10-Q 1 clst-20220930x10q.htm 10-Q
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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 September 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 BANCORP, INC.

(Exact name of registrant as specified in its charter)

Louisiana

    

86-2411762

(State or other jurisdiction of incorporation
of organization)

(I.R.S. Employer Identification No.)

235 N. Court Street, Opelousas, Louisiana 70570

(Address of principal executive offices; Zip Code) 

(337) 948-3033

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Common Stock

CLST

Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Exchange Act 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 filing 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 (§232.405 of this chapter) 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, a 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 Exchange Act). Yes   No 

There were 5,290,000 shares of Registrant’s common stock, par value of $0.01 per share, issued and outstanding as of November 4, 2022.

CATALYST BANCORP, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

Consolidated Statements of Financial Condition

1

Consolidated Statements of Income

2

Consolidated Statements of Comprehensive Income

3

Consolidated Statements of Changes in Shareholders' Equity

4

Consolidated Statements of Cash Flows

5

Notes to Unaudited Consolidated Financial Statements

6

Item 2.

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

26

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

45

Item 4.

Controls and Procedures

45

PART II

OTHER INFORMATION

46

Item 1.

Legal Proceedings

46

Item 1A.

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46

Item 3.

Defaults Upon Senior Securities

46

Item 4.

Mine Safety Disclosures

46

Item 5

Other Information

46

Item 6.

Exhibits

47

SIGNATURES

48

i

PART I. FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

    

(Unaudited)

September 30, 

December 31, 

(Dollars in thousands)

2022

2021

ASSETS

 

  

 

  

Non-interest-bearing cash

$

4,558

$

4,933

Interest-bearing cash and due from banks

 

31,639

 

35,951

Total cash and cash equivalents

 

36,197

 

40,884

Investment securities:

 

  

 

  

Securities available-for-sale, at fair value

 

78,563

 

88,339

Securities held-to-maturity (fair values of $10,794 and $13,152, respectively)

 

13,480

 

13,498

Loans receivable, net of unearned income

 

131,701

 

131,842

Allowance for loan losses

 

(1,804)

 

(2,276)

Loans receivable, net

 

129,897

 

129,566

Accrued interest receivable

 

566

 

579

Foreclosed assets

 

320

 

340

Premises and equipment, net

 

6,392

 

6,577

Stock in correspondent banks, at cost

 

1,799

 

1,793

Bank-owned life insurance

 

13,519

 

3,303

Other assets

 

2,681

 

470

TOTAL ASSETS

$

283,414

$

285,349

 

  

 

  

LIABILITIES

 

  

 

  

Deposits

 

  

 

  

Non-interest-bearing

$

31,988

$

30,299

Interest-bearing

 

152,239

 

146,496

Total deposits

 

184,227

 

176,795

Advances from Federal Home Loan Bank

 

9,153

 

9,018

Other liabilities

 

706

 

1,190

TOTAL LIABILITIES

 

194,086

 

187,003

 

  

 

  

SHAREHOLDERS' EQUITY

 

  

 

  

Preferred stock, $0.01 par value - 5,000,000 shares authorized; none issued

-

-

Common stock, $0.01 par value - 30,000,000 shares authorized; 5,290,000 issued and outstanding

53

53

Additional paid-in capital

50,902

50,802

Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")

(4,020)

(4,179)

Retained earnings

 

52,379

 

52,353

Accumulated other comprehensive income (loss)

 

(9,986)

 

(683)

TOTAL SHAREHOLDERS' EQUITY

 

89,328

 

98,346

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

283,414

$

285,349

The accompanying Notes are an integral part of these financial statements.

1

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended September 30, 

Nine Months Ended September 30, 

(Dollars in thousands)

2022

2021

2022

2021

INTEREST INCOME

  

  

  

  

Loans receivable, including fees

$

1,466

$

1,671

$

4,584

$

5,344

Investment securities

 

381

 

172

 

1,062

 

434

Other

 

185

 

13

 

262

 

37

Total interest income

 

2,032

 

1,856

 

5,908

 

5,815

INTEREST EXPENSE

 

  

 

  

 

  

 

  

Deposits

 

93

 

124

 

272

 

414

Advances from Federal Home Loan Bank

 

69

 

68

 

205

 

204

Total interest expense

 

162

 

192

 

477

 

618

Net interest income

 

1,870

 

1,664

 

5,431

 

5,197

Provision for (reversal of) loan losses

 

(115)

 

-

 

(375)

 

(286)

Net interest income after provision for (reversal of) loan losses

 

1,985

 

1,664

 

5,806

 

5,483

NON-INTEREST INCOME

 

  

 

  

 

  

 

  

Service charges on deposit accounts

 

192

 

165

 

542

 

448

Gain (loss) on disposals and sales of fixed assets

 

-

 

-

 

(77)

 

25

Bank-owned life insurance

 

97

 

22

 

216

 

67

Federal community development grant

 

-

 

1,826

 

171

 

1,826

Other

 

7

 

12

 

20

 

36

Total non-interest income

 

296

 

2,025

 

872

 

2,402

NON-INTEREST EXPENSE

 

  

 

  

 

  

 

  

Salaries and employee benefits

 

1,168

 

1,084

 

3,647

 

3,331

Occupancy and equipment

 

203

 

200

 

640

 

554

Data processing and communication

 

216

 

201

 

666

 

556

Professional fees

 

157

 

88

 

472

 

255

Directors’ fees

 

75

 

70

 

185

 

211

ATM and debit card

 

76

 

48

 

184

137

Foreclosed assets, net

 

(2)

 

39

 

(21)

 

74

Advertising and marketing

 

36

 

14

 

187

 

35

Franchise and shares tax

15

-

131

-

Regulatory fees and assessments

35

32

104

95

Insurance

34

14

100

35

Printing, supplies and postage

37

27

117

82

Other

 

78

 

67

 

285

 

211

Total non-interest expense

 

2,128

 

1,884

 

6,697

 

5,576

Income (loss) before income tax expense (benefit)

 

153

 

1,805

 

(19)

 

2,309

Income tax expense (benefit)

 

14

 

372

 

(45)

 

465

NET INCOME

$

139

$

1,433

$

26

$

1,844

Earnings per share - basic

$

0.03

$

N/A

$

0.01

$

N/A

Earnings per share - diluted

$

0.03

$

N/A

$

0.01

$

N/A

The accompanying Notes are an integral part of these financial statements.

2

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended September 30, 

Nine Months Ended September 30, 

(Dollars in thousands)

2022

    

2021

2022

    

2021

Net income

$

139

$

1,433

$

26

$

1,844

Net change in unrealized gains (losses) on available-for-sale securities

 

(4,229)

 

(209)

 

(11,776)

 

(477)

Income tax effect

 

888

 

44

 

2,473

 

100

Total other comprehensive income (loss)

 

(3,341)

 

(165)

 

(9,303)

 

(377)

Total comprehensive income (loss)

$

(3,202)

$

1,268

$

(9,277)

$

1,467

The accompanying Notes are an integral part of these financial statements.

3

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands)

Common Stock

Additional Paid-in Capital

Unallocated Common Stock Held by ESOP

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Total

BALANCE, JUNE 30, 2021

$

-

$

-

$

-

$

50,837

$

(105)

$

50,732

Net income

 

-

 

-

 

-

 

1,433

 

-

 

1,433

Other comprehensive income (loss)

 

-

 

-

 

-

 

-

(165)

 

(165)

BALANCE, SEPTEMBER 30, 2021

$

-

$

-

$

-

$

52,270

$

(270)

$

52,000

BALANCE, JUNE 30, 2022

$

53

$

50,838

$

(4,073)

$

52,240

$

(6,645)

$

92,413

Net income

 

-

 

-

 

-

 

139

 

-

 

139

Other comprehensive income (loss)

 

-

 

-

 

-

 

-

(3,341)

 

(3,341)

ESOP shares released for allocation

 

-

 

17

 

53

 

-

-

 

70

Stock compensation expense

 

-

 

47

 

-

 

-

-

 

47

BALANCE, SEPTEMBER 30, 2022

$

53

$

50,902

$

(4,020)

$

52,379

$

(9,986)

$

89,328

BALANCE, DECEMBER 31, 2020

$

-

$

-

$

-

$

50,426

$

107

$

50,533

Net income

 

-

 

-

 

-

 

1,844

 

-

 

1,844

Other comprehensive income (loss)

 

-

 

-

 

-

 

-

(377)

 

(377)

BALANCE, SEPTEMBER 30, 2021

$

-

$

-

$

-

$

52,270

$

(270)

$

52,000

BALANCE, DECEMBER 31, 2021

$

53

$

50,802

$

(4,179)

$

52,353

$

(683)

$

98,346

Net income

 

-

 

-

 

-

 

26

 

-

 

26

Other comprehensive income (loss)

 

-

 

-

 

-

 

-

(9,303)

 

(9,303)

ESOP shares released for allocation

 

-

 

53

 

159

 

-

-

 

212

Stock compensation expense

 

-

 

47

 

-

 

-

-

 

47

BALANCE, SEPTEMBER 30, 2022

$

53

$

50,902

$

(4,020)

$

52,379

$

(9,986)

$

89,328

The accompanying Notes are an integral part of these financial statements.

4

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30, 

(Dollars in thousands)

2022

    

2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

  

 

  

Net income

$

26

$

1,844

Adjustments to reconcile net income to net cash provided by operating activities:

 

  

 

  

Investment securities amortization, net

 

370

 

295

Federal Home Loan Bank stock dividends

 

(6)

 

(4)

Amortization of prepayment penalties on debt restructuring

135

135

Provision for (reversal of) loan losses

 

(375)

 

(286)

Net loss (gain) on disposals and sales of premises and equipment

 

77

 

(25)

Increase in cash surrender value of bank-owned life insurance

(216)

(67)

Stock-based compensation

259

-

Depreciation of premises and equipment

 

343

 

308

Net writedowns and losses (gains) on the sale of foreclosed assets

 

(29)

 

59

Deferred income tax expense (benefit)

 

58

 

(24)

(Increase) decrease in other assets

 

(112)

 

(263)

Increase (decrease) in other liabilities

 

(154)

 

535

Net cash provided by operating activities

 

376

 

2,507

CASH FLOWS FROM INVESTING ACTIVITIES

 

  

 

  

Activity in available-for-sale securities:

 

  

 

  

Proceeds from maturities, calls, and paydowns

 

8,547

 

5,967

Purchases

 

(10,900)

 

(35,672)

Activity in held-to-maturity securities:

 

  

 

Proceeds from maturities and calls

 

-

 

4,000

Net (increase) decrease in loans

 

54

 

14,791

Proceeds from sale of foreclosed assets

 

39

 

156

Purchases of premises and equipment

 

(235)

 

(1,477)

Proceeds from sale of premises and equipment

 

-

 

25

Purchase of bank-owned life insurance

 

(10,000)

 

-

Net cash used in investing activities

 

(12,495)

 

(12,210)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

  

Net increase in deposits

 

7,432

 

84,862

Net cash provided by financing activities

 

7,432

 

84,862

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

(4,687)

 

75,159

CASH AND CASH EQUIVALENTS, beginning of period

 

40,884

 

25,245

CASH AND CASH EQUIVALENTS, end of period

$

36,197

$

100,404

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES

 

  

 

  

Loans originated to facilitate the sale of real estate owned

$

-

$

82

Acquisition of real estate in settlement of loans

$

10

$

215

SUPPLEMENTAL SCHEDULE OF INTEREST AND TAXES PAID

 

  

 

  

Cash paid for interest

$

345

$

502

Cash paid for income taxes

$

243

$

82

The accompanying Notes are an integral part of these financial statements.

5

CATALYST BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. BASIS OF PRESENTATION

Catalyst Bancorp, Inc. (“Catalyst Bancorp” or the “Company”) is the holding company for Catalyst Bank (the “Bank”), formerly known as St. Landry Homestead Federal Savings Bank. The Bank has been in operation in the Acadiana region of south-central Louisiana since 1922 and offers commercial and retail banking products through six full-service locations.

The Company was incorporated by the Bank in February 2021 as part of the conversion of the Bank from the mutual to the stock form of organization (the “Conversion”). The Conversion was completed on October 12, 2021, at which time the Company acquired all of the issued and outstanding shares of common stock of the Bank and became the holding company for the Bank. Shares of the Company’s common stock were issued and sold in an offering to certain depositors of the Bank and others. The Company was not engaged in operations and had not issued any shares of stock prior to the completion of the Conversion.

As used in this report, unless the context otherwise requires, the terms “we,” “our,” “us,” or the “Company” refer to Catalyst Bancorp, and the term the “Bank” refers to Catalyst Bank, the wholly owned subsidiary of the Company. In addition, unless the context otherwise requires, references to the operations of the Company include the operations of the Bank.

The accompanying unaudited consolidated financial statements of the Company were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three and nine months ended September 30, 2022 and 2021 are not necessarily indicative of the results which may be expected for the entire fiscal year. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2021.

Critical Accounting Policies and Estimates

Critical 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 December 31, 2021.

On March 23, 2022, the Board of Directors adopted the 2022 Stock Option Plan and the 2022 Recognition and Retention Plan and Trust Agreement (“2022 Recognition and Retention Plan”), which were approved by shareholders at our annual meeting on May 17, 2022. Under the terms of both plans, officers, employees and directors selected by the Compensation Committee of the Board of Directors are eligible to receive benefits. A total of 529,000 shares of common stock, or 10% of the shares sold in the conversion offering, have been reserved for the future issuance pursuant to the 2022 Stock Option Plan. Options to acquire shares of common stock will be awarded with an exercise price no less than the fair market value of the common stock on the grant date. Under the terms of the 2022 Recognition and Retention Plan, the Company will contribute sufficient funds to the Recognition and Retention Plan Trust so that the Trust can purchase 211,600 shares of common stock, or 4.0% of the shares sold in the conversion offering. During the fourth quarter of 2022, the 2022 Recognition and Retention Plan commenced purchasing shares in the open market to the extent available.

On September 1, 2022, the Company granted a total of 295,340 awards under the 2022 Stock Option Plan and 119,336 awards under the 2022 Recognition and Retention Plan. In accordance with ASC 718, Compensation – Stock Compensation, the Company measures stock compensation expense based on the fair market value of the instrument as of

6

the grant date and is recognized over the service period, which is usually the vesting period. All awards issued on September 1, 2022 were issued with a five year vesting period.

There were no other material changes from the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In preparing the financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s financial condition, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.

Certain amounts reported in prior periods may have been reclassified to conform to the current period presentation. Such reclassifications had no effect on previously reported equity or net income.

NOTE 2. COMPLETION OF STOCK OFFERING

The Company completed its initial public offering (“IPO”) of stock in connection with the Bank’s conversion from the mutual to the stock form of organization on October 12, 2021. Information for periods prior to the completion of the Conversion are for the Bank only.

The Company issued a total of 5,290,000 shares of its common stock, par value $0.01 per share, for an aggregate of $52.9 million in total offering proceeds, including shares issued to the Company’s employee stock ownership plan (“ESOP”). The Company made a loan to the ESOP in the amount of $4.2 million, which the ESOP used to purchase 423,200 shares. The Company’s common stock trades on the Nasdaq Capital Market under the symbol “CLST”.

The costs of issuing the common stock were deferred and deducted from the sales proceeds of the IPO at December 31, 2021. Conversion costs totaled $2.1 million at December 31, 2021. The net proceeds of the IPO of $50.8 million are reflected in the Company’s shareholders’ equity.

NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (ASC 326), Measurement of Credit Losses on Financial Instruments. The amendments introduce an impairment model that is based on current expected credit losses (“CECL”), rather than incurred losses, to estimate credit losses on certain types of financial instruments, including loans, held-to-maturity securities and certain off-balance sheet financial instruments. The CECL should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Financial instruments with similar risk characteristics may be grouped together when estimating the CECL. The allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination that are measured at amortized cost basis is determined in a similar manner to other financial assets measured at amortized cost basis; however, the initial estimate of expected credit loss would be recognized through an allowance for credit losses with an offset to the purchase price at acquisition. Only subsequent changes in the allowance for credit losses are recorded as a credit loss expense for these assets. The ASU also amends the current available-for-sale security impairment model for debt securities whereby credit losses related to available-for-sale debt securities should be recorded through an allowance for credit losses. The amendments will be applied through a modified retrospective approach, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. On October 18, 2019, FASB approved an effective date delay applicable to smaller reporting companies and non-public business entities until January 2023. The Company has elected to delay implementation of the standard until January 2023. The Company has completed the implementation of a vendor provided software application and is currently conducting parallel testing of several CECL estimation methodologies. The Company expects the adoption of the ASU to increase the allowance for loan losses. The extent of the impact upon adoption is not known and will depend on the characteristics of the Company’s loan portfolio and economic conditions on that date as well as forecasted conditions thereafter.

7

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326), Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures. The amendments in this ASU respond to feedback received by the FASB during the post-implementation review of the amendments included in ASU 2016-13. The amendments in ASU 2022-02 eliminate the accounting guidance for TDRs by creditors in ASC 310-40, Receivables – Troubled Debt Restructurings by Creditors and enhance disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Stakeholders have observed that the additional designation of a loan modification as a TDR and the related accounting under current GAAP are unnecessarily complex and do not provide decision-useful information after the adoption of ASU 2016-13 since credit losses from TDRs are incorporated under the CECL model.  Under the amendments in ASU 2022-02, an entity must apply the guidance under ASC 310-20 to determine whether a modification results in a new loan or a continuation of an existing loan rather than applying the guidance for TDRs.  For public business entities, the amendments in ASU 2022-02 also require an entity to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20. The amendments in ASU 2022-02 are effective at the time of adoption of the amendments in ASU 2016-13. The Company is currently evaluating the provisions of the amendment; however, we do not expect that the adoption of ASU 2022-02 will have a material effect on the Company’s consolidated financial statements.

8

NOTE 4. EARNINGS PER SHARE

Earnings per common share was computed based on the following:

Three Months Ended September 30, 

Nine Months Ended September 30, 

(In thousands, except per share data)

2022

2022

Numerator

 

  

 

  

Net income available to common shareholders

$

139

$

26

Denominator

 

  

 

  

Weighted average common shares outstanding

 

5,290

 

5,290

Weighted average unallocated ESOP shares

(405)

(410)

Weighted average shares

4,885

4,880

Effect of dilutive shares:

Restricted stock

-

-

Stock options

-

-

Weighted average shares - assuming dilution

4,885

4,880

Basic earnings per common share

$

0.03

$

0.01

Diluted earnings per common share

$

0.03

$

0.01

During the three and nine months ended September 30, 2022, the number of convertible securities or other contracts to issue common stock outstanding that if converted or exercised would result in potential dilution of earnings per share was immaterial. At and during the three and nine months ended September 30, 2021, the Company did not have any common shares outstanding. The Company completed its IPO of stock in connection with the Bank’s Conversion from the mutual to the stock form of organization on October 12, 2021.

9

NOTE 5. INVESTMENT SECURITIES

Investment securities have been classified according to management’s intent. The amortized cost of securities and their approximate fair values are as follows:

    

September 30, 2022

(Dollars in thousands)

Amortized Cost

    

Gross Unrealized Gains

    

Gross Unrealized Losses

    

Fair Value

Securities available-for-sale

 

  

 

  

 

  

 

Mortgage-backed securities

$

74,762

$

-

$

(10,834)

$

63,928

U.S. Government and agency obligations

 

10,977

 

-

 

(1,098)

 

9,879

Municipal obligations

 

5,464

 

-

 

(708)

 

4,756

Total available-for-sale

$

91,203

$

-

$

(12,640)

$

78,563

Securities held-to-maturity

 

  

 

  

 

  

 

  

U.S. Government and agency obligations

$

13,009

$

-

$

(2,640)

$

10,369

Municipal obligations

 

471

 

-

 

(46)

 

425

Total held-to-maturity

$

13,480

$

-

$

(2,686)

$

10,794

    

December 31, 2021

(Dollars in thousands)

Amortized Cost

    

Gross Unrealized Gains

    

Gross Unrealized Losses

    

Fair Value

Securities available-for-sale

 

  

 

  

 

  

 

Mortgage-backed securities

$

75,374

$

87

$

(798)

$

74,663

U.S. Government and agency obligations

 

9,347

 

1

 

(111)

 

9,237

Municipal obligations

 

4,482

 

-

 

(43)

 

4,439

Total available-for-sale

$

89,203

$

88

$

(952)

$

88,339

Securities held-to-maturity

 

  

 

  

 

  

 

  

U.S. Government and agency obligations

$

13,019

$

23

$

(375)

$

12,667

Municipal obligations

 

479

 

6

 

-

 

485

Total held-to-maturity

$

13,498

$

29

$

(375)

$

13,152

There were no securities transferred between classifications during the nine months ended September 30, 2022 or 2021.

Investment securities with a carrying amount of approximately $14.2 million and $10.2 million, respectively, were pledged to secure deposits as required or permitted by law at September 30, 2022 and December 31, 2021.

10

The following is a summary of maturities of securities held-to-maturity and available-for-sale at September 30, 2022 and December 31, 2021:

September 30, 2022

Available-for-Sale

Held-to-Maturity

(Dollars in thousands)

Amortized Cost

    

Fair Value

    

Amortized Cost

    

Fair Value

Amounts maturing in:

 

  

 

  

 

  

 

  

One year or less

$

-

$

-

$

-

$

-

After one through five years

 

12,392

 

11,455

 

1,345

 

1,172

After five through ten years

 

15,562

 

13,910

 

8,125

 

6,460

After ten years

 

63,249

 

53,198

 

4,010

 

3,162

Total

$

91,203

$

78,563

$

13,480

$

10,794

December 31, 2021

Available-for-Sale

Held-to-Maturity

(Dollars in thousands)

    

Amortized Cost

    

Fair Value

    

Amortized Cost

    

Fair Value

Amounts maturing in:

 

  

 

  

 

  

 

  

One year or less

$

-

$

-

$

-

$

-

After one through five years

 

8,431

 

8,396

 

-

 

-

After five through ten years

 

12,695

 

12,604

 

9,479

 

9,157

After ten years

 

68,077

 

67,339

 

4,019

 

3,995

Total

$

89,203

$

88,339

$

13,498

$

13,152

Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments, or call options. The expected maturities may differ from contractual maturities because of the exercise of call options and potential paydowns. Accordingly, actual maturities may differ from contractual maturities.

11

Information pertaining to securities with gross unrealized losses at September 30, 2022 and December 31, 2021 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

September 30, 2022

Less than 12 Months

12 Months or Greater

Total

(Dollars in thousands)

    

Fair Value

    

Gross Unrealized Losses

    

Fair Value

    

Gross Unrealized Losses

    

Fair Value

    

Gross Unrealized Losses

Securities available-for-sale

 

  

 

  

 

  

 

  

 

 

Mortgage-backed securities

$

32,451

$

(4,669)

$

31,477

$

(6,165)

$

63,928

$

(10,834)

U.S. Government and agency obligations

 

6,707

 

(521)

 

3,172

 

(577)

 

9,879

 

(1,098)

Municipal obligations

 

2,408

 

(146)

 

2,348

 

(562)

 

4,756

 

(708)

Total available-for-sale

$

41,566

$

(5,336)

$

36,997

$

(7,304)

$

78,563

$

(12,640)

Securities held-to-maturity

 

  

 

  

 

  

 

  

 

  

 

  

U.S. Government and agency obligations

$

2,443

$

(566)

$

7,926

$

(2,074)

$

10,369

$