Financial Performance - Net income for the year ended December 31, 2022, was $180,000, a decrease from $1.9 million for the year ended December 31, 2021[171]. - Net income fell significantly from $1.92 million in 2021 to $0.18 million in 2022, representing a decrease of about 90.6%[218]. - Basic earnings per share dropped to $0.04 in 2022 from $0.39 in 2021, a decline of 89.7%[236]. - Non-interest income dropped from $2.63 million in 2021 to $1.17 million in 2022, a decline of about 55.5%[218]. - Non-interest income decreased significantly to $1,173,000 in 2022 from $2,626,000 in 2021, a decline of 55.3%[236]. - The efficiency ratio worsened to 102.55% in 2022 from 81.76% in 2021, indicating increased operational inefficiency[218]. - Net cash provided by operating activities decreased to $772,000 in 2022 from $3,428,000 in 2021, a reduction of 77.5%[240]. - Net income available to common shareholders decreased to $180,000 in 2022 from $1,915,000 in 2021[263]. Asset and Loan Composition - Total assets decreased by $22.3 million, or 7.8%, to $263.3 million as of December 31, 2022, compared to $285.6 million at the end of 2021[78]. - Total loans increased by $1.5 million, or 1.1%, to $133.6 million as of December 31, 2022, compared to $132.1 million in 2021[87]. - The loan portfolio composition shows that single-family residential loans accounted for $87.5 million, or 65.5% of total loans, while commercial and industrial loans increased by 65.3% to $13.8 million[87]. - The Bank's primary income sources are interest from loans and investment securities, with total real estate loans at $116.3 million, representing 87.0% of total loans[87]. - As of December 31, 2022, the total amount of loans due after December 31, 2023 is $125.166 million, with $43.805 million in fixed-rate loans and $81.361 million in floating or adjustable-rate loans[91]. - The allowance for loan losses totaled $1.8 million, or 1.35% of total loans, at December 31, 2022, down from $2.3 million, or 1.72% of total loans, at December 31, 2021[191]. - Non-accrual loans as a percentage of total loans outstanding rose to 1.12% in 2022 from 0.67% in 2021, reflecting a deterioration in asset quality[227]. Investment and Capital Management - The total investment securities portfolio at December 31, 2022, amounted to $93.1 million, representing 35.3% of total assets, with $64.2 million in pass-through mortgage-backed securities[103]. - The company had $79.6 million of investment securities classified as available for sale and $13.5 million classified as held to maturity as of December 31, 2022[115]. - The investment policy aims to manage interest rate sensitivity and maintain liquidity while generating favorable returns[102]. - The company has authority to invest in various securities, including mortgage-backed securities and U.S. Treasury obligations[101]. - Federal regulations require a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, and a total capital to risk-based assets ratio of 8.0%[205]. - Catalyst Bank met the criteria for being considered "well capitalized" as of December 31, 2022[214]. - Common equity Tier 1 capital ratio decreased from 63.51% in 2021 to 56.17% in 2022, indicating a decline in capital strength[227]. Operational Changes and Strategy - Catalyst Bancorp completed its initial public offering, issuing 5,290,000 shares for an aggregate of $52.9 million, with net proceeds of $50.8 million[65]. - The Bank's strategy includes increasing focus on small- to mid-sized businesses and enhancing commercial and multi-family residential real estate loans[72]. - The company aims to grow its loan portfolio with greater diversification, focusing on increasing commercial lending activities to enhance profitability and growth prospects[180]. - Catalyst Bank's business strategy includes expanding its franchise through potential acquisitions of other financial institutions in south Louisiana[180]. - The company has made several key hires, including a new Chief Financial Officer and a Chief Credit Officer, to support its business strategy[137]. - The company plans to repurchase up to 265,000 shares, approximately 5% of its outstanding common stock, under the 2023 Repurchase Plan[159]. Regulatory Compliance and Risk Management - At December 31, 2022, Catalyst Bank's capital exceeded all applicable regulatory requirements, ensuring compliance with capital adequacy guidelines[108]. - The bank received an "outstanding" Community Reinvestment Act rating in its most recent federal examination, reflecting its compliance with community credit needs[183]. - As of December 31, 2022, Catalyst Bank was in compliance with loans-to-one borrower limitations, which restrict loans to a single borrower to 15% of unimpaired capital and surplus[167]. - The bank's strategy for credit risk management emphasizes strong asset quality, experienced credit professionals, and active credit monitoring to reduce non-performing assets[180]. - The evaluation of the allowance for loan losses is sensitive to material variation and is based on estimates that may change as more information becomes available[191]. Market and Economic Conditions - Non-performing assets increased from December 31, 2021, to December 31, 2022, primarily due to a rise in non-accruing one- to four-family residential loans, influenced by reduced government stimulus and persistent inflation[100]. - The FDIC has increased deposit insurance assessment rates effective January 1, 2023, which may adversely affect operating expenses[221]. - The increase in unrealized losses on available-for-sale securities relates principally to increases in market rates of similar types of securities[207]. - The company expects a 10% to 20% increase in the allowance for loan losses due to the adoption of ASU 2016-13[259].

Financial Performance - The company reported a net income of $139,000 for the three months ended September 30, 2022, a decrease of 90% compared to $1.4 million for the same period in 2021[144]. - For the nine months ended September 30, 2022, net income was $26,000, down from $1.8 million in the same period in 2021[144]. - For the three months ended September 30, 2022, the company reported net income of $139,000, a decrease from $1.4 million for the same period in 2021[189]. - Non-interest income totaled $296,000 for the three months ended September 30, 2022, compared to $2.0 million for the same period in 2021[196]. - Non-interest income decreased by $1.5 million, or 63.7%, to $872,000 for the nine months ended September 30, 2022, largely due to the absence of a $1.8 million grant received in 2021[213]. Assets and Liabilities - As of September 30, 2022, total assets were $283.4 million, with total loans of $131.7 million and total deposits of $184.2 million[144]. - Total assets decreased by $1.9 million, or 0.7%, to $283.4 million at September 30, 2022, from $285.3 million at December 31, 2021[160]. - Total liabilities were $195.3 million, with shareholders' equity at $92.8 million as of September 30, 2022[182]. - The company had outstanding advances from the FHLB with a carrying value of $9.2 million and the capacity to borrow an additional $37.6 million as of September 30, 2022[226]. Loan and Deposit Information - Total loans receivable fell by $141,000, or 0.1%, to $131.7 million at September 30, 2022, compared to $131.8 million at December 31, 2021[161]. - Total deposits amounted to $184.2 million at September 30, 2022, an increase of $7.4 million, or 4.2%, compared to December 31, 2021[176]. - The allowance for loan losses totaled $1.8 million, or 1.37% of total loans, as of September 30, 2022, compared to $2.3 million, or 1.73% of total loans, at December 31, 2021[149]. - Total non-performing loans rose to $1.600 million at September 30, 2022, compared to $891,000 at December 31, 2021[170]. Investment Securities - Total investment securities amounted to $92.0 million at September 30, 2022, a decrease of $9.8 million, or 9.6%, from $101.8 million at December 31, 2021[172]. - The average amortized cost balance of the investment securities portfolio increased by $42.5 million, or 68.6%, for the three months ended September 30, 2022[192]. - The company purchased $10.9 million of investment securities during the nine months ended September 30, 2022, exceeding $8.5 million of maturities, calls, and principal repayments[172]. Expenses - Non-interest expense increased by $244,000, or 13.0%, to $2.1 million for the three months ended September 30, 2022[198]. - Non-interest expense increased by $1.1 million, or 20.1%, to $6.7 million for the nine months ended September 30, 2022, including $215,000 of rebranding-related expenses[216]. - The company expects non-interest expenses to continue to increase as operations expand, influenced by new stock benefit plans implemented in 2022[145]. Capital and Equity - Shareholders' equity decreased by $9.0 million, or 9.2%, to $89.3 million at September 30, 2022, primarily due to a $9.3 million increase in accumulated other comprehensive loss[179]. - The ratio of total shareholders' equity to total assets was 31.5% at September 30, 2022, down from 34.5% at December 31, 2021[179]. - As of September 30, 2022, the company exceeded all regulatory capital requirements, with Common Equity Tier 1 Capital at $77.997 million, representing a ratio of 57.84%[231]. Miscellaneous - The company funded 240 SBA PPP loans totaling $8.5 million during the COVID-19 pandemic, with all outstanding loans fully repaid by September 30, 2022[156]. - The company recorded net loan charge-offs of $97,000 during the nine months ended September 30, 2022[165]. - Recent accounting pronouncements may impact financial statements, as discussed in Note 3[237].

Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock CLST Nasdaq Capital Market UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-40893 CATALYST B ...

Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock CLST Nasdaq Capital Market UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-40893 CATALYST ...

Financial Performance - Net income for the year ended December 31, 2021, was $1,927,000, a significant recovery from a net loss of $703,000 in 2020[308]. - Total comprehensive income for 2021 was $1,137,000, compared to a loss of $584,000 in 2020, indicating a positive turnaround[311]. - Net income for the year ended December 31, 2021, was $1,927,000, compared to a net loss of $(703,000) for the year ended December 31, 2020, indicating a significant turnaround in profitability[317]. - Total income tax expense for 2021 was $487,000 compared to a benefit of $(474,000) in 2020, reflecting a significant change in tax position[426]. - Net cash provided by operating activities increased to $3,428,000 from $857,000, reflecting improved operational efficiency[317]. Assets and Liabilities - Total assets increased to $285,349,000 as of December 31, 2021, compared to $224,688,000 as of December 31, 2020, representing a growth of 27%[303]. - The total assets of Catalyst Bancorp, Inc. as of December 31, 2021, amounted to $98,346 thousand, with total shareholders' equity also at $98,346 thousand[462]. - The fair value of loans receivable, net, was $128,591 thousand as of December 31, 2021, down from $148,674 thousand in 2020, a decrease of 13%[459]. - The total liabilities for the company were not explicitly stated but are included in the total assets and shareholders' equity of $98,346 thousand[462]. Deposits and Loans - Total deposits rose to $176,795,000 in 2021, compared to $164,598,000 in 2020, an increase of 7.3%[303]. - The company experienced a net increase in deposits of $12,197,000, although this was lower than the previous year's increase of $22,969,000, suggesting a potential slowdown in deposit growth[317]. - Total real estate loans decreased from $140,565,000 in December 2020 to $119,083,000 in December 2021, representing a decline of approximately 15.3%[397]. - Net loans decreased from $148,778,000 in December 2020 to $129,566,000 in December 2021, a reduction of about 12.9%[397]. - The total loans receivable as of December 31, 2021, amounted to $131,842,000, down from $151,800,000 in December 2020, indicating a decrease of about 13.2%[401]. Income and Expenses - Total interest income decreased to $7,699,000 in 2021 from $8,490,000 in 2020, reflecting a decline of approximately 9.3%[308]. - Non-interest income increased to $2,626,000 in 2021, up from $966,000 in 2020, marking a growth of 171%[308]. - Total non-interest expense decreased slightly to $7,776,000 in 2021 from $7,943,000 in 2020, a reduction of about 2.1%[308]. - The company recorded charge-offs of $150,000 in 2021, down from $140,000 in 2020, indicating a slight increase in charge-offs year-over-year[399]. Equity and Capital - The company's retained earnings increased to $52,353,000 as of December 31, 2021, up from $50,426,000 in 2020, reflecting a growth of 3.8%[303]. - The Bank's Common Equity Tier 1 Capital was $77,819,000 with a ratio of 63.51% as of December 31, 2021, significantly above the required 6.5%[431]. - Total risk-based capital as of December 31, 2021, was $79,360,000, representing a ratio of 64.77%, exceeding the required 10%[431]. - The Company made matching contributions of $148,000 to the 401(k) plan in 2021, up from $112,000 in 2020[443]. Grants and Programs - During the year ended December 31, 2021, the Bank recognized a $1.8 million grant from the CDFI Rapid Response Program, which was deployed to capital through income recognition and qualifying loans[349]. - The Bank received a $203,000 grant from the CDFI Bank Enterprise Award Program in 2020, meeting conditions by providing loans and financial services to distressed communities[349]. Investment and Securities - Available-for-sale securities increased from $20,730 thousand in 2020 to $88,339 thousand in 2021, representing a growth of 326%[453]. - The amortized cost of available-for-sale securities was $89.203 million, with a fair value of $88.339 million as of December 31, 2021[385]. - Investment securities with a carrying amount of approximately $10.2 million were pledged to secure deposits as required by law at December 31, 2021[388]. Miscellaneous - The Conversion to stock-form ownership was completed on January 27, 2021, establishing Catalyst Bancorp as the parent company of the Bank[377]. - The Company has implemented a software application to assist in determining the allowance for loan losses under the CECL model, with an effective date delay until January 2023[373]. - The Employee Stock Ownership Plan (ESOP) was established in October 2021, with a loan of $4.2 million used to purchase 423,200 shares[444].

Financial Performance - Net income for the three months ended September 30, 2021, was $1.4 million, up $1.8 million from a net loss of $404,000 for the same period in 2020[108]. - Net income for the nine months ended September 30, 2021, was $1.8 million, a significant increase from $11,000 for the same period in 2020[154]. - Non-interest income increased by $1.9 million, or 340.7%, to $2.4 million for the nine months ended September 30, 2021, primarily due to the recognition of a $1.8 million CDFI grant[159]. - Total interest income decreased by $313,000, or 14.4%, to $1.9 million for the three months ended September 30, 2021, primarily due to a $300,000 decrease in interest income on loans[133]. - Total interest income decreased by $683,000, or 10.5%, to $5.8 million for the nine months ended September 30, 2021, primarily due to a $594,000 decrease in interest income on loans receivable[155]. - Net interest income was $1.7 million for the three months ended September 30, 2021, a decrease of $75,000, or 4.3%, compared to the same period in 2020[135]. - Net interest income totaled $5.2 million for the nine months ended September 30, 2021, an increase of $33,000, or 0.6%, compared to the same period in 2020[157]. Assets and Liabilities - Total assets increased by $86.9 million, or 38.7%, to $311.6 million at September 30, 2021, from $224.7 million at December 31, 2020[121]. - Cash and cash equivalents rose by $75.2 million, or 297.7%, to $100.4 million at September 30, 2021, compared to $25.2 million at December 31, 2020[122]. - Net loans receivable decreased by $14.7 million, or 9.9%, to $134.1 million at September 30, 2021, from $148.8 million at December 31, 2020[123]. - Total loans outstanding decreased to $136.72 million at September 30, 2021, from $151.8 million at December 31, 2020[130]. - The average balance of loans decreased by $20.3 million, or 12.6%, to $140.2 million for the nine months ended September 30, 2021[155]. - Total investment securities increased by $24.9 million, or 65.2%, to $63.2 million as of September 30, 2021, compared to $38.3 million at December 31, 2020[124]. Equity and Capital - The total equity of the company was $52.0 million at September 30, 2021[108]. - The ratio of total equity to total assets was 16.7% at September 30, 2021, with total equity increasing to $52.0 million[127]. - The company exceeded all regulatory capital requirements with a Tier 1 leverage capital level of $52.3 million, or 20.7% of adjusted total assets, well above the required level of $12.7 million, or 5.0%[170]. Deposits and Funding - Total deposits rose by $84.9 million, or 51.6%, to $249.5 million at September 30, 2021, primarily due to $72.9 million in cash from the initial public offering[125]. - The company issued 5,290,000 shares of common stock for an aggregate of $52.9 million in total offering proceeds during its initial public offering[107]. - Net cash provided by financing activities was $84.9 million for the nine months ended September 30, 2021, mainly due to $72.9 million in cash received from the initial public offering[168]. Expenses - The company expects non-interest expenses to increase as operations grow, including compensation expenses related to an employee stock ownership plan[110]. - Non-interest expense increased by $576,000, or 11.5%, to $5.6 million for the nine months ended September 30, 2021, compared to $5.0 million for the same period in 2020[160]. - Salaries and employee benefits expense increased by $499,000, or 17.6%, due to additional personnel employed during the nine months ended September 30, 2021, compared to the same period in 2020[162]. - Occupancy and equipment expenses rose by $108,000, or 22.0%, primarily reflecting costs related to an additional branch location opened in 2020[162]. - Legal, accounting, and consulting expenses increased by $90,000, or 54.5%, mainly due to software and professional services costs associated with operating as a public company[163]. - Income tax expense increased by $432,000 to $465,000 for the nine months ended September 30, 2021, compared to $33,000 for the same period in 2020, primarily due to increased taxable earnings[164]. Loan Losses and Provisions - The provision for loan losses recorded a reversal of $286,000 for the nine months ended September 30, 2021, compared to a provision of $665,000 for the same period in 2020[158]. - The ratio of the allowance for loan losses to total loans was 1.94% at September 30, 2021[158]. Non-Performing Assets - Total non-performing assets decreased to $1.828 million at September 30, 2021, down from $2.087 million at December 31, 2020[130].

[PART I FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section provides the unaudited financial statements, management's analysis of financial condition and operations, market risk disclosures, and internal controls for St. Landry Homestead Federal Savings Bank [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited financial statements of St. Landry Homestead Federal Savings Bank, showing asset growth to **$238.6 million**, stable net income, and the bank's well-capitalized status amid its conversion plan - Catalyst Bancorp, Inc., the holding company, had **no assets or liabilities** as of June 30, 2021, with all financial statements pertaining solely to the Bank[8](index=8&type=chunk) [Statements of Financial Condition](index=4&type=section&id=Statements%20of%20Financial%20Condition) Total assets increased to **$238.6 million** by June 30, 2021, driven by a rise in available-for-sale securities and cash, while net loans decreased and deposits grew Statement of Financial Condition Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$238,640** | **$224,688** | | Total cash and cash equivalents | $29,087 | $25,245 | | Securities available-for-sale, at fair value | $41,856 | $20,730 | | Loans receivable, net | $137,950 | $148,778 | | **Total Liabilities** | **$187,908** | **$174,155** | | Total deposits | $177,888 | $164,598 | | **Total Equity** | **$50,732** | **$50,533** | [Statements of Income](index=5&type=section&id=Statements%20of%20Income) Net income remained **$260,000** for Q2 2021 and slightly decreased to **$411,000** for H1 2021, largely influenced by a **$286,000** reversal of loan loss provision Income Statement Summary (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $1,639 | $1,705 | $3,323 | $3,425 | | (Reversal of) Provision for loan loss | ($286) | — | ($286) | $65 | | Total non-interest income | $364 | $168 | $587 | $357 | | Total non-interest expense | $1,967 | $1,524 | $3,692 | $3,163 | | **Net Income** | **$260** | **$260** | **$411** | **$415** | [Statements of Cash Flows](index=8&type=section&id=Statements%20of%20Cash%20Flows) Net cash from operations significantly decreased to **$459,000** for H1 2021, while investing activities used **$9.9 million** and financing provided **$13.3 million**, resulting in a **$3.8 million** increase in cash Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $459 | $1,661 | | Net cash used in investing activities | ($9,907) | ($5,233) | | Net cash provided by financing activities | $13,290 | $18,719 | | **Net Increase in Cash and Cash Equivalents** | **$3,842** | **$15,147** | [Notes to Unaudited Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Financial%20Statements) Notes detail accounting policies, the **$57.4 million** investment portfolio, **$140.6 million** loan portfolio, the Bank's **well-capitalized** status with a **21.34%** Tier 1 Leverage Ratio, and conversion plan details - The Bank has opted to delay the implementation of the new **CECL accounting standard** until January 2023[36](index=36&type=chunk) - The Bank's Board adopted a plan of conversion to a stock-form savings bank structure with Catalyst Bancorp, Inc., incurring **$498,000** in deferred conversion costs by June 30, 2021[103](index=103&type=chunk)[104](index=104&type=chunk) Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | One- to four-family residential | $91,778 | $99,869 | | Commercial real estate | $28,217 | $30,304 | | Construction & land | $4,527 | $5,538 | | Commercial and industrial | $7,039 | $6,736 | | Other | $4,738 | $4,552 | | **Total Loans** | **$140,599** | **$151,800** | Capital Ratios as of June 30, 2021 | Ratio | Bank's Ratio | Well-Capitalized Requirement | | :--- | :--- | :--- | | Common Equity Tier 1 Capital | 41.81% | >6.5% | | Tier 1 Risk-Based Capital | 41.81% | >8.0% | | Total Risk-Based Capital | 43.07% | >10.0% | | Tier 1 Leverage Capital | 21.34% | >5.0% | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Bank's strategic shift, **6.2%** asset growth to **$238.6 million**, **$411,000** net income for H1 2021, and a decrease in non-performing assets to **0.83%** of total assets - The Bank is strategically re-focusing from a traditional thrift model to a **relationship-based community bank model**[119](index=119&type=chunk) - The Bank funded **240 SBA PPP loans** totaling approximately **$8.5 million** and modified **199 loans** with **$28.0 million** in principal balances due to COVID-19[127](index=127&type=chunk) - The Bank expects to recognize a **$1.8 million grant** from the U.S. Treasury's CDFI Rapid Response Program as non-interest income over the next 2.5 years[158](index=158&type=chunk) [Comparison of Financial Condition at June 30, 2021 and December 31, 2020](index=35&type=section&id=Comparison%20of%20Financial%20Condition) Total assets grew **6.2%** to **$238.6 million**, driven by a **50.0%** increase in investment securities, an **8.1%** rise in deposits, and a **7.3%** decrease in net loans - Total assets increased by **$14.0 million**, or **6.2%**, reaching **$238.6 million** by June 30, 2021[130](index=130&type=chunk) - Net loans receivable decreased by **$10.8 million** (**7.3%**) to **$138.0 million**, while total investment securities increased by **$19.1 million** (**50.0%**) to **$57.4 million**[132](index=132&type=chunk)[133](index=133&type=chunk) - Total deposits increased by **$13.3 million**, or **8.1%**, to **$177.9 million**, boosted by SBA PPP loan proceeds and government stimulus[134](index=134&type=chunk) [Non-performing Assets](index=37&type=section&id=Non-performing%20Assets) Total non-performing assets decreased to **$2.0 million**, representing **0.83%** of total assets, while non-performing loans also declined to **$1.4 million** or **0.99%** of total loans Non-performing Assets (in thousands) | Metric | At June 30, 2021 | At December 31, 2020 | | :--- | :--- | :--- | | Total non-performing loans | $1,395 | $1,672 | | Real estate owned | $590 | $415 | | **Total non-performing assets** | **$1,985** | **$2,087** | | Total non-performing assets as a percentage of total assets | 0.83% | 0.93% | [Comparison of Results of Operations](index=37&type=section&id=Comparison%20of%20Results%20of%20Operations) Net income for H1 2021 was **$411,000**, slightly down from 2020, as a **3.0%** decrease in net interest income and **16.7%** rise in non-interest expense were largely offset by a **$286,000** loan loss provision reversal and **64.4%** increase in non-interest income - Net income for Q2 2021 remained flat at **$260,000**, with a **$286,000** reversal to the allowance for loan losses offsetting lower net interest income and higher non-interest expenses[141](index=141&type=chunk) - Net income for H1 2021 was **$411,000**, a slight decrease from H1 2020, primarily due to lower net interest income and higher non-interest expense, mitigated by a loan loss provision reversal[162](index=162&type=chunk) - Net interest margin for H1 2021 decreased to **3.09%** from **3.26%**, reflecting the prevailing low interest rate environment[166](index=166&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The Bank maintains strong liquidity with **$52.8 million** in FHLB borrowing capacity and is **well-capitalized**, exceeding all regulatory requirements with a **21.3%** Tier 1 leverage ratio - As of June 30, 2021, the Bank had access to an additional **$52.8 million** from the FHLB and **$17.8 million** from a line of credit with First National Bankers Bank[172](index=172&type=chunk) - The Bank exceeded all regulatory capital requirements, maintaining a **43.1% total risk-based capital ratio** against a **10.0% well-capitalized requirement**[176](index=176&type=chunk) - Outstanding commitments as of June 30, 2021, included **$4.2 million** for loan originations and **$1.5 million** in undisbursed construction loans[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes to the market risk disclosures previously provided in the company's Prospectus - No material changes have occurred in the market risk disclosures presented in the Prospectus[183](index=183&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO affirmed the effectiveness of the company's disclosure controls and procedures as of June 30, 2021[184](index=184&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[184](index=184&type=chunk) [PART II OTHER INFORMATION](index=50&type=section&id=PART%20II%20OTHER%20INFORMATION) This section details legal proceedings, risk factors, unregistered equity sales, and a list of exhibits filed with the report [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any material pending legal proceedings beyond routine ordinary course of business matters - The company is not involved in any material pending legal proceedings beyond routine matters in the ordinary course of business[189](index=189&type=chunk) [Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Prospectus - The evaluation of applicable risk factors has not materially changed from those disclosed in the Prospectus[190](index=190&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no information under this item for the current period - No information to report for this period[191](index=191&type=chunk) [Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section provides a list of exhibits filed with the Form 10-Q, including corporate documents and certifications