling in the near term and, therefore, held for only a short period of time	Fair value, with changes in fair value included in earnings

Available for sale (AFS)	Securities not classified as HTM or trading	Fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities, identified as the call date as to premiums and maturity date as to discounts. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

The Company uses a current expected credit loss ("CECL") model to estimate the allowance for credit losses on debt securities. For available-for-sale debt securities in an unrealized loss position, management 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 available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically 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 cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any decline in fair value that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes.

Amortized cost excludes accrued interest receivable, which is included in Accrued Interest Receivable on the consolidated balance sheets. At December 31, 2024 and June 30, 2024, accrued interest receivable on available for sale securities was $453,000 and $467,000, respectively, and is excluded from the estimate of credit losses.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for credit losses and any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination

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costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

Accrued interest receivable on the Company’s loans, which is included in Accrued Interest Receivable on the consolidated balance sheets at December 31, 2024 and June 30, 2024 was $546,000 and $457,000, respectively, and is excluded from the estimate of credit losses.

The past due status of a loan is based on the contractual terms in the loan agreement. The accrual of interest on a loan is discontinued when the loan becomes 90 days delinquent or whenever management believes the borrower will be unable to make payments as they become due. When loans are placed on nonaccrual status or charged off, all unpaid accrued interest is reversed against interest income. The interest on these loans is subsequently accounted for on the cash basis if collection of the remaining recorded investment in the loan is still expected or using the cost-recovery method when collection of the remaining recorded investment is in doubt. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

For all loan portfolio segments except residential and consumer loans, the Bank promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Bank charges-off residential and consumer loans, or portions thereof, when the Bank reasonably determines the amount of the loss. The Bank adheres to delinquency thresholds established by applicable regulatory guidance to determine the charge-off timeframe for these loans. Loans at these delinquency thresholds for which the Bank can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.

For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Bank requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

When cash payments are received on impaired loans in each loan class, the Bank records the payment as interest income unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the principal balance of the loan.

Allowance for Credit Losses

The allowance for credit losses on loans is a valuation allowance that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the Company's loan portfolio. The allowance for credit losses on loans is established through provisions for credit losses charged against earnings. When available information confirms that specific loans, or portions thereof, are uncollectible, these amounts are charged against the allowance for credit losses on loans, and subsequent recoveries, if any, are credited to the allowance for credit losses on loans.

The Company uses a current expected credit loss ("CECL") model to estimate the allowance for credit losses on loans. The CECL model considers historical loss rates and other qualitative adjustments, as well as a new forward-looking component that considers reasonable and supportable forecasts over the expected life of each loan. To develop the allowance for credit losses on

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loans estimate under the CECL model, the Company segments the loan portfolio into loan pools based on loan type and similar credit risk elements; performs an individual evaluation of certain collateral dependent and other credit-deteriorated loans; calculates the historical loss rates for the segmented loan pools; applies the loss rates over the calculated life of the collectively evaluated loan pools; adjusts for forecasted macro-level economic conditions and other anticipated changes in credit quality; and determines qualitative adjustments based on factors and conditions unique to the Company's loan portfolio.

Under the CECL model, loans that do not share similar risk characteristics with loans in their respective pools are individually evaluated for expected credit losses and are excluded from the collectively evaluated loan credit loss estimates. Management individually evaluates nonaccrual loans and other loans with evidence of credit deterioration. For loans individually evaluated, a specific reserve is estimated based on either the fair value of collateral or the discounted value of expected future cash flows.

A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. For collateral dependent loans, expected credit losses are based on the fair value of the collateral as of the date of the consolidated balance sheet, with consideration for estimated selling costs if satisfaction of the loan depends on the sale of the collateral.

Management evaluates all collectively evaluated loan pools using the weighted average remaining life ("WARM") methodology. The WARM methodology applies calculated quarterly net loss rates to collectively evaluated loan pools on a periodic basis based on the estimated remaining life of each pool. The estimated losses under the remaining life methodology are then adjusted for qualitative factors deemed appropriate by management.

The estimated remaining life of each pool is determined using annual, pool-based attrition measurements using the Company's loan-level historical data. The Company's historical call report data is utilized for historical loss rate calculations, and the lookback period for each collectively evaluated loan pool is determined by management based upon management’s evaluation of what historical data is most reflective indicator of expected losses. Forecasted historical loss rates are calculated using the Company's historical data based on the lookback, forecast, and reversion period inputs by management. Management elected to utilize an 8-quarter forecast period, with immediate reversion to historical losses after the forecast period.

The quantitative analysis described above is supplemented with other qualitative factors based on the risks present for each collectively evaluated loan pool. These qualitative factors include: changes in lending policies and practices; changes in international, national, regional, and local business conditions; changes in the nature and volume of the portfolio and in terms of loans; changes in lending staff; changes in the volume and severity of past due loans; changes in the quality of the Company’s loan review system; changes in the value of underlying collateral; existence and effect of any concentrations of credit risk and changes in the levels of concentrations; and the effect of other external factors such as competition.

In addition to the allowance for credit losses on loans, the Company maintains a reserve for unfunded loan commitments at a level that management believes is adequate to absorb estimated probable credit losses over the contractual terms of the Company's noncancellable loan commitments. The reserve for unfunded commitments, which is included in Accrued interest payable and other liabilities on the accompanying consolidated balance, is established through provisions for credit losses charged against earnings.

Unfunded loan commitments are segmented into the same pools used for estimating the allowance for credit losses on loans. Estimated credit losses on unfunded loan commitments are based on the same methodology, inputs, and assumptions used to estimate credit losses on collectively evaluated loans, adjusted for estimated funding probabilities. The estimated funding probabilities represent management's estimate of the amount of the current unfunded loan commitment that will be funded over the remaining contractual life of the commitment and is based on historical data, when available, or as determined by management when historical data is not available.

The Company may modify loans to borrowers experiencing financial difficulty and grant certain concessions that include principal forgiveness, a term extension, an other-than-insignificant payment delay, an interest rate reduction, or a combination of these concessions. An assessment of whether the borrower is experiencing financial difficulty is made at the time of the loan modification. Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

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Note 2:Recent Accounting Pronouncements

Accounting Standards Updates Issued, but Not Adopted

Income Taxes: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU add specific requirements for income tax disclosures to improve transparency and decision usefulness. The guidance in ASU 2023-09 requires that public business entities disclose specific categories in the income tax rate reconciliation and provide additional qualitative information for reconciling items that meet a quantitative threshold. In addition, the amendments in ASU 2023-09 require that all entities disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by individual jurisdictions. The ASU also includes other disclosure amendments related to the disaggregation of income tax expense between federal, state and foreign taxes. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis and retrospective application is permitted.

Segment Reporting: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. These amendments require, among other things, that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 208. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all periods presented in the financial statements.

Note 3:Debt Securities

Debt securities held by the Company generally are classified and recorded in the financial statements as available for sale, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss).

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


			Gross		Gross
	Amortized		Unrealized		Unrealized		Approximate
	Cost		Gains		Losses		Fair Value

	(Unaudited)
Available-for-sale Securities:
December 31, 2024
Mortgage-backed Government
Sponsored Enterprises (GSEs)	$	17,429,944	$	63,550	$	69,913	$	17,423,581
Collateralized mortgage obligations (CMOs)		129,622,174		392,770		674,676		129,340,268
Subordinated debt		4,750,000		—		189,560		4,560,440
	$	151,802,118	$	456,320	$	934,149	$	151,324,289

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			Gross		Gross
	Amortized		Unrealized		Unrealized		Approximate
	Cost		Gains		Losses		Fair Value
Available-for-sale Securities:
June 30, 2024
U.S. Government agencies	$	6,000,000	$	—	$	285,910	$	5,714,090
Mortgage-backed Government
Sponsored Enterprises (GSEs)		29,387,507		49,792		1,676,887		27,760,412
Collateralized mortgage obligations (CMOs)		99,668,482		293,565		459,194		99,502,853
Subordinated debt		2,750,000		—		212,045		2,537,955
State and political subdivisions		4,548,588		—		718,946		3,829,642
	$	142,354,577	$	343,357	$	3,352,982	$	139,344,952

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


	December 31, 2024
	Available-for-sale
	Amortized		Fair
	Cost		Value

	(Unaudited)
Within one year	$	—	$	—
One to five years		—		—
Five to ten years		4,750,000		4,560,440
After ten years		—		—
		4,750,000		4,560,440
Mortgage-backed GSE's and CMO's		147,052,118		146,763,849
Totals	$	151,802,118	$	151,324,289

The carrying value of securities pledged as collateral, to secure public deposits, borrowings, and for other purposes, was $81,553,000 and $54,822,000 at December 31, 2024 and June 30, 2024, respectively.

During the three and six months ended December 31, 2024, proceeds from sales of securities totaled $17,206,000. Such sales resulted in realized losses of $2,366,000. During the six months ended December 31, 2023, proceeds from sales of securities totaled $2,989,000. Such sales resulted in realized losses of $2,000. There were no such sales during the three months ended December 31, 2023.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at December 31, 2024 and June 30, 2024 was $66,188,000 and $85,595,000, respectively, which is approximately 44 percent and 61 percent, respectively, of the fair value of the Company’s total investment portfolio. Management believes that all unrealized losses at December 31, 2024 and June 30, 2024 resulted from temporary changes in interest rates and current market conditions and not a result of credit deterioration.

Information related to unrealized losses in the investment portfolio as of December 31, 2024 and June 30, 2024 is summarized as follows:

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	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

	(Unaudited)
Mortgage-backed Government
Sponsored Enterprises (GSEs)	$	2,612,991	$	8,889	$	3,063,702	$	61,024	$	5,676,693	$	69,913
Collateralized mortgage obligations		46,176,818		508,853		11,774,489		165,823		57,951,307		674,676
Subordinated debt		1,688,750		61,250		871,690		128,310		2,560,440		189,560
Total available-for-sale securities	$	50,478,559	$	578,992	$	15,709,881	$	355,157	$	66,188,440	$	934,149


	June 30, 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
U.S. Government agencies	$	—	$	—	$	5,714,090	$	285,910	$	5,714,090	$	285,910
Mortgage-backed Government
Sponsored Enterprises (GSEs)		2,910,227		3,516		13,077,539		1,673,371		15,987,766		1,676,887
Collateralized mortgage obligations		55,863,004		418,582		1,662,871		40,612		57,525,875		459,194
Subordinated debt		1,688,750		61,250		849,205		150,795		2,537,955		212,045
State and political subdivisions		—		—		3,829,642		718,946		3,829,642		718,946
Total available-for-sale securities	$	60,461,981	$	483,348	$	25,133,347	$	2,869,634	$	85,595,328	$	3,352,982

Subordinated Debt

Unrealized losses on these securities have not been recognized into income 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 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.

Mortgage-backed GSE’s, Collateralized Mortgage Obligations

Unrealized losses on these securities have not been recognized into income because the unrealized losses were caused by changes in interest rates and illiquidity, and not credit quality. The Company has 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 and the Company expects to recover the amortized cost basis over the term of the securities.

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Note 4:Loans and Allowance for Credit Losses

Categories of loans at December 31, 2024 and June 30, 2024 include:


	December 31,		June 30,
	2024		2024
		(Unaudited)
Real estate loans:
Commercial	$	27,808,261	$	19,724,941
Residential		74,028,147		69,826,726
Multifamily		642,881		659,257
Agricultural		4,104,394		4,213,660
Construction and land		26,249,385		17,644,710
Home equity line of credit (HELOC)		2,284,378		1,622,877
Commercial and industrial		15,227,430		14,879,004
Consumer		983,855		955,415
Total loans		151,328,731		129,526,590
Less:
Undisbursed loans in process		1,727,364		2,222,582
Net deferred loan fees		94,993		139,947
Allowance for credit losses		990,926		772,969
Net loans	$	148,515,448	$	126,391,092

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


	Balance		Provision (credit)						Balance
	September 30, 2024		for loan losses		Charge-offs		Recoveries		December 31, 2024

	(Unaudited)
Real estate loans:
Commercial	$	212,477	$	97,046	$	—	$	—	$	309,523
Residential		181,293		3,858		—		—		185,151
Multifamily		1,254		(10)		—		—		1,244
Agricultural		12,136		(291)		—		—		11,845
Construction and land		253,894		35,613		—		—		289,507
HELOC		3,456		817		—		—		4,273
Commercial and industrial		171,803		16,267		—		—		188,070
Consumer		2,248		(935)		—		—		1,313
Total	$	838,561	$	152,365	$	—	$	—	$	990,926

Unfunded loan commitments and letters of credit	$	199,406	$	95,769	$	—	$	—	$	295,175


	Balance		Provision (credit)						Balance
	September 30, 2023		for loan losses		Charge-offs		Recoveries		December 31, 2023

	(Unaudited)
Real estate loans:
Commercial	$	40,492	$	38,845	$	—	$	—	$	79,337
Residential		214,574		(6,210)		—		—		208,364
Multifamily		1,757		(202)		—		—		1,555
Agricultural		15,791		(2,261)		—		—		13,530
Construction and land		73,004		48,298		—		—		121,302
HELOC		1,253		868		—		—		2,121
Commercial and industrial		90,448		(1,484)		—		—		88,964
Consumer		1,920		12,379		—		—		14,299
Total	$	439,239	$	90,233	$	—	$	—	$	529,472

Unfunded loan commitments and letters of credit	$	20,146	$	3,432	$	—	$	—	$	23,578

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	Balance		Provision (credit)						Balance
	June 30, 2024		for loan losses		Charge-offs		Recoveries		December 31, 2024

	(Unaudited)
Real estate loans:
Commercial	$	206,959	$	102,564	$		$		$	309,523
Residential		174,613		10,538		—		—		185,151
Multifamily		1,275		(31)		—		—		1,244
Agricultural		12,161		(316)		—		—		11,845
Construction and land		190,594		98,913		—		—		289,507
HELOC		3,051		1,222		—		—		4,273
Commercial and industrial		183,011		5,059		—		—		188,070
Consumer		1,305		8		—		—		1,313
Total	$	772,969	$	217,957	$	—	$	—	$	990,926

Unfunded loan commitments and letters of credit	$	176,353	$	118,822	$	—	$	—	$	295,175


	Balance		Adoption of		Provision (credit)						Balance
	June 30, 2023		ASC 326		for loan losses		Charge-offs		Recoveries		December 31, 2023

	(Unaudited)
Real estate loans:
Commercial	$	27,379	$	(2,203)	$	54,161	$	—	$	—	$	79,337
Residential		167,714		41,930		(1,280)		—		—		208,364
Multifamily		1,786		(9)		(222)		—		—		1,555
Agricultural		17,091		(1,196)		(2,365)		—		—		13,530
Construction and land		12,491		10,144		98,667		—		—		121,302
HELOC		34,779		(33,888)		1,230		—		—		2,121
Commercial and industrial		882		31,562		56,520		—		—		88,964
Consumer		1,300		455		12,544		—		—		14,299
Total	$	263,422	$	46,795	$	219,255	$	—	$	—	$	529,472

Unfunded loan commitments and letters of credit	$	—	$	20,503	$	3,075	$	—	$	—	$	23,578

The reserve for unfunded loan commitments is included in accrued interest payable and other liabilities on the accompanying consolidated balance sheets.

The Company has adopted a standard loan grading system for all non-residential real estate loans loans. Loan grades are numbered 1 through 8. Grades 1 through 3 are considered satisfactory grades. The grade of 4, Monitor, represents loans requiring more than normal attention. The grade of 5, Special Mention, represents loans of lower quality and is considered criticized. The grades of 6, or Substandard, and 7, Doubtful, refer to loans that are classified.

Pass (1-3) Loans of reasonable credit strength and repayment ability providing a satisfactory credit risk.

Monitor (4)

Loans requiring more than normal attention resulting from underwriting weaknesses as to repayment terms, loan structure, financial and/or documentation exceptions.

Special Mention (5)

Loans which may include the characteristics of the Monitor classification, problems that need to be addressed by both the lender and the borrower.

Substandard (6)

Loans which may include the characteristics of the Special Mention classification, but also reflects financial and other problems that might result in some loss at a future date and/or reliance upon collateral for ultimate collection.

Doubtful (7) Loans for which some loss is anticipated, but the timing and amount of the loss is not definite.

Loss (8) Loans considered non-bankable assets which may or may not have some salvage value.

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Internally prepared loan gradings for commercial loans are updated at least annually. Residential real estate and hom equity lines of credit are generally evaluated based on whether or not the loan is performing according to the contractual terms of the loans as of the consolidated balance sheet date.

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

Commercial Real Estate

These loans include commercial real estate and 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.

Residential Real Estate

These loans include first liens and junior liens on 1-4 family residential real estate (both owner and non-owner occupied). 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.

Multifamily

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 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.

Agriculture Real Estate

These loans include loans on farm ground, vacant land for development and loans on commercial real estate. The main risks are changes in the value of the collateral and changes in the economy or borrowers’ business operations. 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 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. Commercial and industrial loans considered collateral dependent are primarily secured by accounts receivable, inventory, equipment and real estate.

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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. Some consumer loans are unsecured and have no underlying collateral.

The following shows the amortized cost of loans, segregated by portfolio segment, credit quality rating and year of origination as of December 31, 2024, and gross charge-offs for the six months ended December 31, 2024:


													Revolving Loans
													Amortized
	2025		2024		2023		2022		2021		Prior		Cost Basis		Total

	(Unaudited)
December 31, 2024
Commercial
Pass (1-3)	$	5,534,732	$	16,601,161	$	1,091,835	$	1,419,550	$	310,836	$	2,135,309	$	714,838	$	27,808,261
Monitor (4)		—		—		—		—		—		—		—		—
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		—		—		—
Doubtful (7)		—		—		—		—		—		—		—		—
Total commercial	$	5,534,732	$	16,601,161	$	1,091,835	$	1,419,550	$	310,836	$	2,135,309	$	714,838	$	27,808,261
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Multifamily
Pass (1-3)	$	—	$	—	$	—	$	642,881	$	—	$	—	$	—	$	642,881
Monitor (4)		—		—		—		—		—		—		—		—
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		—		—		—
Doubtful (7)		—		—		—		—		—		—		—		—
Total multifamily	$	—	$	—	$	—	$	642,881	$	—	$	—	$	—	$	642,881
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Agricultural
Pass (1-3)	$	—	$	629,495	$	1,040,267	$	824,713	$	612,200	$	782,498	$	—	$	3,889,173
Monitor (4)		—		—		—		—		—		215,221		—		215,221
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		—		—		—
Doubtful (7)		—		—		—		—		—		—		—		—
Total agricultural	$	—	$	629,495	$	1,040,267	$	824,713	$	612,200	$	997,719	$	—	$	4,104,394
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction and land
Pass (1-3)	$	3,129,574	$	17,923,766	$	5,145,029	$	16,028	$	—	$	—	$	—	$	26,214,397
Monitor (4)		—		—		—		—		—		—		—		—
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		34,988		—		34,988
Doubtful (7)		—		—		—		—		—		—		—		—
Total construction and land	$	3,129,574	$	17,923,766	$	5,145,029	$	16,028	$	—	$	34,988	$	—	$	26,249,385
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial
Pass (1-3)	$	3,379,406	$	11,239,461	$	123,566	$	—	$	—	$	—	$	—	$	14,742,433
Monitor (4)		484,997		—		—		—		—		—		—		484,997
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		—		—		—
Doubtful (7)		—		—		—		—		—		—		—		—
Total commercial and industrial	$	3,864,403	$	11,239,461	$	123,566	$	—	$	—	$	—	$	—	$	15,227,430
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer
Pass (1-3)	$	197,054	$	446,319	$	224,937	$	91,674	$	12,374	$	11,497	$	—	$	983,855
Monitor (4)		—		—		—		—		—		—		—		—
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		—		—		—
Doubtful (7)		—		—		—		—		—		—		—		—
Total consumer	$	197,054	$	446,319	$	224,937	$	91,674	$	12,374	$	11,497	$	—	$	983,855
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential
Performing	$	7,512,210	$	9,576,577	$	5,373,840	$	14,252,448	$	15,888,542	$	20,631,920	$	266,739	$	73,502,276
Nonperforming		—		—		143,835		45,599		111,210		225,227		—		525,871

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Total residential	$	7,512,210	$	9,576,577	$	5,517,675	$	14,298,047	$	15,999,752	$	20,857,147	$	266,739	$	74,028,147
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
HELOC
Performing	$	714,981	$	1,121,158	$	36,417	$	153,062	$	72,771	$	174,322	$	—	$	2,272,711
Nonperforming		—		—		—		11,667		—		—		—		11,667
Total HELOC	$	714,981	$	1,121,158	$	36,417	$	164,729	$	72,771	$	174,322	$	—	$	2,284,378
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

The following shows the amortized cost of loans, segregated by portfolio segment, credit quality rating and year of origination as of June 30, 2024, and gross charge-offs for the year ended June 30, 2024:


													Revolving Loans
													Amortized
	2024		2023		2022		2021		2020		Prior		Cost Basis		Total
June 30, 2024
Commercial
Pass (1-3)	$	14,580,611	$	1,093,719	$	1,456,599	$	336,694	$	295,178	$	1,962,140	$	—	$	19,724,941
Monitor (4)		—		—		—		—		—		—		—		—
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		—		—		—
Doubtful (7)		—		—		—		—		—		—		—		—
Total commercial	$	14,580,611	$	1,093,719	$	1,456,599	$	336,694	$	295,178	$	1,962,140	$	—	$	19,724,941
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Multifamily
Pass (1-3)	$	—	$	—	$	659,257	$	—	$	—	$	—	$	—	$	659,257
Monitor (4)		—		—		—		—		—		—		—		—
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		—		—		—
Doubtful (7)		—		—		—		—		—		—		—		—
Total multifamily	$	—	$	—	$	659,257	$	—	$	—	$	—	$	—	$	659,257
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Agricultural
Pass (1-3)	$	627,343	$	1,087,542	$	827,774	$	615,048	$	278,000	$	566,671	$	—	$	4,002,378
Monitor (4)		—		—		—		—		—		211,282		—		211,282
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		—		—		—
Doubtful (7)		—		—		—		—		—		—		—		—
Total agricultural	$	627,343	$	1,087,542	$	827,774	$	615,048	$	278,000	$	777,953	$	—	$	4,213,660
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction and land
Pass (1-3)	$	12,732,392	$	4,855,874	$	20,212	$	—	$	—	$	—	$	—	$	17,608,478
Monitor (4)		—		—		—		—		—		—		—		—
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		36,232		—		36,232
Doubtful (7)		—		—		—		—		—		—		—		—
Total construction and land	$	12,732,392	$	4,855,874	$	20,212	$	—	$	—	$	36,232	$	—	$	17,644,710
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial
Pass (1-3)	$	14,429,210	$	161,367	$	—	$	288,427	$	—	$	—	$	—	$	14,879,004
Monitor (4)		—		—		—		—		—		—		—		—
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		—		—		—
Doubtful (7)		—		—		—		—		—		—		—		—
Total commercial and industrial	$	14,429,210	$	161,367	$	—	$	288,427	$	—	$	—	$	—	$	14,879,004
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer
Pass (1-3)	$	493,671	$	287,793	$	132,845	$	17,597	$	11,714	$	11,795	$	—	$	955,415
Monitor (4)		—		—		—		—		—		—		—		—
Special Mention (5)		—		—		—		—		—		—		—		—
Substandard (6)		—		—		—		—		—		—		—		—
Doubtful (7)		—		—		—		—		—		—		—		—
Total consumer	$	493,671	$	287,793	$	132,845	$	17,597	$	11,714	$	11,795	$	—	$	955,415
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential
Performing	$	9,835,966	$	5,704,514	$	14,362,807	$	16,673,325	$	7,723,487	$	14,614,432	$	410,032	$	69,324,563
Nonperforming		—		145,011		46,674		—		—		310,478		—		502,163

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Total residential	$	9,835,966	$	5,849,525	$	14,409,481	$	16,673,325	$	7,723,487	$	14,924,910	$	410,032	$	69,826,726
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
HELOC
Performing	$	1,231,286	$	34,140	$	145,393	$	39,737	$	51,479	$	120,842	$	—	$	1,622,877
Nonperforming		—		—		—		—		—		—		—		—
Total HELOC	$	1,231,286	$	34,140	$	145,393	$	39,737	$	51,479	$	120,842	$	—	$	1,622,877
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

The following tables present the Company’s loan portfolio aging analysis of the recorded investment in loans as of December 31, 2024 and June 30, 2024:


	December 31, 2024
					Greater Than								Total Loans >
	30-59 Days		60-89 Days		90 Days		Total				Total Loans		90 Days &
	Past Due		Past Due		Past Due		Past Due		Current		Receivable		Accruing

	(Unaudited)
Real estate loans:
Commercial	$	215,844	$	—	$	—	$	215,844	$	27,592,417	$	27,808,261	$	—
Residential		1,203,398		594,685		132,613		1,930,696		72,097,451		74,028,147		—
Multifamily		—		—		—		—		642,881		642,881		—
Agricultural		—		—		—		—		4,104,394		4,104,394		—
Construction and land		34,988		—		—		34,988		26,214,397		26,249,385		—
HELOC		99,383		—		11,667		111,050		2,173,328		2,284,378		—
Commercial and industrial		—		—		—		—		15,227,430		15,227,430		—
Consumer		11,497		14,437		2,700		28,634		955,221		983,855		—
Total	$	1,565,110	$	609,122	$	146,980	$	2,321,212	$	149,007,519	$	151,328,731	$	—


	June 30, 2024
					Greater Than								Total Loans >
	30-59 Days		60-89 Days		90 Days		Total				Total Loans		90 Days &
	Past Due		Past Due		Past Due		Past Due		Current		Receivable		Accruing
Real estate loans:
Commercial	$	—	$	—	$	—	$	—	$	19,724,941	$	19,724,941	$	—
Residential		559,332		87,754		71,729		718,815		69,107,911		69,826,726		—
Multifamily		—		—		—		—		659,257		659,257		—
Agricultural		—		—		—		—		4,213,660		4,213,660		—
Construction and land		36,232		—		—		36,232		17,608,478		17,644,710		—
HELOC		—		—		—		—		1,622,877		1,622,877		—
Commercial and industrial		—		—		—		—		14,879,004		14,879,004		—
Consumer		1,528		3,522		—		5,050		950,365		955,415		—
Total	$	597,092	$	91,276	$	71,729	$	760,097	$	128,766,493	$	129,526,590	$	—

Information regarding collateral dependent loans as of December 31, 2024 and June 30, 2024 is as follows:


	As of December 31, 2024
							Related
	Real Estate		Other		Total		Allowance

	(Unaudited)
Real estate
Commercial	$	—	$	—	$	—	$	—
Residential		525,871		—		525,871		—
Multifamily		—		—		—		—
Agricultural		—		—		—		—
Construction and land		34,988		—		34,988		—
Home equity line of credit (HELOC)		11,667		—		11,667		—
Commercial and industrial		—		—		—		—
Consumer		—		38,726		38,726		—
Totals	$	572,526	$	38,726	$	611,252	$	—

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	As of June 30, 2024
							Related
	Real Estate		Other		Total		Allowance
Real estate
Commercial	$	—	$	—	$	—	$	—
Residential		502,163		—		502,163		—
Multifamily		—		—		—		—
Agricultural		—		—		—		—
Construction and land		36,232		—		36,232		—
Home equity line of credit (HELOC)		—		—		—		—
Commercial and industrial		—		—		—		—
Consumer		—		15,672		15,672		—
Totals	$	538,395	$	15,672	$	554,067	$	—

Information regarding nonaccrual loans as of December 31, 2024 and June 30, 2024 is as follows:


	As of December 31, 2024
											Amortized Cost
	Nonaccrual Loans		Nonaccrual Loans				Total Nonaccrual		Interest Income		Basis of Loans 90+
	With No Allowance		With an Allowance		Total Nonaccrual		Loans at Beginning		Recognized on		Days Past Due
	for Credit Losses		for Credit Losses		Loans		of Year		Nonaccrual Loans		Not on Nonaccrual

	(Unaudited)
Real estate loans:
Commercial	$	—	$	—	$	—	$	—	$	—	$	—
Residential		525,871		—		525,871		502,163		—		—
Multifamily		—		—		—		—		—		—
Agricultural		—		—		—		—		—		—
Construction and land		34,988		—		34,988		36,232		—		—
Home equity line of credit (HELOC)		11,667		—		11,667		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer		38,726		—		38,726		15,672		—		—
Total	$	611,252	$	—	$	611,252	$	554,067	$	—	$	—


	As of June 30, 2024
											Amortized Cost
	Nonaccrual Loans		Nonaccrual Loans				Total Nonaccrual		Interest Income		Basis of Loans 90+
	With No Allowance		With an Allowance		Total Nonaccrual		Loans at Beginning		Recognized on		Days Past Due
	for Credit Losses		for Credit Losses		Loans		of Year		Nonaccrual Loans		Not on Nonaccrual
Real estate loans:
Commercial	$	—	$	—	$	—	$	—	$	—	$	—
Residential		502,163		—		502,163		304,096		—		—
Multifamily		—		—		—		—		—		—
Agricultural		—		—		—		—		—		—
Construction and land		36,232		—		36,232		—		—		—
Home equity line of credit (HELOC)		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer		15,672		—		15,672		—		—		—
Total	$	554,067	$	—	$	554,067	$	304,096	$	—	$	—

During the six months ended December 31, 2024 and 2023, respectively, there were no significant modifications of loans to borrowers who were experiencing financial difficulty. The Company did not provide any modifications under these circumstances to borrowers.

Note 5:Capital and Regulatory Matters

Prior to September 30, 2024, the Bank had a community bank leverage ratio (CBLR) framework election in effect. Effective for the quarter ended September 30, 2024, the Bank opted out of that election.

The Bank 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 financial statements of the Company and the Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that

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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 Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, the Bank’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 Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, common equity Tier 1 capital to total risk-weighted assets and of Tier 1 capital to average assets. Management believes, as of December 31, 2024, that the Bank meets all capital adequacy requirements to which it is subject.

At December 31, 2024, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since the most recent notification that management believes have changed the Bank’s prompt corrective action category. The following table presents actual and required capital ratios for the Bank.


						To be Well Capitalized Under
	Actual					the Prompt Corrective Action Provision
(Dollars in thousands)	Amount		Ratio			Amount		Ratio
As of December 31, 2024
Common Equity Tier 1 Capital	$	32,540		17.34	%	$	12,200		>6.5	%
Tier 1 Risk-Based Capital		32,540		17.34			15,016		>8.0
Total Risk-Based Capital		33,826		18.02			18,770		>10.0
Tier 1 Leverage Capital		32,540		9.69			16,789		>5.0

On November 13, 2019, the federal regulators finalized and adopted a regulatory capital rule 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 percent, 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 Bank’s CBLR was 12.11 percent as of June 30, 2024. Management believes, as of June 30, 2024, that the Company met all capital adequacy requirements to which it is subject.

Note 6:

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.

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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 June 30, 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 (Unaudited)
Mortgage-backed GSEs	$	17,423,581	$	—	$	17,423,581	$	—
Collateralized mortgage obligations		129,340,268		—		129,340,268		—
Subordinated debt		4,560,440		—		4,560,440		—

June 30, 2024
U.S. Government agencies	$	5,714,090	$	—	$	5,714,090	$	—
Mortgage-backed GSEs		27,760,412		—		27,760,412		—
Collateralized mortgage obligations		99,502,853		—		99,502,853		—
Subordinated debt		2,537,955		—		2,537,955		—
State and political subdivisions		3,829,642		—		3,829,642		—

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 six months ended December 31, 2024 and for the year ended June 30, 2024.

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.

The estimated fair values of the Company’s financial instruments not carried at fair value on the consolidated balance sheets at December 31, 2024 and June 30, 2024 are as follows:

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	Carrying		Fair		Fair Value Measurements Using
	Value		Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2024 (Unaudited)
Financial assets:
Cash and due from banks	$	15,683,580	$	15,683,580	$	15,683,580	$	—	$	—
Loans, net		148,515,448		139,197,447		—		—		139,197,447
Stock in correspondent banks		947,100		947,100		—		947,100		—
Accrued interest receivable		1,044,442		1,044,442		1,044,442		—		—

Financial liabilities:
Deposits		289,668,388		289,718,395		96,803,395		—		192,915,000
Accrued interest payable		281,125		281,125		281,125		—		—

June 30, 2024
Financial assets:
Cash and due from banks	$	31,630,525	$	31,630,525	$	31,630,525	$	—	$	—
Loans, net		126,391,092		115,890,092		—		—		115,890,092
Stock in correspondent banks		2,195,900		2,195,900		—		2,195,900		—
Accrued interest receivable		961,856		961,856		961,856		—		—

Financial liabilities:
Deposits		209,310,330		209,243,722		73,959,722		—		135,284,000
Borrowings		62,000,000		61,812,000		—		—		61,812,000
Accrued interest payable		778,831		778,831		778,831		—		—

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.

Note 7:Commitments

Commitments to originate loans are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.

Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.

Management uses the same credit policies in granting lines of credit as it does for on-balance-sheet instruments.

Commitments outstanding at December 31, 2024 and June 30, 2024 were as follows:


	December 31,		June 30,
	2024		2024
Commitments to originate loans	$	5,235,727	$	2,766,266
Undisbursed balance of loans closed		33,707,944		30,314,342
Total	$	38,943,671	$	33,080,608

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Note 8:Loss Per Share

Loss per common share for the three and six months ended December 31, 2024 and 2023 is as follows:


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2024		2023		2024		2023
Basic
Net loss	$	(2,266,619)	$	(299,322)	$	(2,899,337)	$	(738,181)

Shares outstanding for basic (loss) earnings per share:
Weighted-average common shares outstanding		1,884,927		1,922,924		1,885,526		1,922,924
Less average unearned ESOP shares		(131,400)		(146,142)		(132,365)		(146,142)
Weighted-average shares - basic		1,753,527		1,776,782		1,753,161		1,776,782

Basic loss per share	$	(1.29)	$	(0.17)	$	(1.65)	$	(0.42)

Diluted
Effect of dilutive stock-based awards
Weighted-average shares outstanding - basic		1,753,527		1,776,782		1,753,161		1,776,782
Stock options		—		—		—		—
Restricted stock		5,865		—		4,656		—
Weighted average shares - assuming dilution		1,759,392		1,776,782		1,757,817		1,776,782

Diluted loss per share	$	(1.29)	$	(0.17)	$	(1.65)	$	(0.42)

Stock options for 20,000 shares of common stock, were not considered in computing diluted earnings per common share for the three and six months ended December 31, 2024, because they were antidilutive. There were no stock options or restricted stock awards outstanding as of December 31, 2023.

Note 9:Borrowings

Borrowed funds at December 31, 2024 and June 30, 2024, are summarized as follows:


	December 31,			June 30,
	2024			2024
	Rate	Amount		Rate	Amount
Advances from Federal Home Loan Bank of Cincinnati	N/A	$	—	5.46%	$	38,500,000
Advances from Federal Reserve Bank of Cleveland	N/A		—	4.76%		23,500,000
Total borrowings		$	—		$	62,000,000

Based on collateral pledged, consisting of all shares of FHLB stock owned and a blanket pledge of approximately $69,238,000 and $65,848,000 of its qualifying mortgage loans as of December 31, 2024 and June 30, 2024, respectively, the Company had $45,309,000 and $3,945,000 in available borrowing capacity with the FHLB as of December 31, 2024 and June 30, 2024, respectively.

Based on eligible available for sale securities pledged as collateral to the Federal Reserve Bank Discount Window totaling $50,482,000, the Company had $41,145,000 in available borrowing capacity with the FRB as of December 31, 2024. The Company had not yet entered the Discount Window program as of June 30, 2024 and had no borrowing capacity at that time.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the Company’s consolidated financial condition at December 31, 2024 and consolidated results of operations for the three and six months

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ended December 31, 2024 and 2023. It should be read in conjunction with the unaudited consolidated financial statements and the related notes appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

This quarterly 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;

●

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;

●

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;

●

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

●

our ability to control cost and expenses, particularly those associated with operating a publicly traded company;

●

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;

●

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;

●

material weakness or significant deficiency in our internal controls over financial reporting;

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●

our ability to control costs when hiring employees in a highly competitive environment; 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.

Critical Accounting Policies and Use of Critical Accounting Estimates

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. Van Wert Federal estimates 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 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 June 30, 2024

Total Assets. Total assets were $329.2 million at December 31, 2024, an increase of $17.9 million, or 5.8%, from June 30, 2024. The increase is part of the continued execution of the strategic plan by management to more appropriately leverage capital by adding higher yielding variable rate interest earning assets using fixed rate funding to offset the liability sensitive nature of the balance sheet. The increase was comprised primarily of $12.0 million in securities, $22.1 million in loans, and offset by a decrease of $16.0 million in cash.

Cash and Due from Banks. Cash and due from banks decreased by $16.0 million, or -50.4%, to $15.7 million at December 31, 2024 from $31.6 million at June 30, 2024. The decrease was due primarily to the payoff of the overnight Cash Management Advance (“CMA”) line with FHLB at June 30, 2024, which was partially offset by $17.2 million in cash proceeds from the sale of securities in December 2024.

Investment Securities. Investment securities increased $12.0 million, or 8.6%, to $151.3 million at December 31, 2024, from $139.3 million at June 30, 2024. Aggregate securities purchases of $48.8 million during the six months ended December 31, 2024, were partially offset by $20.2 million of calls, maturities and repayments and $17.2 million in proceeds from the sale of securities. Management identified $19.6 million of fixed rate securities as sale candidates with a weighted average book yield of 1.68% and a weighted average maturity of 8.6 years. After performing an earn back analysis, management identified that at a modest reinvestment rate of 6%, reinvesting the cash proceeds from the sale would result in approximately $700,000 of additional interest income annually and the earn back period on the loss would be 2.6 years. The yield on investment securities was 5.9% for the six months ended December 31, 2024, compared to 5.48% for the six months ended December 31, 2023, reflecting the increase in market interest rates during the period, as well as the addition of higher yielding securities. The increase in investment securities is part of a forward-looking investment strategy to increase the number of variable rate investments financed by fixed rate deposit instruments, such as brokered certificates of deposits noted in the deposit section below, which will ultimately provide a more balanced interest rate risk profile. The increase is also part of an effort to more appropriately leverage the Company’s capital.

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The $166,000 increase in the fair value of the investment securities was primarily attributable to the variability in market interest rates. As market interest rates decrease, the fair value of the securities increases. The unrealized gains and losses are recorded to shareholders’ equity, net of tax, as management has determined that there are no credit quality concerns with the issuers of the securities and there is no current intent to sell additional securities and, as a result, the fair value is expected to recover as the securities approach their maturity dates.

Net Loans. Net loans increased by $22.1 million, or 17.5%, to $148.5 million at December 31, 2024, from $126.4 million at June 30, 2024. During the six months ended December 31, 2024, loan originations totaled $21.0 million, comprised of $7.5 million of loans secured by one-to-four family residential real estate, $715,000 of HELOCs, $197,000 of consumer loans, $3.9 million of commercial and industrial loans, $5.5 million in commercial and $3.1 million in construction loans. Increases in loan balances reflect our strategy to grow our loan portfolio, continuing to focus on owner-occupied one-to-four family residential real estate loans, while increasing our emphasis on commercial real estate loans and commercial and industrial loans. Management intends to continue to pursue growth in these loan segments in future periods.

Deposits. Deposits increased by $80.4 million, or 38.4%, to $289.7 million at December 31, 2024 from $209.3 million at June 30, 2024. Core deposits (defined as all deposits other than brokered deposits) increased $20.9 million, or 16.7%, to $146.1 million at December 31, 2024 from $125.2 million at June 30, 2024. Brokered Certificates of deposit increased $59.4 million, or 70.6%, to $143.5 million at December 31, 2024 from $84.1 million at June 30, 2024.

Shareholders’ Equity. Shareholders’ equity decreased $813,000, or 2.2%, to $35.7 million at December 31, 2024 from $36.5 million at June 30, 2024. Primarily a result of a net tax effect on unrealized gains on securities of $2.0 million, offset by a net loss of $3.0 million for the six months ended December 31, 2024, which includes certain one-time expenses noted in the noninterest expense section below and a $2.4 million loss on the sale of $19.6 of securities, and partially offset by ESOP shares committed to be released.

Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects are immaterial. Average balances are calculated using month-end average balances, rather than daily average balances. We believe the use of month-end average balances is representative of our operations. Non-accrual loans are included in average balances only. Average yields include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Deferred loan fees are immaterial.

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

Interest-earning assets:
Loans	$	142,115		$	2,029	5.71	%	$	96,130		$	1,147	4.77	%
Investment securities		165,497			2,413	5.83			110,649			1,561	5.64
Interest-bearing deposits and other		15,782			175	4.44			15,020			133	3.55
Total interest-earning assets		323,394			4,617	5.71			221,799			2,841	5.12
Non-interest-earning assets		7,783							3,963
Allowance for loan losses		(915)							(484)
Total assets	$	330,262						$	225,278

Interest-bearing liabilities:
Interest-bearing demand	$	40,843		$	102	1.00	%	$	25,777		$	66	1.02	%
Savings and money market		51,219			312	2.44			40,378			121	1.20
Certificates of deposit		183,712			2,192	4.77			80,434			832	4.14
Total deposits		275,774			2,606	3.78			146,589			1,019	2.78
Borrowings		14,850			150	4.04			39,125			536	5.48
Total interest-bearing liabilities		290,624			2,756	3.79			185,714			1,555	3.35
Non-interest-bearing liabilities		3,391							1,863
Total liabilities		294,015							187,577
Equity		36,247							37,701
Total liabilities and equity	$	330,262						$	225,278

Net interest income				$	1,861						$	1,286
Net interest rate spread (1)						1.92	%						1.77	%
Net interest-earning assets (2)	$	32,770						$	36,085
Net interest margin (3)						2.30	%						2.32	%
Average interest-earning assets to interest-bearing liabilities		111.28	%						119.43	%

(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.

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

General. Net loss for the three months ended December 31, 2024 was $2.3 million, an increase of $2.0 million, or 679.0%, compared to net loss of $299,000 for the three months ended December 31, 2023. The increase in net loss was primarily due to the after tax loss on sale of securities a $1.9 million. We continue to execute the strategic process of building out and repositioning the balance sheet and adding organic interest earning assets funded with organic deposits.

Interest Income. Interest income increased $1.8 million, or 62.5%, to $4.6 million for the three months ended December 31, 2024, compared to $2.8 million for the three months ended December 31, 2023. This increase was attributable to a $882,000 million, or 76.9%, increase in interest on investment securities and a $852,000, or 54.6%, increase in interest on loans, and is reflective of management’s strategy to continue to add higher yielding interest earnings assets to the balance sheet.

The average balance of loans during the three months ended December 31, 2024, increased by $46.0 million, or 47.8%, from the average balance for the three months ended December 31, 2023, while the average yield on loans increased by 94 basis points to 5.71% for the three months ended December 31, 2024, from 4.77% for the three months ended December 31, 2023. The increase in average yield reflects the increases in market interest rates impacting the loan portfolio, as well as the addition of several higher yielding loans as the Company continues to add commercial loans to the portfolio.

The average balance of investment securities increased $54.8 million, or 49.6%, to $165.5 million for the three months ended December 31, 2024, from $110.6 million for the three months ended December 31, 2023, while the average yield on investment securities increased by 19 basis points to 5.83% for the three months ended December 31, 2024, from 5.64% for the three months ended December 31, 2023.

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The average balance of interest-bearing deposits and other, comprised of overnight deposits and stock in the Federal Home Loan Bank and Federal Reserve Bank, increased $762,000, or -5.1%, for the three months ended December 31, 2024, and the average yield increased 89 basis points to 4.44% for the three months ended December 31, 2024, from 3.55% for the three months ended December 31, 2023.

Interest Expense. Total interest expense increased $1.2 million, or 77.2%, to $2.8 million for the three months ended December 31, 2024, from $1.55 million for the three months ended December 31, 2023. The increase was due to an increase of 100 basis points in the average cost of deposits to 3.78% for the three months ended December 31, 2024, from 2.78% for the three months ended December 31, 2023, reflecting how management has had to increase the offered rates to be competitive in efforts to maintain and grow deposits.

Net Interest Income. Net interest income increased $575,000, or 44.8%, to $1.9 million for the three months ended December 31, 2024, compared to $1.3 million for the three months ended December 31, 2023, while net interest margin decreased 2 basis points to 2.30% for the three months ended December 31, 2024, from 2.32% for the three months ended December 31, 2023.

Provision for Credit Losses. The total provision for credit losses on loans and unfunded commitments was $248,000 for the three months ended December 31, 2024, compared to $94,000 for the three months ended December 31, 2023. In both periods, the provision for credit losses was largely attributable to commercial loan growth.

Total nonperforming and substandard loans were $573,000 at December 31, 2024, compared to $529,000 at December 31, 2023. Total loans past due greater than 30 days were $1.5 million and $747,000 at those respective dates. As a percentage of nonperforming and substandard loans, the allowance for credit losses was 173.1% at December 31, 2024, compared to 100.0% at December 31, 2023.

The allowance for credit losses reflects the estimate management believes to be appropriate to cover lifetime probable losses which were inherent in the loan portfolio at December 31, 2024 and 2023. 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. Furthermore, as an integral part of its examination process, the OCC will periodically review our allowance for credit losses. The OCC may have judgments different than those of management, and we may determine to increase our allowance as a result of these regulatory reviews. Any material increase in the allowance for credit losses may adversely affect our financial condition and results of operations.

Non-Interest Income. Non-interest income increased $71,400, or 131.4%, to $126,000 for the three months ended December 31, 2024, compared to $54,000 for the three months ended December 31, 2023 and is the result of additional loan and deposit fee income from increased volume.

Non-Interest Expense. Non-interest expense increased $3.1 million or 187.3%, to $4.7 million for the three months ended December 31, 2024, compared to $1.6 million for the three months ended December 31, 2023. The largest contributor to the increase in non-interest expense is the $2.4 million loss on the sale of low yielding fixed rate securities as noted above in the investment securities paragraph of the Comparison of Financial Condition section. Additional notable increases were salaries and employee benefits of $350,000, representative of our investing in staff as we continue to add key positions vital to the expansion and growth of the Company as well as increases in occupancy expenses as a result of our Fort Wayne location which was not in place in December 2023 and FDIC insurance. There were also $160,000 of one-time expenses incurred during the three months ended December 31, 2024. See additional discussion of one-time expenses further below.

One-time Expenses Related to Conversion

At the time of the conversion on July 13, 2022, the Bank estimated that it would incur a one-time expense in the third quarter 2022 related to the termination of the defined benefit plan of approximately $3.1 million. Given the increase in interest rates since the time of the initial estimation, the actual cost of termination of the defined benefit plan was $1.3 million, with over $1 million of those expenses occurring in fiscal year 2023.

In January 2023, the board of directors agreed to take the necessary steps to become a regional commercial bank, ultimately electing to become a Covered Savings Association (CSA) instead of remaining as a Qualified Thrift Lender (QTL). The board of directors, in conjunction with the decreased one-time expenses related to the termination of the defined benefit plan, approved $1.8 million of one-

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time expenses for, among other things, investments in products, services, software, operating system modules, branding, personnel, consulting fees and training related to obtaining the capabilities required of a regional commercial bank.

The following is management’s classification of these expenses for fiscal year 2023, 2024, and year to date fiscal year 2025:


	Year Ended June 30,				6 Months Ended		Total since
	2023		2024		December 31, 2024		Conversion
Category
Termination of defined benefit plan	$	1,052,000	$	261,000	$	—	$	1,313,000
Contract termination and related personnel costs		256,000		206,000		3,500		465,500
IT and software maintenance and related consulting fees		102,000		154,000		7,550		263,550
Branding related costs		5,000		385,000		250,847		640,847
Other costs		—		105,000		146,399		251,399
Total one-time expenses	$	1,415,000	$	1,111,000	$	408,296	$	2,934,296

Federal and Indiana Income Taxes. Provision for federal and Indiana income taxes benefit increased $599,000, or 685.5%, to a $687,000 benefit provision for the three months ended December 31, 2024, compared to a $87,000 benefit provision for the three months ended December 31, 2023. The increase in the federal and Indiana income tax benefit provision was due primarily to the loss on sale of securities during the quarter.


	For the Six Months Ended December 31,
	2024							2023

	Average							Average
	Outstanding					Yield/		Outstanding					Yield/
	Balance			Interest		Rate		Balance			Interest		Rate

Interest-earning assets:
Loans	$	136,761		$	3,779	5.53	%	$	91,067		$	2,037	4.47	%
Investment securities		158,054			4,683	5.93			95,082			2,606	5.48
Interest-bearing deposits and other		12,420			298	4.80			16,086			279	3.46
Total interest-earning assets		307,235			8,760	5.70			202,235			4,922	4.87
Non-interest-earning assets		12,478							3,651
Allowance for credit losses		(867)							(395)
Total assets	$	318,846						$	205,491

Interest-bearing liabilities:
Interest-bearing demand	$	37,357		$	201	1.08	%	$	26,089		$	136	1.04	%
Savings accounts		50,033			598	2.39			40,560			198	0.98
Certificates of deposit		165,914			3,930	4.74			70,945			1,389	3.91
Total deposits		253,304			4,729	3.73			137,594			1,723	2.50
Borrowings		25,700			546	4.25			28,386			829	5.84
Total interest-bearing liabilities		279,004			5,275	3.78			165,980			2,552	3.07
Non-interest-bearing liabilities		3,495							1,323
Total liabilities		282,499							167,303
Shareholders' Equity		36,347							38,188
Total liabilities and shareholders' equity	$	318,846						$	205,491

Net interest income				$	3,485						$	2,370
Net interest rate spread (1)						1.92	%						1.80	%
Net interest-earning assets (2)	$	28,231						$	36,255
Net interest margin (3)						2.27	%						2.34	%
Average interest-earning assets to interest-bearing liabilities		110.12	%						121.84	%

(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.

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

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

General. Net loss for the six months ended December 31, 2024 was $3.0 million, an increase of $2.2 million, or 301.6%, compared to net loss of $738,000 for the six months ended December 31, 2023. The increase in net loss was primarily due to the after tax loss on sale of securities a $1.9 million..

Interest Income. Interest income increased $3.8 million, or 78.0%, to $8.8 million for the six months ended December 31, 2024, compared to $4.9 million for the six months ended December 31, 2023. This increase was attributable to a $2.1 million, or 79.7%, increase in interest on investment securities and a $1.7 million, or 85.5%, increase in interest on loans, and is reflective of management’s strategy to continue to add higher yielding interest earnings assets to the balance sheet.

The average balance of loans during the six months ended December 31, 2024, increased by $45.7 million, or 50.2%, from the average balance for the six months ended December 31, 2023, while the average yield on loans increased by 106 basis points to 5.53% for the six months ended December 31, 2024, from 4.47% for the six months ended December 31, 2023. The increase in average yield reflects the increases in market interest rates impacting the loan portfolio, as well as the addition of several higher yielding loans as the Company continues to add commercial loans to the portfolio.

The average balance of investment securities increased $63.0 million, or 66.2%, to $158.0 million for the six months ended December 31, 2024, from $95.1 million for the six months ended December 31, 2023, while the average yield on investment securities increased by 45 basis points to 5.93% for the six months ended December 31, 2024, from 5.48% for the six months ended December 31, 2023. This increase in yields resulted from the effects of management’s purchasing of higher yielding securities beginning in March 2023.

The average balance of other interest-bearing deposits, comprised of overnight deposits and stock in the Federal Home Loan Bank and Federal Reserve Bank, decreased $3.7 million, or 22.8%, for the six months ended December 31, 2024, and the average yield increased 134 basis points to 4.80% for the six months ended December 31, 2024, from 3.46% for the six months ended December 31, 2023 reflecting the rise in the interest rate environment.

Interest Expense. Total interest expense increased $2.7 million, or 106.7%, to $5.3 million for the six months ended December 31, 2024, from $2.6 million for the six months ended December 31, 2023. The increase was due to an increase of 123 basis points in the average cost of deposits to 3.73% for the six months ended December 31, 2024, from 2.50% for the six months ended December 31, 2023, reflecting how management has had to increase the offered rates to be competitive in efforts to maintain and grow deposits.

Net Interest Income. Net interest income increased $1.1 million, or 47.0%, to $3.5 million for the six months ended December 31, 2024, compared to $2.4 million for the six months ended December 31, 2023, while net interest margin decreased 7 basis points to 2.27% for the six months ended December 31, 2024, from 2.34% for the six months ended December 31, 2023.

Provision for Credit Losses. The total provision for credit losses on loans and unfunded commitments was $337,000 for the six months ended December 31, 2024, compared to $222,000 for the six months ended December 31, 2023. In both periods, the provision for credit losses was largely attributable to commercial loan growth.

Non-Interest Income. Non-interest income increased $89,000, or 92.9%, to $185,000 for the six months ended December 31, 2024, compared to $96,000 for the six months ended December 31, 2023 and is the result of additional loan and deposit fee income from increased volume.

Non-Interest Expense. Non-interest expense increased $3.9 million, or 122.2%, to $7.1 million for the six months ended December 31, 2024, compared to $3.2 million for the six months ended December 31, 2023. The largest contributor to the increase in non-interest expense is the $2.4 million loss on the sale of low yielding fixed rate securities as noted above in the investment securities paragraph of the Comparison of Financial Condition section. Additional notable increases were salaries and employee benefits of $748,000 resulting from the addition of several new employees and positions throughout calendar year 2024 and reflects our investment in people for our strategic growth initiatives. Occupancy and equipment increased $143,000, or 57.2%, resulting from our new Fort Wayne location which was not in place in December 2023. Data processing fees increased $146,000, or 63.1%, as a result of increased processing volume from loans and deposits and new modules essential to the long term strategic growth goals of the company as we continue to add in demand products necessary to bring the company from a mutual thrift to a regional commercial

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bank. FDIC insurance premiums also increased $155,000, or 379.5%, a result of several factors such as a more diverse loan makeup, increased brokered deposits, and recurring quarterly pre-tax net losses.

Federal and Indiana Income Taxes. Provision for federal and Indiana income taxes benefit increased $651,000, or 308.3%, to a $862,000 benefit provision for the six months ended December 31, 2024, compared to a $211,000 benefit provision for the six months ended December 31, 2023. The increase in the federal and Indiana income tax benefit provision was due primarily to the loss on sale of securities during the quarter and the other noted increases in non-interest expenses above.

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 and the Federal Reserve Bank of Cleveland Discount Window. At December 31, 2024, we had no outstanding borrowings from either the FHLB or FRB. At December 31, 2024, we had the capacity to borrow $45.3 million from the Federal Home Loan Bank of Cincinnati and $41.1 million from the Federal Reserve Bank of Cleveland.

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 are dependent 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 further information, see the statements of cash flows contained in the financial statements appearing elsewhere in this Form 10-Q.

We are committed to maintaining a strong liquidity position. 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.

Prior to September 30, 2024, the Bank had a community bank leverage ratio (CBLR) framework election in effect. Effective for the quarter ended September 30, 2024, the Bank opted out of that election.


						To be Well Capitalized Under
	Actual					the Prompt Corrective Action Provision
(Dollars in thousands)	Amount		Ratio			Amount		Ratio
As of December 31, 2024
Common Equity Tier 1 Capital	$	32,540		17.34	%	$	12,200		>6.5	%
Tier 1 Risk-Based Capital		32,540		17.34			15,016		>8.0
Total Risk-Based Capital		33,826		18.02			18,770		>10.0
Tier 1 Leverage Capital		32,540		9.69			16,789		>5.0

Off-Balance Sheet Arrangements. At December 31, 2024, we had $38.9 million of outstanding commitments to originate loans. Certificates of deposit that are scheduled to mature in less than one year from December 31, 2024 totaled $65.2 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 or Federal Reserve Bank of Cleveland advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

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

Item 4.Controls and Procedures

Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the President and Chief Executive Officer and the 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) and 15d-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of December 31, 2024. These disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities and Exchange Act of 1934, as amended, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to the Company’s management, including the President and Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure. Based on that evaluation, the Company’s management, including the President and Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were ineffective as of December 31, 2024.

Internal Controls Over Financial Reporting

The Company’s management, including the President and Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of December 31, 2024, the Company’s management, including the Company’s principal executive officer and principal financial officer, has assessed the effectiveness of its internal control over financial reporting using the criteria set forth in the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Based on the assessment using those criteria, management identified a material weakness related to the Company’s internal control over financial reporting and, as such, concluded that the Company’s internal control over financial reporting was ineffective as of December 31, 2024. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis. The following material weakness was identified in the Company’s internal control over financial reporting:

●

The Company has not identified, designed and maintained all applicable internal controls which has led to a level of precision on account reconciliations and review of financial statements that is less than what is required of an SEC filer. The material weakness did not result in a material misstatement.

The Company has concluded that the existence of the material weakness did not result in a material misstatement of the Company’s financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2024, or in its Quarterly Report on Form 10-Q for the quarter ended December 31, 2024.

Changes in Internal Control Over Financial Reporting

During the quarters ended September 30, 2024 and December 31, 2024 and year ended June 30, 2024, the Company made notable improvements in its internal controls over financial reporting. In addition to adding a new Chief Financial Officer and Corporate Controller in calendar year 2023, the Company also added two additional accounting staff early in calendar 2024, allowing for additional segregation of duties and more levels of review. The Company also engaged a third party to perform a SOX gap analysis, internal control risk assessment, and regularly occurring internal audits. This work began in September 2024 and is ongoing. The

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Company expects this work to allow the Company to develop and implement enhanced internal controls over financial reporting.

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 consolidated 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 and Use of Proceeds

Issuer Purchases of Equity Securities

The Company purchased the following equity securities of the Company during the three-month period ended December 31, 2024


							Maximum Dollar
					Total Number of		Value of Shares
					Shares Purchased		That May Yet be
	Total Number of		Average Price		as Part of Publicly		Purchased Under
For the Month Ended	Shares Purchased ⁽¹⁾		Paid per Share ⁽¹⁾		Announced Program ⁽²⁾		the Program ⁽²⁾
October 31, 2024		—	$	—		—	$	2,000
November 30, 2024		—		—		—		2,000
December 31, 2024		3,552		17.00		—		100,000
Total		3,552				—

(1)

All 3,552 shares of the Company’s common stock repurchased during the three-months ended December 31, 2024 were not made pursuant to a publicly announced program. These repurchases were made pursuant to the ESOP Plan in connection with terminated participants. Repurchases were made at the externally valuated share price as of 12.31.23 as required per the ESOP agreement as the Company is not traded on a national exchange. The repurchases were required as terminated participants elected their option to put the shares back to the company upon distribution.

(2)

On December 18, 2024, the Company’s board of directors authorized a share repurchase program of up to $100,000 of the Company’s common stock. In connection with the new share repurchase program, the Company’s previous share repurchase program, authorized on February 20, 2024 for up to $600,000 of the Company’s common stock and which had $2,000 available for repurchase, was terminated.

Item 3.Defaults Upon Senior Securities

Not applicable.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

During the three month period ending December 31, 2024, none of the Company’s directors or executive officers adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as such terms are defined under Item 408 of Regulation S-K.

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Item 6.Exhibits


3.1	Articles of Incorporation of VWF Bancorp, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-1 filed March 11, 2022)
3.2	Bylaws of VWF Bancorp, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-1 filed March 11, 2022)
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*	Certification of Chief Executive Officer and 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) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) Condensed Consolidated Statements of Changes in Shareholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements
104	Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)

* Filed concurrently herewith

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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.

	VWF BANCORP, INC.

Date: February 13, 2025	/s/ Michael D. Cahill
	Michael D. Cahill
	President and Chief Executive Officer
	(Principal Executive Officer)

Date: February 13, 2025	/s/ Richard W. Brackin
	Richard W. Brackin
	EVP, Chief Financial Officer
	(Principal Financial and Accounting Officer)

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VWF Bancorp (VWFB) 10-Q2025 Q2 Quarterly report

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