10-Q 1 mara-20221231x10q.htm 10-Q
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Dee

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 000-56269

MARATHON BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland

 

86-2191258

(State or other jurisdiction of
incorporation or organization)

 

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

500 Scott Street, Wausau, Wisconsin

 

54403

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (715) 845-7331

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

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

None

 

None

 

None

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 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, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “small 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 7(a)(2)(B) 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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:

As of February 13, 2023, there were 2,253,311 shares of the registrant’s common stock issued and outstanding.

MARATHON BANCORP, INC.

INDEX

    

PAGE NO.

PART I - FINANCIAL INFORMATION

2

 

 

Item 1.

Consolidated Balance Sheets as of December 31, 2022 (Unaudited) and June 30, 2022

2

 

Consolidated Statements of Income for the Three and Six Months Ended December 31, 2022 and 2021 (Unaudited)

3

 

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended December 31, 2022 and 2021 (Unaudited)

4-5

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended December 31, 2022 and 2021 (Unaudited)

6

 

Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2022 and 2021 (Unaudited)

7

 

Notes to Consolidated Financial Statements (Unaudited)

8

 

 

 

Item 2.

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

27

 

 

 

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

1

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

MARATHON BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

    

Unaudited

    

June 30, 

December 31, 2022

2022

Assets

Cash and due from banks

$

3,073,229

$

2,418,041

Federal funds sold

 

16,384,000

 

6,010,000

Cash and cash equivalents

 

19,457,229

 

8,428,041

Interest bearing deposits held in other financial institutions

 

599,291

 

1,945,073

Debt securities available for sale

 

9,414,015

 

10,617,238

Debt securities held to maturity, at amortized cost (fair value $390,093 and $419,000)

 

521,228

 

532,363

Loans, net of allowance of $2,059,471 and $2,195,050, respectively

 

192,621,976

 

185,629,872

Interest receivable

 

607,402

 

565,929

Investment in restricted stock, at cost

 

770,273

 

323,000

Cash surrender value life insurance

 

8,844,242

 

9,193,315

Premises and equipment, net

 

2,285,431

 

1,676,060

Other assets

 

1,086,721

 

1,107,689

Total assets

$

236,207,808

$

220,018,580

Liabilities and Stockholders' Equity

Liabilities

Deposits

Non-interest bearing

$

24,912,223

$

23,698,115

Interest bearing

 

178,111,965

 

164,402,333

Total deposits

203,024,188

188,100,448

Other liabilities

 

1,964,020

 

1,175,565

Total liabilities

 

204,988,208

 

189,276,013

Stockholders' Equity

Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued

Common stock, $.01 par value, 20,000,000 shares authorized, 2,262,919 and 2,269,700 shares issued and outstanding at December 31, 2022 and June 30, 2022, respectively

22,227

22,295

Additional paid-in capital

8,477,862

8,487,400

Retained earnings

 

24,235,985

 

23,423,432

Unearned ESOP shares, at cost

(804,051)

(821,531)

Accumulated other comprehensive loss

 

(712,423)

 

(369,029)

Total stockholders' equity

 

31,219,600

 

30,742,567

Total liabilities and stockholders' equity

$

236,207,808

$

220,018,580

See accompanying notes to the consolidated financial statements.

2

MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

Unaudited

    

 Three Months

    

 Three Months

    

Six Months

    

Six Months

Ended December 31, 

Ended December 31, 

Ended December 31, 

Ended December 31, 

2022

2021

2022

2021

Interest Income

Loans, including fees

$

2,022,138

$

1,610,637

$

3,933,538

$

3,422,801

Debt securities

 

59,872

 

83,034

 

130,089

 

163,418

Other

 

163,452

 

8,540

 

208,978

 

19,515

Total interest income

 

2,245,462

 

1,702,211

 

4,272,605

 

3,605,734

Interest Expense

Deposits

 

526,608

 

226,050

 

831,008

 

456,756

Borrowings and other

 

28,989

 

2,691

 

38,851

 

6,388

Total interest expense

 

555,597

 

228,741

 

869,859

 

463,144

Net Interest Income

 

1,689,865

 

1,473,470

 

3,402,746

 

3,142,590

Provision for Loan Losses

 

 

 

 

Net Interest Income After Provision for Loan Losses

 

1,689,865

 

1,473,470

 

3,402,746

 

3,142,590

Non-Interest Income

 

  

 

  

 

  

 

  

Service charges on deposit accounts

 

44,082

 

41,670

 

84,948

 

83,297

Mortgage banking income

 

54,653

 

172,100

 

136,243

 

358,066

Increase in cash value of life insurance

 

62,390

 

59,902

 

119,416

 

106,630

Gain on proceeds from life insurance death benefit

173,268

Net gain on securities transactions

 

24,000

 

14,000

 

24,000

 

14,000

Other income

 

8,337

 

2,118

 

15,791

 

8,369

Total non-interest income

 

193,462

 

289,790

 

553,666

 

570,362

Non-Interest Expenses

 

  

 

  

 

  

 

  

Salaries and employee benefits

 

831,677

 

741,210

 

1,663,544

 

1,566,350

Occupancy and equipment expenses

 

177,180

 

185,469

 

348,701

 

361,050

Data processing and office

 

99,484

 

104,496

 

186,534

 

201,304

Professional fees

 

188,841

 

172,057

 

373,908

 

329,534

Marketing expenses

 

33,549

 

27,623

 

51,355

 

42,662

Other expenses

 

159,691

 

147,930

 

311,651

 

276,987

Total non-interest expenses

 

1,490,422

 

1,378,785

 

2,935,693

 

2,777,887

Income Before Income Taxes

 

392,905

 

384,475

 

1,020,719

 

935,065

Provision for Income Taxes

 

91,505

 

99,610

 

208,166

 

233,109

Net Income

$

301,400

$

284,865

$

812,553

$

701,956

Net income per common shares-basic and diluted

$0.14

$0.13

$0.38

$0.33

Weighted average number of common shares outstanding-basic

2,148,581

2,144,911

2,148,181

2,144,221

Weighted average number of common shares outstanding-diluted

2,152,910

2,144,911

2,151,841

2,144,221

See accompanying notes to the consolidated financial statements.

3

MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited

    

Three Months Ended

December 31, 

2022

2021

Net Income

$

301,400

$

284,865

Other comprehensive income (loss)

Unrealized losses on available for sale debt securities

Unrealized holding loss arising during the period

 

(274,147)

 

(64,924)

Tax effect

 

74,680

 

17,684

Net amount

 

(199,467)

 

(47,240)

Reclassification adjustment for gains included in net

income (a)

 

(24,000)

 

(14,000)

Tax effect

 

6,538

 

3,815

Net amount

 

(17,462)

 

(10,185)

Amortization of unrealized losses on debt securities transferred from available for sale to held to maturity (b)

 

1,345

 

4,217

Other comprehensive loss

 

(215,584)

 

(53,208)

Comprehensive Income

$

85,816

$

231,657

(a)The reclassification adjustment is included in the Consolidated Statement of Income as Net Gain on Securities Transactions.

(b) The reclassification adjustment is reflected in the Consolidated Statement of Income as Interest Income - Debt Securities.

See accompanying notes to the consolidated financial statements.

4

MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited

    

Six Months Ended

December 31, 

2022

2021

Net Income

$

812,553

$

701,956

Other comprehensive (loss) income

Unrealized losses on available for sale debt securities

Unrealized holding loss arising during the period

 

(452,637)

 

(70,677)

Tax effect

 

123,899

 

19,251

Net amount

 

(328,738)

 

(51,426)

 

  

 

  

Reclassification adjustment for gains included in net income (a)

 

(24,000)

 

(14,000)

Tax effect

 

6,538

 

3,815

Net amount

 

(17,462)

 

(10,185)

Amortization of unrealized losses on debt securities transferred from available for sale to held to maturity (b)

 

2,806

 

9,336

Other comprehensive loss

 

(343,394)

 

(52,275)

Comprehensive Income

$

469,159

$

649,681

(a)The reclassification adjustment is included in the Consolidated Statement of Income as Net Gain on Securities Transactions.

(b) The reclassification adjustment is reflected in the Consolidated Statement of Income as Interest Income - Debt Securities.

See accompanying notes to the consolidated financial statements.

5

MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Unaudited

Accumulated

Additional

Unearned

Other

Preferred

Common

Paid-in

Retained

ESOP

Comprehensive

    

Stock

    

Stock

    

Capital

    

Earnings

    

Shares

    

Income (Loss)

    

Total

Balance, July 1, 2022

$

$

22,295

$

8,487,400

$

23,423,432

$

(821,531)

$

(369,029)

$

30,742,567

Net income

 

511,153

 

 

511,153

Other comprehensive loss

 

 

(127,810)

 

(127,810)

ESOP shares committed to be released (874 shares)

874

8,740

9,614

Stock based compensation

34,620

34,620

Balance, September 30, 2022

22,295

8,522,894

23,934,585

(812,791)

(496,839)

31,170,144

Net income

301,400

301,400

Other comprehensive loss

(215,584)

(215,584)

ESOP shares committed to be released (874 shares)

798

8,740

9,538

Stock based compensation

30,727

30,727

Purchase and retirement of common stock (6,781 shares)

(68)

(76,557)

(76,625)

Balance, December 31, 2022

$

$

22,227

$

8,477,862

$

24,235,985

$

(804,051)

$

(712,423)

$

31,219,600

Accumulated

Additional

Unearned

Other

Preferred

Common

Paid-in

Retained

ESOP

Comprehensive

Stock

    

Stock

    

Capital

    

Earnings

    

Shares

    

Income (Loss)

    

Total

Balance, July 1, 2021

$

$

22,295

$

8,484,019

$

22,088,669

$

(866,499)

$

120,667

$

29,849,151

Net income

 

417,091

 

 

417,091

Other comprehensive income

 

 

933

 

933

ESOP shares committed to be released (1,379 shares)

1,190

13,792

14,982

Balance, September 30, 2021

22,295

8,485,209

22,505,760

(852,707)

121,600

30,282,157

Net income

284,865

284,865

Other comprehensive loss

(53,208)

(53,208)

ESOP shares committed to be released (1,370 shares)

444

13,697

14,141

Balance, December 31, 2021

$

$

22,295

$

8,485,653

$

22,790,625

$

(839,010)

$

68,392

$

30,527,955

See accompanying notes to the consolidated financial statements.

6

MARATHON BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

Six Months Ended

December 31, 

    

2022

    

2021

Operating Activities

Net income

$

812,553

$

701,956

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

101,809

101,895

Stock based compensation

65,347

ESOP expense

19,152

29,123

Net amortization of discounts and premiums on debt securities

53,001

63,794

Amortization of deferred loan fees, net

(24,858)

(495,351)

Net gain on sale of loans

(56,352)

(223,686)

Realized gain on available for sale debt securities

(24,000)

(14,000)

Net change in deferred taxes

147,625

198,648

Gain on proceeds from life insurance death benefit

(173,268)

Earnings on cash value of life insurance

(119,416)

(106,630)

(Increase) decrease in interest receivable

(41,473)

16,813

Originations of loans held for sale

(972,700)

(12,385,042)

Proceeds from loans held for sale

1,029,052

12,608,728

Net amortization of operating lease right of use assets

53,021

Net change in operating lease liabilities

(61,493)

Net change in other assets

2,961

16,002

Net change in other liabilities

151,112

(306,350)

Net Cash from Operating Activities

962,073

205,900

Investing Activities

  

  

Net change in interest-bearing deposits in other financial institutions

1,345,782

(1,456,002)

Purchase of debt securities available for sale

(3,000,000)

Proceeds from life insurance death benefit

641,757

Proceeds from sales, maturities, and repayments of debt securities available for sale

698,156

1,260,577

Proceeds from maturities and calls of debt securities held to maturity

14,188

93,654

Purchase of bank owned life insurance

(3,000,000)

Net increase in restricted stock

(447,273)

Net increase in loans

(6,967,246)

(11,660,127)

Purchases of property and equipment

(65,364)

(9,239)

Net Cash used in Investing Activities

(4,780,000)

(17,771,137)

Financing Activities

  

  

Net change in deposits

14,923,740

11,436,665

Repayments of PPPLF funding, net

(10,222,591)

Purchase and retirement of common stock

(76,625)

Net Cash from Financing Activities

14,847,115

1,214,074

Net Change in Cash and Cash Equivalents

11,029,188

(16,351,163)

Cash and Cash Equivalents, Beginning of Year

8,428,041

46,048,643

Cash and Cash Equivalents, End of Year

$

19,457,229

$

29,697,480

Supplemental Disclosure of Cash Flow Information

  

  

Cash payments for

  

  

Interest

$

873,113

$

471,468

Taxes

87,000

46,000

Supplemental Schedule of Noncash Investing and Financing Activities

Lease liabilities arising from using right-of-use assets

$

698,837

$

See accompanying notes to the consolidated financial statements.

7

MARATHON BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

Note 1- Basis of Presentation

Marathon Bancorp, Inc. (the “Company”) is a Maryland chartered mid-tier stock holding company and was formed in connection with the conversion of Marathon Bank (the “Bank”) from a mutual to the mutual holding company form of organization in April 2021, and it is a subsidiary of Marathon MHC (the “Mutual Holding Company”), a Wisconsin chartered mutual holding company. The Mutual Holding Company received 1,226,223 shares, or 55.0%, of the Company’s issued stock at the time of the reorganization. In connection with the reorganization, Marathon Bancorp, Inc. sold 1,003,274 shares of common stock to the public at $10.00 per share, representing 45.0% of its outstanding shares of common stock at the time of the reorganization. The stock offering resulted in gross proceeds of $10.0 million, net of offering expenses of $1.4 million, resulting in net proceeds of $8.5 million. The Mutual Holding Company activity is not included in the accompanying consolidated financial statements. Marathon Bank is a wholly owned subsidiary of the Company. The same directors and officers, who manage the Bank, also manage the Company and the Mutual Holding Company.

The Bank is a Wisconsin stock savings bank, which conducts its business through four facilities. The Bank operates as a full-service financial institution with a primary market area including, but not limited to, Marathon County and Ozaukee County, Wisconsin. Its primary deposit products are demand deposits, savings, and certificates of deposits; and its primary lending products are commercial real estate, commercial and industrial, construction, one-to-four-family residential, multi-family real estate and consumer loans.

The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences could be material to the financial statements. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for loan losses, valuation of deferred tax assets, other than temporary impairment of debt securities and fair value of financial assets and liabilities.

In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the three and six month periods ended December 31, 2022 are not necessarily indicative of the results for the year ending June 30, 2023 or any other period. For further information, refer to the consolidated financial statements and notes thereto for the years ended June 30, 2022 and 2021 contained in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on September 28, 2022.

Recent Accounting Pronouncements

This section provides a summary description of recent ASUs issued by the FASB to the ASC that had or that management expects may have an impact on the consolidated financial statements issued upon adoption. The Company is classified as an emerging growth company and has elected 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. Effective dates reflect this election.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Topic 842 was subsequently amended by ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842)”. The amendments in this update increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. For leases with a term of 12 months or less, the amendments permit lessees to make an accounting policy election by class of underlying assets

8

not to recognize lease assets and lease liabilities. For finance leases, the amendments in this update require a lessee to (1) recognize a right-of-use asset and lease liability, initially measured at the present value of the lease payments, on the balance sheet; (2) recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of operations; (3) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases, the amendments in this update require a lessee to (1) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, on the balance sheet; (2) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; (3) classify all cash payments within operating activities in the statement of cash flows. On October 16, 2019, the FASB approved the proposal to delay the effective date for this standard for private and all other entities. Due to the Company’s extended transition period election, the amendments are effective for fiscal years beginning after December 15, 2020. In June 2020, the FASB issued ASU No. 2020-05, Coronavirus Disease 2019 (“COVID-19”) in response to the pandemic which has adversely affected the global economy and caused significant and widespread business and capital market disruptions. The FASB issued ASU 2020-05 as a limited deferral of the effective dates of certain ASUs, including ASU 2016-02 (including amendments issued after the issuance of the original) to provide immediate, near-term relief for certain entities for whom these ASUs are either currently effective or imminently effective.  The Company adopted ASU 2016-02 on July 1, 2022 using the optional transition method. The Company also elected the following practical expedients: the package of practical expedients, combining lease and nonlease components by class of underlying asset, and using hindsight in determining the lease terms. The adoption of this standard resulted in the recording of a ROU asset and lease liability of $698,837 as of July 1, 2022 for the Company’s five operating lease obligations. The adoption of this standard did not have a material impact on the Company’s operations, cash flows or capital ratios, nor did it cause the Company to no longer be well capitalized.

Recently Issued, But Not Yet Effective Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments.” Topic 326 was subsequently amended by ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses; ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses”; and ASU 2019-05, “Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief.” This ASU replaces the current incurred loss impairment methodology with a methodology that reflected expected credit losses measured at amortized cost and certain other instruments, including loans, held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit exposures. On October 16, 2019, the FASB approved the proposal to delay the effective date for this standard for private and all other entities. Due to the Company’s extended transition period election, the update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt this pronouncement beginning July 1, 2023. Management is currently evaluating the potential impact on its results of operations, financial position, and cash flows; however, due to the significant differences in the revised guidance from existing U.S. GAAP, the implementation of this guidance may result in material changes in the Company’s accounting for credit losses on financial instruments.

In March 2022, the FASB issued ASU 2022-02, "Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures" ("ASU 2022-02"). ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings ("TDRs") in ASC 310-40, "Receivables - Troubled Debt Restructurings by Creditors" for entities that have adopted the current expected credit loss ("CECL") model introduced by ASU 2016-13. ASU 2022-02 also requires that public business entities disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, "Financial Instruments—Credit Losses—Measured at Amortized Cost". ASU 2022-02 is effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect that ASU 2022-02 will have on its consolidated financial statements and related disclosures and has selected a third party vendor solution to assist with the application of ASU 2016-13. The loss estimation models are expected to be completed during the third quarter.

9

Note 2- Earnings Per Share

Basic net income per common share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Unallocated common shares held by the ESOP are not included in the weighted-average number of common shares outstanding for purposes of calculating earnings per common share until they are committed to be released.  Diluted earnings per share is adjusted for the dilutive effects of stock based compensation and is calculated using the treasury stock method. There were no dilutive effects for the three and six months ended December 31, 2022 or 2021. Set forth below is the calculation of earnings per share.

For the Three Months

For the Six Months

Ended December 31,

Ended December 31,

    

2022

    

2021

2022

2021

Net income applicable to common stock

$

301,400

$

284,865

$

812,553

$

701,956

Average number of shares outstanding

2,229,423

2,229,497

2,229,460

2,229,497

Less: Average unallocated ESOP shares

80,842

84,586

81,279

85,276

Average number of common shares outstanding used to calculate basic earnings per share

2,148,581

2,144,911

2,148,181

2,144,221

Effect of dilutive restricted stock awards

4,329

3,660

Average number of common shares outstanding used to calculate diluted earnings per share

2,152,910

2,144,911

2,151,841

2,144,221

Earnings per common share:

Basic

$

0.14

$

0.13

$

0.38

$

0.33

Diluted

0.14

0.13

0.38

0.33

Note 3- Debt Securities

Debt securities have been classified in the consolidated balance sheet according to management’s intent. The carrying value of securities as of December 31, 2022 and June 30, 2022, consists of the following:

December 31,

June 30,

    

2022

    

2022

Available for sale debt securities, at fair value

$

9,414,015

$

10,617,238

Held to maturity debt securities, at amortized cost

521,228

532,363

$

9,935,243

$

11,149,601

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

    

    

Gross

    

Gross

    

    

Amortized

Unrealized

Unrealized

Cost

Gains

Losses

Fair Value

December 31, 2022

Available for sale debt securities

States and municipalities

$

904,170

$

901

$

(9,512)

$

895,559

Mortgage-backed

 

2,284,115

 

24,464

 

(115,133)

 

2,193,446

Corporate bonds

 

7,139,076

 

 

(814,066)

 

6,325,010

$

10,327,361

$

25,365

$

(938,711)

$

9,414,015

Held to maturity debt securities

 

  

 

  

 

  

 

  

Mortgage-backed

$

521,228

$

$

(131,135)

$

390,093

10