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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 March 31, 2022

◻ 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. 000-56071

Eureka Homestead Bancorp, Inc.

(Exact name of registrant as specified in its charter)


Maryland		83-4051300
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

1922 Veterans Memorial Boulevard
Metairie, Louisiana		70005
(Address of Principal Executive Offices)		(Zip Code)

(504) 834-0242

(Registrant’s telephone number)

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: 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 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 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 May 9, 2022, 1,072,127 shares of the Company’s common stock, par value $0.01 per share, were issued and outstanding.

Table of Contents

Eureka Homestead Bancorp, Inc.

Form 10-Q

Index


		Page
	Part I. Financial Information

Item 1.	Consolidated Financial Statements

	Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021 (unaudited)	3

	Consolidated Statements of Income for the Three Months Ended March 31, 2022 and 2021 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021 (unaudited)	5

	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021 (unaudited)	6

	Consolidated Statements of Cash Flows for the Three Months Ended March 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	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

	Part II. Other Information

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

	Signature Page	34

Table of Contents

Part I. – Financial Information

Item 1.

Consolidated Financial Statements

EUREKA HOMESTEAD BANCORP, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

MARCH 31, 2022 AND DECEMBER 31, 2021

(in thousands)


	March 31,		December 31,
	2022		2021
ASSETS

Cash and Cash Equivalents	$	3,755	$	7,316
Interest-Bearing Deposits in Banks		7,486		7,742
Investment Securities		4,591		5,329
Loans Receivable, Net		76,782		75,943
Loans Held-for-Sale		1,203		401
Accrued Interest Receivable		394		421
Federal Home Loan Bank Stock		1,450		1,448
Premises and Equipment, Net		617		626
Cash Surrender Value of Life Insurance		4,246		4,225
Deferred Tax Asset		23		—
Prepaid Expenses and Other Assets		154		144
Total Assets	$	100,701	$	103,595

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Deposits	$	59,905	$	60,963
Advances from Federal Home Loan Bank		18,225		18,218
Advance Payments by Borrowers for Taxes and Insurance		1,076		1,902
Deferred Tax Liability		—		7
Accrued Expenses and Other Liabilities		1,525		659
Total Liabilities		80,731		81,749

Commitments and Contingencies (Note 7)

Stockholders' Equity:
Preferred Stock, $0.01 Par Value, 1,000,000 Shares Authorized, No Shares Issued		—		—
Common Stock, $0.01 Par Value, 9,000,000 Shares Authorized, 1,072,127 and 1,191,627 Shares Issued and Outstanding on March 31, 2022 and December 31, 2021, Respectively		11		12
Additional Paid-in Capital		8,736		10,498
Unallocated Common Stock Held by:
Employee Stock Ownership Plan (ESOP)		(995)		(1,006)
Recognition and Retention Plan (RRP)		—		—
Retained Earnings		12,303		12,317
Accumulated Other Comprehensive (Loss) Income		(85)		25
Total Stockholders' Equity		19,970		21,846
Total Liabilities and Stockholders' Equity	$	100,701	$	103,595

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

Table of Contents

EUREKA HOMESTEAD BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (Unaudited)

(in thousands except for Earnings Per Share )


	Three Months Ended March 31,
	2022		2021
Interest Income:
Loans Receivable	$	672	$	706
Investment Securities		13		14
Interest-Bearing Deposits in Banks		6		5
Total Interest Income		691		725
Interest Expense:
Deposits		161		200
Advances from Federal Home Loan Bank		103		116
Total Interest Expense		264		316
Net Interest Income		427		409

Provision for Loan Losses		—		8
Net Interest Income After Provision for Loan Losses		427		401

Non-Interest Income:
Service Charges and Other Income		9		28
Fees on Loans Sold		179		222
Income from Life Insurance		21		22
Total Non-Interest Income		209		272

Non-Interest Expenses:
Salaries and Employee Benefits		402		393
Occupancy Expense		52		51
FDIC Deposit Insurance Premium and Examination Fees		17		17
Data Processing		18		20
Accounting and Consulting		59		38
Insurance		24		21
Legal fees		15		12
Other		63		41
Total Non-Interest Expenses		650		593
(Loss) Income Before Income Tax Expense		(14)		80
Income Tax Expense		—		—
Net (Loss) Income	$	(14)	$	80

(Loss) Earnings Per Share: Basic	$	(0.01)	$	0.07

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

Table of Contents

EUREKA HOMESTEAD BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (Unaudited)

(in thousands)


	Three Months Ended March 31,
	2022		2021
Net (Loss) Income	$	(14)	$	80
Other Comprehensive (Loss):
Unrealized (Losses) on Investment Securities		(139)		(5)
Other Comprehensive (Loss) Before Income Taxes		(139)		(5)
Income Tax Effect		29		1
Other Comprehensive (Loss), Net of Income Taxes		(110)		(4)
Comprehensive (Loss) Income	$	(124)	$	76

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

Table of Contents

EUREKA HOMESTEAD BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (Unaudited)

(in thousands)


									Accumulated
			Additional		Unallocated				Other
	Common		Paid-in		ESOP		Retained		Comprehensive
	Stock		Capital		Shares		Earnings		Income/(Loss)		Total
Balance, January 1, 2021	$	12	$	10,765	$	(1,052)	$	12,171	$	44	$	21,940
ESOP Shares Earned		—		4		11		—		—		15
Stock Shares Repurchased		—		(280)		—		—		—		(280)
Net Income		—		—		—		80		—		80
Other Comprehensive Loss		—		—		—		—		(4)		(4)
Balance, March 31, 2021	$	12	$	10,489	$	(1,041)	$	12,251	$	40	$	21,751

Balance, January 1, 2022	$	12	$	10,498	$	(1,006)	$	12,317	$	25	$	21,846
ESOP Shares Earned		—		9		11		—		—		20
Stock Shares Repurchased		(1)		(1,771)		—		—		—		(1,772)
Net Loss		—		—		—		(14)		—		(14)
Other Comprehensive Loss		—		—		—		—		(110)		(110)
Balance, March 31, 2022	$	11	$	8,736	$	(995)	$	12,303	$	(85)	$	19,970

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

Table of Contents

EUREKA HOMESTEAD BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (Unaudited)

(in thousands)


	Three Months Ended March 31,
	2022		2021
Cash Flows from Operating Activities:
Net (Loss) Income	$	(14)	$	80
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities:
Cash Provided by (Used in) Operating Activities:
Provision for Loan Losses		—		8
Depreciation Expense		9		10
Amortization of FHLB Advance Prepayment Penalty		7		6
Net (Accretion) Amortization of Discount/Premium on Mortgage-Backed Securities		(2)		9
Stock Dividend on Federal Home Loan Bank Stock		(2)		(2)
Non-cash Compensation for ESOP		20		15
Net (Increase) Decrease in Loans Held-for-Sale		(802)		1,815
Changes in Assets and Liabilities:
Decrease (Increase) in Accrued Interest Receivable		27		(9)
(Increase) in CSV of Life Insurance		(21)		(22)
(Increase) Decrease in Prepaid Expenses and Other Assets		(10)		52
Increase (Decrease) in Accrued Expenses and Other Liabilities		866		(88)
Net Cash Provided by Operating Activities		78		1,874

Cash Flows from Investing Activities:
Net (Increase) in Loans		(839)		(6,269)
Proceeds from Maturities of Interest-Bearing Deposits in Banks		3,995		6,741
Purchases of Interest-Bearing Deposits in Banks		(3,739)		(750)
Proceeds from Sales, Calls and Principal Repayments of Investment Securities		600		218
Net Cash Provided by (Used in) Investing Activities		17		(60)

Cash Flows from Financing Activities:
Net (Decrease) Increase in Deposits		(1,058)		3,029
Shares Repurchased		(1,772)		(280)
Net (Decrease) in Advance Payments by Borrowers for Taxes and Insurance		(826)		(676)
Net Cash (Used in) Provided by Financing Activities		(3,656)		2,073
Net (Decrease) Increase in Cash and Cash Equivalents		(3,561)		3,887

Cash and Cash Equivalents at Beginning of Period		7,316		3,952
Cash and Cash Equivalents at End of Period	$	3,755	$	7,839

Supplemental Disclosures for Cash Flow Information:
Cash Paid for:
Interest	$	277	$	316

Supplemental Schedule for Noncash Investing and Financing Activities:
Change in the Unrealized Gain/Loss on Investment Securities	$	(139)	$	(5)

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

Table of Contents

Eureka Homestead Bancorp, Inc.

Form 10-Q

EUREKA HOMESTEAD BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022 (Unaudited)

Note 1 – Basis of Presentation -

The accompanying unaudited consolidated financial statements of Eureka Homestead Bancorp, Inc. (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-month period ended March 31, 2022 are not necessarily indicative of the results which may be expected for the entire year. These statements should be read in conjunction with the Financial Statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (“SEC”). Reference is made to the accounting policies of the Company described in the Notes to the Financial Statements contained in the Annual Report.

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 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.

Note 2 – Recent Accounting Pronouncements -

Emerging Growth Company Status

The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as the Company is an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to other public companies. An emerging growth company may elect to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, but must make such election when the company is first required to file a registration statement. The Company has elected to use the extended transition period described above and intends to maintain its emerging growth company status as allowed under the JOBS Act.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), Conforming Amendments Related to Leases. This ASU amends the codification regarding leases in order to increase transparency and comparability. The ASU requires companies to recognize lease assets and liabilities on the balance sheet and disclose key information about leasing arrangements. A lessee would recognize a liability to make lease payments and a right-of-use asset representing its right to use the leased asset for the lease term. For an emerging growth company, the amendments in this update are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

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In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 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 (e.g., loans and held to maturity securities), including certain off-balance sheet financial instruments (e.g., commitments to extend credit and standby letters of credit that are not unconditionally cancellable). 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 ASU also amends the current available-for-sale security impairment model for debt securities whereby credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses. For an emerging growth company, the amendments in this update, as amended through more recent related ASUs, are effective for fiscal years beginning after December 15, 2022, and interim periods within fiscal years beginning after December 15, 2023. 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. The Company is currently planning for the implementation of this accounting standard. It is too early to assess the impact this ASU will have on the Company’s Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. The amendments did not have a material impact on the Company’s Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and in January 2021, issued an update ASU 2021-01. The ASUs provide optional guidance for a limited period of time to ease the potential burden in accounting for (or derecognizing the effects of) reference rate reform on financial reporting. Specifically, the amendments provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. These relate only to those contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASUs became effective March 12, 2020 and can be adopted anytime during the period of January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of this guidance. There is only one investment security relationship that has LIBOR pricing with a maturity date beyond December 31, 2022. The documentation for the relationship contains language for an alternative pricing index when LIBOR is no longer available.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures. This ASU eliminates the troubled debt restructuring (“TDR”) accounting model for creditors that have already adopted Topic 326, which is commonly referred to as the current expected credit loss (“CECL”) model. In lieu of the TDR accounting model, creditors now will apply the general loan modification guidance in Subtopic 310-20 to all loan modifications, including modifications made for borrowers experiencing financial difficulty. Under the general loan modification guidance, a modification is treated as a new loan only if the terms of the new loan are at least as favorable to the lender as the terms for comparable loans to other customers with similar collection risks, and modifications to the terms of the original loan are more than minor. If either condition is not met, the modification is accounted for as the continuation of the old loan with any effect of the modification treated as a prospective adjustment to the loan’s effective interest rate. In addition, this ASU requires the disclosure of gross charge-offs recorded in the current period for financing receivables by origination year. For an emerging growth company, that has not adopted Topic 326, ASU 2022-02 takes effect in reporting periods when Topic 326 is adopted, with early adoption permitted. The Company is currently assessing the impact of this ASU on the Company’s Consolidated Financial Statements.

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Note 3 – (Loss) Earnings Per Share -

Basic earnings per share (“EPS”) represents income available or loss attributable to common stockholders divided by the weighted average number of common shares outstanding; no dilution for any potentially convertible shares is included in the calculation. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

(Loss) earnings per common share were computed based on the following:


	Three Months Ended March 31,
(in thousands, except per share data)	2022		2021
Numerator:
Net (loss) income available to common stockholders	$	(14)	$	80

Denominator:
Weighted average common shares outstanding		1,180		1,190
Less: Average unallocated ESOP shares		100		103
Weighted average shares		1,080		1,087

Basic (loss) earnings per common share	$	(0.01)	$	0.07

Note 4 – Investment Securities -

The amortized cost and fair values of investment securities available-for-sale were as follows:


			Gross		Gross
March 31, 2022:	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gains		(Losses)		Value
Mortgage-Backed Securities:
FHLMC	$	2,558	$	—	$	(132)	$	2,426
SBA 7a Pools		2,140		25		—		2,165
Total Investment Securities Available-for-Sale	$	4,698	$	25	$	(132)	$	4,591


			Gross		Gross
December 31, 2021:	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gains		(Losses)		Value
Mortgage-Backed Securities:
FHLMC	$	2,766	$	1	$	—	$	2,767
SBA 7a Pools		2,531		31		—		2,562
Total Investment Securities Available-for-Sale	$	5,297	$	32	$	—	$	5,329

All investment securities held on March 31, 2022 and December 31, 2021, were government-sponsored mortgage-backed or SBA pool securities.

The amortized cost and fair values of the investment securities available-for-sale at March 31, 2022, by contractual maturity, are shown below. For mortgage-backed securities and SBA 7a pools, expected maturities will differ from

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contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Available-for-Sale
March 31, 2022	Amortized		Fair
(in thousands)	Cost		Value
Amounts Maturing:
After One Year through Five Years	$	—	$	—
After Five Years through Ten Years		1,920		1,931
After Ten Years		2,778		2,660
	$	4,698	$	4,591

No investment securities were pledged to secure advances from the FHLB at March 31, 2022 and December 31, 2021.

There were no sales or calls of available-for-sale investment securities for the three months ended March 31, 2022 and the year ended December 31, 2021.

Gross unrealized losses in investment securities at March 31, 2022 and December 31, 2021, existing for continuous periods of less than 12 months and for continuous periods of 12 months or more, are as follows:


March 31, 2022
(in thousands)	Less Than 12 Months				12 Months or More				Totals
Security			Unrealized				Unrealized				Unrealized
Description	Fair Value		(Losses)		Fair Value		(Losses)		Fair Value		(Losses)
Mortgage-Backed
FHLMC	$	2,558	$	(132)	$	—	$	—	$	2,558	$	(132)
SBA 7a Pools		—		—		—		—		—		—
	$	2,558	$	(132)	$	—	$	—	$	2,558	$	(132)


December 31, 2021
(in thousands)	Less Than 12 Months				12 Months or More				Totals
Security			Unrealized				Unrealized				Unrealized
Description	Fair Value		(Losses)		Fair Value		(Losses)		Fair Value		(Losses)
Mortgage-Backed
FHLMC	$	1,415	$	—	$	—	$	—	$	1,415	$	—
SBA 7a Pools		—		—		—		—		—		—
	$	1,415	$	—	$	—	$	—	$	1,415	$	—

Management evaluates securities for other-than temporary impairment on a periodic and regular basis, as well as when economic or market concerns warrant such evaluation. No declines at March 31, 2022 and December 31, 2021, were deemed to be other-than-temporary.

In analyzing an issuer’s financial condition, management considers whether the federal government or its agencies issued the securities, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial statements.

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Note 5 – Loans Receivable and the Allowance for Loan Losses -

Loans receivable at March 31, 2022 and December 31, 2021 are summarized as follows:


	March 31,		December 31,
(in thousands)	2022		2021
Mortgage Loans
1-4 Family	$	65,686	$	66,356
Multifamily		2,390		2,780
Construction and Land		6,499		4,576
Commercial Real Estate		1,468		1,480
Consumer Loans		230		239
		76,273		75,431
Plus (Less):
Unamortized Loan Fees/Costs		1,367		1,370
Allowance for Loan Losses		(858)		(858)
Net Loans Receivable	$	76,782	$	75,943

The performing mortgage loans are pledged, under a blanket lien, as collateral securing advances from the FHLB at March 31, 2022 and December 31, 2021.

Management evaluates the allowance for loan losses to assess the risk of loss in the loan portfolio and to determine the adequacy of the allowance for loan losses. For purposes of this evaluation, loans are aggregated into pools based on various characteristics. Some of those characteristics include payment status, concentrations, and loan to collateral value and the financial status of borrowers. The allowance allocated to each of these pools is based on historical charge-off rates, adjusted for changes in the credit risk characteristics within these pools, as determined from current information and analyses. In determining the appropriate level of the allowance, management also ensures that the overall allowance appropriately reflects current macroeconomic conditions, industry exposure and a margin for the imprecision inherent in most estimates of expected credit losses. In addition to these factors, management also considers the following for each segment of the loan portfolio when determining the allowance:

• Residential mortgages - This category consists of loans secured by first and junior liens on residential real estate. The performance of these loans may be adversely affected by unemployment rates, local residential real estate market conditions and the interest rate environment.

• Commercial real estate - This category consists of loans primarily secured by office buildings, and retail shopping facilities. The performance of commercial real estate loans may be adversely affected by conditions specific to the relevant industry, the real estate market for the property type and geographic region where the property or borrower is located.

• Construction and land - This category consists of loans to finance the ground-up construction and/or improvement of construction of residential and commercial properties and loans secured by land. The performance of construction and land loans is generally dependent upon the successful completion of improvements and/or land development for the end user, the sale of the property to a third party, or a secondary source of cash flow from the owners. The successful completion of planned improvements and development maybe adversely affected by changes in the estimated property value upon completion of construction, projected costs and other conditions leading to project delays.

• Multi-family residential - This category consists of loans secured by apartment or residential buildings with five or more units used to accommodate households on a temporary or permanent basis. The performance of multi-family loans is generally dependent on the receipt of rental income from the tenants who occupy the subject property. The occupancy rate of the subject property and the ability of the tenants to pay rent may be adversely affected by the location of the subject property and local economic conditions.

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• Consumer - This category consists of loans to individuals for household, family and other personal use. The performance of these loans may be adversely affected by national and local economic conditions, unemployment rates and other factors affecting the borrower's income available to service the debt. All of our consumer loans are secured by our customers’ savings accounts and/or certificates of deposit.

As a result of the uncertainties inherent in the estimation process, management’s estimate of loan losses and the related allowance could change in the near term.

Based on management’s periodic evaluation of the allowance for loan losses, a provision for loan losses is charged to operations if additions to the allowance are required. Actual loan charge-offs are deducted from the allowance and subsequent recoveries of previously charged-off loans are added to the allowance.

The following tables set forth, as of March 31 2022 and December 31, 2021, the balance of the allowance for loan losses by portfolio segment, disaggregated by impairment methodology, which is then further segregated by amounts evaluated for impairment collectively and individually. The allowance for loan losses allocated to each portfolio segment is not necessarily indicative of future losses in any particular portfolio segment and does not restrict the use of the allowance to absorb losses in other portfolio segments.

Allowance for Loan Losses and Recorded Investment in Loans Receivable
March 31, 2022 (in thousands)


					Mortgage-		Mortgage-
	Mortgage-		Mortgage-		Construction		Commercial
	1-4 Family		Multifamily		and Land		Real Estate		Consumer		Total
Allowance for Loan Losses:
Beginning Balance	$	752	$	21	$	63	$	22	$	—	$	858
Charge-Offs		—		—		—		—		—		—
Recoveries		—		—		—		—		—		—
Provision (Credit)		4		(3)		(1)		—		—		—
Ending Balance	$	756	$	18	$	62	$	22	$	—	$	858

Ending Balance:
Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—

Collectively Evaluated for Impairment	$	756	$	18	$	62	$	22	$	—	$	858

Loans Receivable:
Ending Balance	$	65,686	$	2,390	$	6,499	$	1,468	$	230	$	76,273

Ending Balance:
Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—

Collectively Evaluated for Impairment	$	65,686	$	2,390	$	6,499	$	1,468	$	230	$	76,273

The allowance for loan losses for Mortgage 1-4 Family Loans of $756,000 includes an unallocated portion of $481,000 as of March 31 2022.

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Allowance for Loan Losses and Recorded Investment in Loans Receivable
December 31, 2021 (in thousands)


					Mortgage-		Mortgage-
	Mortgage-		Mortgage-		Construction		Commercial
	1-4 Family		Multifamily		and Land		Real Estate		Consumer		Total
Allowance for Loan Losses:
Beginning Balance	$	818	$	22	$	6	$	4	$	—	$	850
Charge-Offs		—		—		—		—		—		—
Recoveries		8		—		—		—		—		8
Provision (Credit)		(74)		(1)		57		18		—		—
Ending Balance	$	752	$	21	$	63	$	22	$	—	$	858

Ending Balance:
Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—

Collectively Evaluated for Impairment	$	752	$	21	$	63	$	22	$	—	$	858

Loans Receivable:
Ending Balance	$	66,356	$	2,780	$	4,576	$	1,480	$	239	$	75,431

Ending Balance:
Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—

Collectively Evaluated for Impairment	$	66,356	$	2,780	$	4,576	$	1,480	$	239	$	75,431

The allowance for loan losses for Mortgage 1-4 Family Loans of $752,000 includes an unallocated portion of $477,000 as of December 31, 2021.

Management further disaggregates the loan portfolio segments into classes of loans, which are based on the initial measurement of the loan, risk characteristics of the loan and the method for monitoring and assessing the credit risk of the loan.

Loan Grades / Classification

The primary purpose of grading loans is to assess credit quality and assist in identifying potential problem loans. Every loan in the portfolio is assigned a loan grade based on quality and level of risk. Loan grades are updated as events occur that bear on the collectability of the loan, such as change in payment flow or status of the obligor or collateral. Changes in loan grades are reported to the Board Loan Committee.

Each credit reviewed is assigned a loan grade based on the following system:

Loan Grade 1Pass – Good

Loans with no identified problems and do not require more than normal attention. The repayment source is well defined and the borrower/guarantor exhibits no inability of repaying the loan as agreed. The financial information is acceptable and the loan meets credit and policy requirements and exhibits no unusual elements of risk. The collateral is acceptable and adequate.

Loan Grade 2Pass – Fair

These are performing owner-occupied loans that exhibit diminished borrower capacity, such as sufficiently-aged Troubled Debt Restructurings or loans that are frequently delinquent more than 30 days but less than 60 days. Also included are performing investor loans with a good payment record but lack updated financial information but are judged from alternate sources to have satisfactory cash flows and a sufficiently strong guarantor.

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Loan Grade 3Watch

Owner-occupied loans that are well-secured but are occasionally delinquent more than 60 days but less than 90. Also included are performing investor loans lacking required current financial information or that demonstrate diminished guarantor capacity and an estimated stressed debt service coverage ratio of less than 1.20.

Loan Grade 4Special Mention (For investment loans only.)

Investment loans that have potential or identified weaknesses that deserve management’s close attention. If left uncorrected, these may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. These loans are not adversely classified and do not expose the institution to sufficient risk to warrant adverse classification. Default is not imminent.

Adverse Classifications

Loan Grade 5Substandard

A loan that is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledge, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard.

Loan Grade 6Doubtful

A loan that has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors which may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined.

Credit Quality Indicators - Credit Risk Profile Based on Loan Grades at March 31, 2022 (in thousands)


					Special
	Pass		Watch		Mention		Substandard		Doubtful		Total
Mortgage Loans:
1 to 4 Family	$	65,686	$	—	$	—	$	—	$	—	$	65,686
Multifamily		2,390		—		—		—		—		2,390
Construction and Land		6,499		—		—		—		—		6,499
Commercial Real Estate		1,468		—		—		—		—		1,468
Non-Mortgage Loans:
Consumer		230		—		—		—		—		230
Total	$	76,273	$	—	$	—	$	—	$	—	$	76,273

Credit Quality Indicators - Credit Risk Profile Based on Loan Grades at December 31, 2021 (in thousands)


					Special
	Pass		Watch		Mention		Substandard		Doubtful		Total
Mortgage Loans:
1 to 4 Family	$	66,356	$	—	$	—	$	—	$	—	$	66,356
Multifamily		2,780		—		—		—		—		2,780
Construction and Land		4,576		—		—		—		—		4,576
Commercial Real Estate		1,480		—		—		—		—		1,480
Non-Mortgage Loans:
Consumer		239		—		—		—		—		239
Total	$	75,431	$	—	$	—	$	—	$	—	$	75,431

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At March 31 2022 and December 31, 2021, loan balances outstanding on non-accrual status amounted to $0 and $0, respectively. The Company considers loans more than 90 days past due and on nonaccrual as nonperforming loans.

At March 31 2022 and December 31, 2021, the credit quality indicators (performing and nonperforming loans), disaggregated by class of loan, are as follows:

Credit Quality Indicators - Credit Risk Profile Based on Payment Activity at March 31 2022 (in thousands)


			Non-
	Performing		Performing		Total
Mortgage Loans:
1 to 4 Family	$	65,686	$	—	$	65,686
Multifamily		2,390		—		2,390
Construction and Land		6,499		—		6,499
Commercial Real Estate		1,468		—		1,468
Non-Mortgage Loans:
Consumer		230		—		230
Total	$	76,273	$	—	$	76,273

Credit Quality Indicators - Credit Risk Profile Based on Payment Activity at December 31, 2021 (in thousands)


			Non-
	Performing		Performing		Total
Mortgage Loans:
1 to 4 Family	$	66,356	$	—	$	66,356
Multifamily		2,780		—		2,780
Construction and Land		4,576		—		4,576
Commercial Real Estate		1,480		—		1,480
Non-Mortgage Loans:
Consumer		239		—		239
Total	$	75,431	$	—	$	75,431

The following tables reflect certain information with respect to the loan portfolio delinquencies by loan class and amount as of March 31, 2022 and December 31, 2021. There were no loans over 90 days past due and still accruing as of March 31, 2022 and December 31, 2021.

Aged Analysis of Past Due Loans Receivable at March 31, 2022 (in thousands)


	30-59		60-89		90 Days or						Total
	Days		Days		Greater		Total				Loans
	Past Due		Past Due		Past Due		Past Due		Current		Receivable
Mortgage Loans:
1 to 4 Family	$	—	$	—	$	—	$	—	$	65,686	$	65,686
Multifamily		—		—		—		—		2,390		2,390
Construction and Land		—		—		—		—		6,499		6,499
Commercial Real Estate		—		—		—		—		1,468		1,468
Non-Mortgage Loans:
Consumer		—		—		—		—		230		230
Total	$	—	$	—	$	—	$	—	$	76,273	$	76,273

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Aged Analysis of Past Due Loans Receivable at December 31, 2021 (in thousands)


	30-59		60-89		90 Days or						Total
	Days		Days		Greater		Total				Loans
	Past Due		Past Due		Past Due		Past Due		Current		Receivable
Mortgage Loans:
1 to 4 Family	$	—	$	—	$	—	$	—	$	66,356	$	66,356
Multifamily		—		—		—		—		2,780		2,780
Construction and Land		—		—		—		—		4,576		4,576
Commercial Real Estate		—		—		—		—		1,480		1,480
Non-Mortgage Loans:
Consumer		—		—		—		—		239		239
Total	$	—	$	—	$	—	$	—	$	75,431	$	75,431

The following is a summary of information pertaining to impaired loans as of March 31, 2022 and December 31, 2021.

Impaired Loans

March 31, 2022

(in thousands)

Unpaid

Average

Interest

Recorded

Principal

Related

Recorded

Income

Investment

Balance

Allowance

Investment

Recognized

Mortgage Loans

—

Non-Mortgage Loans

—

Impaired Loans

December 31, 2021

(in thousands)

Unpaid

Average

Interest

Recorded

Principal

Related

Recorded

Income

Investment

Balance

Allowance

Investment

Recognized

Mortgage Loans

—

Non-Mortgage Loans

—

The Company seeks to assist customers that are experiencing financial difficulty by renegotiating loans within lending regulations and guidelines. Once modified in a troubled debt restructuring, a loan is generally considered impaired until its contractual maturity. At the time of the restructuring, the loan is evaluated for an asset-specific allowance for loan losses. The Company continues to specifically reevaluate the loan in subsequent periods, regardless of the borrower’s performance under the modified terms. If a borrower subsequently defaults on the loan after it is restructured, the Company provides an allowance for loan losses for the amount of the loan that exceeds the value of the related collateral.

The Company had no troubled debt restructurings as of March 31, 2022 and December 31, 2021 or any that defaulted subsequent to the restructuring through the date the financial statements were issued.

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Note 6 – Regulatory Matters -

The Bank is subject to various regulatory capital requirements administered by its primary Federal regulator, the Office of the Comptroller of the Currency (OCC). Failure to meet the minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and the financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory reporting requirements. The Bank’s capital amounts and classification under the prompt corrective action guidelines are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total capital, tier 1 capital, and common equity tier 1 capital to risk-weighted assets (as defined in the regulations), and leverage capital, which is tier 1 capital to adjusted average total assets (as defined). Management believes, as of March 31, 2022 and December 31, 2021, that the Bank meets all the capital adequacy requirements to which it is subject.

As of March 31, 2022 and December 31, 2021, the most recent notifications from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To remain categorized as well capitalized, the Bank will have to maintain minimum total capital, common equity tier 1 capital, tier 1 capital, and leveraged capital ratios as disclosed in the table below. There are no conditions or events since the most recent notification that management believes have changed the Bank’s category. The Bank’s actual and required capital amounts and ratios are as follows:


									To be Well
									Capitalized Under
					For Capital				Prompt Corrective
March 31, 2022:	Actual				Adequacy Purposes				Action Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital
(to Risk Weighted Assets)	$	20,152	39.11	%	$	4,122	8.00	%	$	5,152	10.00	%
Tier 1 Capital
(to Risk Weighted Assets)	$	19,506	37.86	%	$	3,091	6.00	%	$	4,122	8.00	%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)	$	19,506	37.86	%	$	2,318	4.50	%	$	3,349	6.50	%
Tier 1 Leverage Capital
(to Adjusted Total Assets)	$	19,506	19.03	%	$	4,101	4.00	%	$	5,126	5.00	%


									To be Well
									Capitalized Under
					For Capital				Prompt Corrective
December 31, 2021:	Actual				Adequacy Purposes				Action Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital
(to Risk Weighted Assets)	$	20,098	39.49	%	$	4,071	8.00	%	$	5,089	10.00	%
Tier 1 Capital
(to Risk Weighted Assets)	$	19,460	38.24	%	$	3,054	6.00	%	$	4,071	8.00	%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)	$	19,460	38.24	%	$	2,290	4.50	%	$	3,308	6.50	%
Tier 1 Leverage Capital
(to Adjusted Total Assets)	$	19,460	18.72	%	$	4,159	4.00	%	$	5,198	5.00	%

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A reconciliation of the Bank’s capital determined under GAAP to Total Capital, Tier 1 Capital, Common Equity Tier 1 Capital and Tier 1 Leverage Capital for March 31, 2022 and December 31, 2021, is as follows:


	March 31,		December 31,
(in thousands)	2022		2021
Total Equity (Bank Only)	$	19,421	$	19,485
Unrealized Losses (Gains) on Securities
Available-for-Sale, Net		85		(25)

Tangible, Tier 1 Capital and Common Equity Tier 1		19,506		19,460
Allowance for Loan Losses Included in Capital		646		638
Total Capital	$	20,152	$	20,098

The specific reserves included in the Allowance for Loan Losses were not significant as of March 31, 2022 and December 31, 2021.

Note 7 – Commitments and Contingencies -

In the normal course of business, the Company has outstanding commitments, such as commitments to extend credit, which are not included in the accompanying financial statements. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making such commitments as it does for instruments that are included in the Balance Sheets.

Commitments to extend credit 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. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation.

At March 31, 2022 and December 31, 2021, the Company had $6.8 million and $9.0 million of outstanding commitments to originate loans, respectively, each of which represents the balances of remaining funds to be disbursed on construction loans in process. In recent years we have sold loans on an industry-standard, servicing-released basis. At March 31, 2022, there were mortgage loans sold to investors with limited recourse for certain periods after the date of sale totaling $8.1 million at the sale date. Recourse would apply if the borrower(s) default on any payment within the first four months of the mortgage loan and it remains in default for a period of 90 days, or if the mortgage loan prepays in full within 180 days of the sale date. Should an early payment default occur, Eureka Homestead shall, at its sole discretion, repurchase such mortgage loan from the purchaser at its current amortized balance plus the service release premium received or indemnify the purchaser by paying the service release premium received plus $5,000. Should a mortgage loan prepay in full within 180 days of the sale date, Eureka Homestead shall refund to the purchaser the servicing release premium paid. There have been mortgage loans sold that had an early payment default or that prepaid in full during the recourse period.

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management and counsel, the disposition or ultimate resolution of such proceedings would not have a material adverse effect on the Company's consolidated financial statements.

Note 8 – Fair Values of Financial Instruments -

Fair Value Disclosures

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with FASB ASC 820, Fair Value Measurements, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly

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transaction between market participants at the measurement date. Fair value is best determined based on quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments.

In cases where quoted market prices are not available, fair values are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value accounting guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under this guidance are described below.

Level 1 - Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 - Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include the following:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers (for example, some brokered markets), or in which little information is released publicly (for example, a principal-to principal market);

Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates); and

Inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).

Level 3 - Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Therefore, unobservable inputs shall reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs shall be developed based on the best information available in the circumstances, which might include the reporting entity’s own data.

However, the reporting entity’s own data used to develop unobservable inputs shall be adjusted if information is reasonably available without undue cost and effort that indicates that market participants would use different assumptions.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Recurring Basis

Fair values of investment securities and mortgage-backed securities were primarily measured using information from a third-party pricing service. This pricing service provides information by utilizing evaluated pricing models supported with market data information. Standard inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data from market research publications.

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The following tables present the balances of assets measured on a recurring basis as of March 31, 2022 and December 31, 2021. The Company did not record any liabilities at fair value for which measurement of the fair value was made on a recurring basis.


	Fair Value at Reporting Date Using
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
			for Identical		Observable		Unobservable
March 31, 2022:	Fair		Assets		Inputs		Inputs
(in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Mortgage-Backed Securities
FHLMC	$	2,426	$	—	$	2,426	$	—
SBA 7a Pools		2,165		—		2,165		—
Total Investment Securities	$	4,591	$	—	$	4,591	$	—


	Fair Value at Reporting Date Using
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
			for Identical		Observable		Unobservable
December 31, 2021:	Fair		Assets		Inputs		Inputs
(in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Mortgage-Backed Securities
FHLMC	$	2,767	$	—	$	2,767	$	—
SBA 7a Pools		2,562		—		2,562		—
Total Investment Securities	$	5,329	$	—	$	5,329	$	—

Non-recurring Basis

The Company has segregated all financial assets and liabilities that are measured at fair value on a non-recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. The Company did not record any liabilities at fair value for which measurement of the fair value was made on a non-recurring basis.

The fair value of the impaired loans is measured at the fair value of the collateral for collateral-dependent loans. Impaired loans are Level 2 assets measured using appraisals from external parties of the collateral less any prior liens. Repossessed assets are initially recorded at fair value less estimated costs to sell. The fair value of repossessed assets is based on property appraisals and an analysis of similar properties available. As such, the Company records repossessed assets as Level 2. The Company had no impaired loans or repossessed assets at March 31, 2022 or December 31, 2021.

FASB ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments for which it is practicable to estimate fair value, whether or not recognized in the balance sheet. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The derived fair value estimates cannot be substantiated through comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. FASB ASC 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Further, the disclosures do not include estimated fair values for items which are not financial instruments but which represent significant value to the Company, including core deposit intangibles and other fee-generating operations of the business. Reasonable comparability of fair value estimates between financial institutions may not be possible due to the wide range of permitted valuation techniques and numerous assumptions involved. The aggregate fair value amounts presented do not, and are not intended to, represent an aggregate measure of the underlying fair value of the Company.

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The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Cash Equivalents - For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Interest-Bearing Deposits in Banks- The carrying amount is a reasonable estimate of fair value.

Investment Securities (including mortgage-backed securities) - For investment securities, including mortgage-backed securities, fair value equals quoted market price, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans - The fair value of loans is estimated using discounted cash flow analyses, using the interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Loans Held-for-Sale - The loans held-for sale are recorded at the lower of aggregate cost or market value which is a reasonable estimate of fair value.

FHLB Stock - The carrying amount is a reasonable estimate of fair value.

Cash Surrender Value of Life Insurance - The carrying amount is a reasonable estimate of fair value.

Accrued Interest Receivable and Accrued Interest Payable - The carrying amounts of accrued interest receivable and accrued interest payable approximate the fair values.

Deposits - The fair value of savings accounts and certain money market deposits is the amount payable on demand at the reporting date (carrying value). The fair value of fixed maturity certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities.

Advances from the FHLB - The fair values of the Advances from the FHLB are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Loan Commitments - For commitments to extend credit, fair value considers the difference between current levels of interest rates and the committed rates.

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The estimated fair values of the Company’s financial instruments are as follows as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022				December 31, 2021
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial Assets:
Cash and Cash Equivalents	$	3,755	$	3,755	$	7,316	$	7,316
Interest-Bearing Deposits in Banks		7,486		7,486		7,742		7,742
Investment Securities		4,591		4,591		5,329		5,329
Loans - Net		76,782		71,331		75,943		77,483
Loans Held-for-Sale		1,203		1,203		401		401
Accrued Interest Receivable		394		394		421		421
FHLB Stock		1,450		1,450		1,448		1,448
Cash Surrender Value of Life Insurance		4,246		4,246		4,225		4,225
Financial Liabilities:
Deposits		59,905		57,751		60,963		60,756
Advances from FHLB		18,225		17,908		18,218		18,622
Accrued Interest Payable		37		37		51		51

The carrying amounts in the preceding table are included in the balance sheet under the applicable captions; accrued interest payable is included in accrued expenses and other liabilities in the balance sheet. The contract or notional amounts of the Company’s financial instruments with off balance sheet risk are disclosed in Note 7.

Note 9 – Change in Corporate Form -

On July 9, 2019, Eureka Homestead (the “Bank”) converted to a federal stock savings and loan association and established a stock holding company, Eureka Homestead Bancorp, Inc. (the “Company”), as parent of the Bank.

In connection with the conversion, the Bank issued all of its common stock to the Company, becoming the wholly owned subsidiary of the Company, and the Company issued and sold shares of its capital stock pursuant to an independent valuation appraisal of the Bank and the Company. The stock was priced at $10.00 per share. In addition, the Bank’s board of directors adopted an employee stock ownership plan (ESOP) which subscribed for 8% of the common stock sold in the offering. The Conversion was completed on July 9, 2019 and resulted in the issuance of 1,429,676 common shares by the Company. The cost of the Conversion and issuing the capital stock totaled $1.2 million and was deducted from the proceeds of the offering.

In accordance with OCC regulations, at the time of the Conversion, the Bank substantially restricted retained earnings by establishing a liquidation account. The liquidation account will be maintained for the benefit of eligible account holders who continue to maintain their accounts at the Bank after the Conversion. The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account. In the event of a complete liquidation by the Bank, and only in such event, each eligible account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held. The Bank may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount.

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.

Note 10 – Employee Stock Ownership Plan -

As part of the stock conversion, shares were purchased by the ESOP with a loan from Eureka Homestead Bancorp, Inc. All employees of the Bank meeting certain tenure requirements are entitled to participate in the ESOP.

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Compensation expense related to the ESOP for the three-month period ended March 31, 2022 was approximately $16,000.

The stock price when issued was $10 per share. The fair value of the 100,000 unallocated shares was approximately $1.5 million based on the average price of our common stock for the quarter ended March 31, 2022, of $14.68 per share.

Note 11 – Equity Incentive Plan

In August 2020, the Company's stockholders approved the 2020 Eureka Homestead Bancorp, Inc. Equity Incentive Plan (the “2020 Plan” or the “Plan”). No more than 200,154 shares of the Company's common stock may be issued under the Plan, of which a maximum of 142,967 may be issued pursuant to the exercise of stock options and 57,187 may be issued pursuant to restricted stock awards, restricted stock units and unrestricted share awards. Stock options awarded to employees may be incentive stock options or non-qualified stock options. The shares that may be issued may be authorized but unissued shares. The Plan permits the grant of incentive awards in the form of options, stock appreciation rights, restricted share and share unit awards, and performance share awards. The 2020 Plan contains limits on certain types of awards to individual participants.

Awards may vest or become exercisable only upon the achievement of performance measures or based solely on the passage of time after award. Stock options and restricted stock awards provide for accelerated vesting upon death, disability or if there is an involuntary termination of service following a change in control (as defined in the Plan).

On December 21, 2021, the Company made a grant of restricted shares for 3,225 shares, to a member of Management. The award vests over a three-year period.

Restricted Shares

Restricted shares are accounted for as fixed grants using the fair value of the Company's stock at the time of the grant. Unvested restricted shares may not be disposed of or transferred during the vesting period.

The table below presents the restricted stock award activity for the period shown:


		Weighted Average
	Restricted	Fair Value at
	Stock Awards	Grant Date
Non-vested at January 1, 2022	3,225	$	13.95
Granted	—		—
Vested	—		—
Forfeited	—		—
Non-vested at March 31, 2022	3,225	$	13.95

As of March 31, 2022, the Company had $41,000 of unrecognized compensation expense related to restricted shares, having recognized $4,000 of compensation expense for the three months ended March 31, 2022. The cost of the restricted shares will be amortized in monthly installments over the three-year vesting period.

Note 12 - Subsequent Events -

Management has evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the date the financial statements were issued.

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Eureka Homestead Bancorp, Inc. 10-Q