Fifth District Bancorp (NASDAQ: FDSB) posts 2025 balance sheet and credit quality details

Q: What is Fifth District Bancorp (FDSB) and how was it formed?

Fifth District Bancorp, Inc. is a savings and loan holding company for Fifth District Savings Bank. It was incorporated in February 2024 and became the holding company upon the bank’s mutual-to-stock conversion completed July 31, 2024, including a public stock sale and foundation issuance.

Q: What are Fifth District Bancorp’s key balance sheet figures for 2025?

At December 31, 2025 , Fifth District Bancorp reported total assets of $534.4 million , loans of $376.4 million , deposits of $393.2 million , and stockholders’ equity of $129.8 million , reflecting a relatively well-capitalized, deposit-funded community-oriented institution.

Q: How is Fifth District Bancorp’s loan portfolio composed?

The loan portfolio is dominated by one- to four-family residential mortgages , totaling $325.8 million or 86.3% of loans at December 31, 2025. Smaller segments include construction and land, commercial real estate, commercial and industrial, home equity products, and consumer loans.

Q: What is the credit quality of Fifth District Bancorp’s loan portfolio?

Credit quality appears solid. Non-performing assets were $586,000 at December 31, 2025, equal to 0.11% of total assets. The allowance for credit losses on loans was $1.7 million , covering 312.32% of non-performing loans and 0.45% of total loans.

Q: How is Fifth District Bancorp primarily funded?

Fifth District Bancorp is primarily funded through core deposits . At December 31, 2025, deposits totaled $393.2 million , with about 61% in certificates of deposit and the remainder in savings, NOW, and money market accounts. The bank had no Federal Home Loan Bank advances outstanding.

Q: What is notable about FDSB’s commercial and industrial lending?

Commercial and industrial loans totaled $14.2 million , or 3.8% of total loans, at December 31, 2025. A significant portion comes from purchased loans from Bankers Healthcare Group, which are supported by a reserve deposit account and strict performance and collection arrangements.

Q: How strong is Fifth District Bancorp’s deposit insurance and uninsured balances?

Deposits are insured by the FDIC up to applicable limits. At December 31, 2025, uninsured deposits—amounts above $250,000 per depositor—totaled $91.5 million , including $50.2 million of uninsured certificates of deposit, indicating some larger depositor relationships.

Filing Impact

(Moderate)

Filing Sentiment

(Neutral)

Form Type

10-K

Rhea-AI Filing Summary

Fifth District Bancorp, Inc. files its annual report describing a community-focused thrift holding company that completed its mutual-to-stock conversion in 2024, selling 5,459,473 shares at $10.00 per share and issuing 100,000 shares to a community foundation.

At December 31, 2025, the company had total assets of $534.4 million, loans of $376.4 million, deposits of $393.2 million, and stockholders’ equity of $129.8 million. Lending is concentrated in fixed-rate one- to four-family mortgages, which represent 86.3% of total loans, with modest exposures to construction, commercial real estate, commercial and industrial, and home equity products.

Credit quality appears strong, with non-performing assets of $586,000, equal to 0.11% of total assets, and an allowance for credit losses on loans of $1.7 million, or 0.45% of total loans. The bank is funded primarily by core deposits, has no Federal Home Loan Bank advances outstanding, and maintains significant unused borrowing capacity.

03/24/2026 - 05:16 PM

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended December 31, 2025

☐	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: 001-42198

Fifth District Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland		99-1897673
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

4000 General DeGaulle Drive, New Orleans, Louisiana		70114
(Address of principal executive offices)		(Zip code)

(504) 362-7544

(Registrant’s telephone number, including area code)

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

Common Stock, par value $0.01 per share		FDSB		The NASDAQ Stock Market LLC
Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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 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 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262 (b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock at the end of the last business day of the most recently completed second fiscal quarter on June 30, 2025, was $58,211,478.

The number of shares of the Registrant’s common stock outstanding as of March 24, 2026, was 5,293,801.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Definitive Proxy Statement for the 2026 Annual Meeting of Stockholders are incorporated by reference in Part III of the Form 10-K.

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TABLE OF CONTENTS

		Page No.
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	27
Item 1B.	Unresolved Staff Comments	27
Item 1C.	Cybersecurity	27
Item 2.	Properties	29
Item 3.	Legal Proceedings	29
Item 4.	Mine Safety Disclosures	29

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	30
Item 6.	[Reserved]	30
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 8.	Financial Statements and Supplementary Data	45
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	86
Item 9A.	Controls and Procedures	86
Item 9B.	Other Information	86
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	87

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	87
Item 11.	Executive Compensation	87
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	88
Item 13.	Certain Relationships and Related Transactions, and Director Independence	88
Item 14.	Principal Accountant Fees and Services	88

PART IV
Item 15.	Exhibits and Financial Statement Schedules	89
Item 16.	Form 10-K Summary	90
SIGNATURES		91

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PART I

ITEM 1. Business

Forward Looking Statements

This annual report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

●

statements of our goals, intentions and expectations;

●

statements regarding our business plans, prospects, growth and operating strategies;

●

statements regarding the asset quality of our loan and investment portfolios; and

●

estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Except as may be required by applicable law or regulation, we are under no duty to and do not take any obligation to update any forward-looking statements after the date of this annual report.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

●

general economic conditions, either nationally or in our market area, are worse than expected;

●

inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of our financial instruments, or our loan origination volume, or increase the level of defaults, losses and prepayments within our loan portfolio;

●

changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses;

●

our ability to access cost-effective funding;

●

our ability to maintain adequate liquidity, primarily through deposits;

●

fluctuations in real estate values and in the conditions of the residential real estate market;

●

demand for loans and deposits in our market area;

●

our ability to implement and change our business strategies;

●

competition among depository institutions and other financial institutions;

●

adverse changes in the securities markets;

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●

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums;

●

changes in the quality or composition of our loan or investment portfolios;

●

technological changes that may be more difficult or expensive than expected;

●

the inability of third-party providers to perform as expected;

●

a failure or breach of our operational or information security systems or infrastructure, including cyberattacks;

●

our ability to manage market risk, credit risk and operational risk;

●

our ability to enter new markets successfully and capitalize on growth opportunities;

●

changes in consumer spending, borrowing and savings habits;

●

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

●

our ability to retain key employees; and

●

changes in the financial condition, results of operations or future prospects of the issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Fifth District Bancorp, Inc.

Fifth District Bancorp, Inc. (“Fifth District Bancorp,” the “Company” or “we”) was incorporated in February 2024 and became the holding company for Fifth District Savings Bank (“Fifth District” or the “Bank”) upon the conversion of Fifth District from the mutual form of organization to the stock form of organization (the “Conversion”). The Conversion was completed on July 31, 2024, and the Company sold 5,459,473 shares of common stock at a price of $10.00 per share. The Company also issued 100,000 shares of common stock to The Fifth District Community Foundation, Inc.

The Company is a registered savings and loan holding company subject to comprehensive regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). The Company conducts its operations primarily through its wholly owned subsidiary, Fifth District. At December 31, 2025, the Company had total assets of $534.4 million, loans of $376.4 million, deposits of $393.2 million, and stockholders’ equity of $129.8 million.

The Company’s principal office is located at 4000 General DeGaulle Drive, New Orleans, Louisiana 70114, and the telephone number at that address is (504) 362-7544. Our website address is www.fifthdistrict.com. Information on our website is not and should not be considered a part of this annual report.

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Fifth District Savings Bank

Fifth District Savings Bank is a federally-chartered savings bank, with its main office in New Orleans, Louisiana. We conduct our business from our main office and six branch offices located in the Parishes of Jefferson, Orleans, and St. Tammany. Our loan portfolio consists primarily of fixed-rate one-to four-family residential mortgage loans. To a substantially lesser extent, we also originate construction loans (residential and commercial), home equity loans, home equity lines of credit, land loans, commercial real estate loans, commercial and industrial loans, and share loans (loans secured by deposit accounts at Fifth District) and purchase consumer and commercial business loans. We typically retain in our portfolio the loans that we originate. We offer a variety of deposit accounts including checking accounts, money market accounts, and certificates of deposit. In addition, we offer electronic banking services including mobile banking, on-line banking, telephone banking, bill pay, and electronic funds transfer via SmartPay^®.

Fifth District is subject to comprehensive regulation and examination by the Office of the Comptroller of the Currency (the “OCC”), its primary federal regulator, and the Federal Deposit Insurance Corporation (the “FDIC”), and is a member of the Federal Home Loan Bank system.

Market Area

We consider the New Orleans-Metairie Metropolitan Statistical Area (MSA) to be our primary market area for originating loans and gathering deposits. Our offices are located in the Parishes of Jefferson, Orleans and St. Tammany, which are part of the New Orleans-Metairie MSA.

Competition

We face strong competition within our primary market area both in making loans and attracting retail deposits. Our market area includes large money center banks, regional banks, community banks, savings institutions, and credit unions. We also face competition for loans from mortgage banking firms, consumer finance companies, credit unions, and fintech companies we face competition for deposits from money market funds, brokerage firms, mutual funds and insurance companies. At June 30, 2025 (the most recent date for which Federal Deposit Insurance Corporation (the “FDIC”) is publicly available), we were ranked 11^th among the 26 FDIC-insured financial institutions with offices in Jefferson Parish, with a deposit market share of 2.30%; 9^th among the 21 FDIC-insured financial institutions with offices in Orleans Parish, with a deposit market share of 0.89%; and 22^nd among the 27 FDIC-insured financial institutions with offices in St. Tammany Parish, with a deposit market share of 0.39%. Our ability to compete in our primary market area does not depend on any existing relationships.

Lending Activities

General. Our loan portfolio consists primarily of fixed-rate one-to four-family residential mortgage loans. To a substantially lesser extent, we also originate construction loans (residential and commercial), home equity loans, home equity lines of credit, land loans, commercial real estate loans, commercial and industrial loans, and share loans (loans secured by deposit accounts at Fifth District) and purchase consumer and commercial business loans. We typically retain in our portfolio the loans that we originate.

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Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated. There were no loans held for sale at any date indicated.


	At December 31,
	2025				2024
	Amount		Percent		Amount		Percent

	(Dollars in thousands)
One-to-four family mortgages	$	325,774	86.34	%	$	332,659	90.34	%
Home equity lines of credit		10,091	2.67			7,952	2.16
Construction and land		12,538	3.32			9,588	2.60
Commercial real estate		10,547	2.79			594	0.16
Commercial and industrial		14,227	3.77			13,761	3.74
Consumer loans		4,189	1.11			3,699	1.00
		377,366	100.00	%		368,253	100.00	%
Less:
Allowance for credit losses		(1,699)				(1,699)
Deferred loan costs		724				779
Loans receivable, net	$	376,391			$	367,333

Contractual Maturities. The following table sets forth the contractual maturities of our total loan portfolio at December 31, 2025. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. Because the tables present contractual maturities and do not reflect repricing or the effect of prepayments, actual maturities may differ.



	One-to-
	Four Family		Home Equity		Construction and		Commercial			Commercial and
	Mortgages		Lines of Credit		Land		Real Estate		Industrial			Consumer	Total

	(In thousands)
Amounts due in:
One year or less	$	9	$	368	$	10,350	$	—	$	70	$	16	$	10,813
After one year through two years		236		735		216		—		—		—		1,187
After two years through three years		158		308		23		—		—		38		527
After three years through five years		2,227		1,083		1,159		9,337		2,148		709		16,663
After five years through 10 years		20,837		7,372		138		743		8,799		2,449		40,338
After 10 years through 15 years		24,978		225		108		467		2,694		132		28,604
After 15 years		277,329		—		544		—		516		845		279,234
Total	$	325,774	$	10,091	$	12,538	$	10,547	$	14,227	$	4,189	$	377,366

The following table sets forth our fixed and adjustable-rate loans at December 31, 2025 that are contractually due after December 31, 2026.

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	Due After December 31, 2026
	Fixed		Adjustable		Total

	(In thousands)
One-to-four family mortgages	$	325,765	$	—	$	325,765
Home equity lines of credit		—		9,723		9,723
Construction and land		2,188		—		2,188
Commercial real estate		10,547		—		10,547
Commercial and industrial		14,157		—		14,157
Consumer loans		4,173		—		4,173
Total loans	$	356,830	$	9,723	$	366,553

One- to Four-Family Residential Mortgage Lending. At December 31, 2025, one-to four-family residential mortgage loans totaled $325.8 million, or 86.3% of total loans. Our one- to four-family residential real estate loans are primarily secured by owner-occupied properties located in our primary market area. At December 31, 2025, one-to four-family residential mortgage loans secured by non-owner-occupied properties totaled $9.6 million.

Our one- to four-family residential real estate loans are underwritten to Fifth District credit policy guidelines. We do not offer adjustable rate residential mortgage loans. We offer fixed-rate residential mortgage loans for 10-year and 15-year terms The interest rate is determined primarily by reference to market conditions and competitive factors. We generally limit the loan-to-value ratios of our residential mortgage loans to 80% (90% with rate adjustment) of the purchase price or appraised value, whichever is lower.

We do not offer “interest only” residential mortgage loans, where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan. We also do not offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance during the life of the loan. We do not currently offer “subprime loans” on one- to four-family residential real estate loans (i.e., generally loans to borrowers with credit scores less than 620).

Construction and Land Development Loans. At December 31, 2025, construction and land development loans totaled $12.5 million, or 3.3% of total loans, of which $1.0 million were land loans. We make residential construction loans, primarily to individuals for the construction of their primary residences and who typically use contractors and single-family home builders with whom we have an established relationship and satisfactory history. Our residential construction loans are primarily structured as construction/permanent loans where after a 12-month construction period the loan converts to a permanent one-to four-family residential mortgage loan. The construction/permanent loan involves one loan closing, saving the borrower the cost of two closings. The interest rate is locked-in at origination and remains fixed throughout the entire term of the construction/permanent loan. Our residential construction loans are underwritten to the same guidelines for permanent residential mortgage loans. At December 31, 2025, our largest residential construction loan amounted to $1.8 million, of which $1.5 million had been disbursed.

In the past, we did not make speculative residential construction loans, which are construction loans to a builder where there is not a contract in place for the purchase of the home at the time the construction loan is originated. We currently have one speculative residential construction loan in process with a builder whom with we have an established relationship and satisfactory history. We may consider making speculative construction loans consistent with our loan policies should opportunities arise.

Residential construction loans generally can be made with a maximum loan-to-value ratio of 80% of the estimated appraised market value upon completion of the project or total project cost, whichever is the lower of the two. Before making a commitment to fund a construction loan, we require an appraisal of the property by an independent licensed appraiser. We also generally require inspections of the property before disbursement of funds during the term of the construction loan. One of our directors, H. Greg Abry, who has substantial experience in the construction and real estate industries, performs property inspections.

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We also make a limited amount of land development loans to complement our construction lending activities. Land development loans are generally secured by lots that will be used for residential development. At December 31, 2025, our largest land loan had an outstanding balance of $130,000 and it was performing according to its original terms.

Commercial Real Estate Loans. At December 31, 2025 commerical real estate loans totaled $10.5 million, or 2.8% of total loans. We offer commercial real estate loans to businesses for the purchase or refinance of commercial and other non-residential real estate. This includes 1 to 4 family investment properties, non-owner occupied multi-family properties, non-owner occupied commercial properties, and special use properties.

Our commercial real estate loans are underwritten to Fifth District credit policy guidelines. We typically offer a fixed rate for up to 5 years with amortization periods up to 25 years. The interest rate is determined primarily by reference to market conditions and competitive factors. We generally limit the loan-to-value ratios of our commercial real estate loans to 75% for non-owner occupied properties and 80% for owner-occupied properties.

Commercial and Industrial Loans. At December 31, 2025, commercial and industrial loans totaled $14.2 million, or 3.8% of total loans. Substantially, these loans are purchased loans, as discussed below.

When making commercial and industrial loans, we consider the financial statements of the borrower, our lending history with the borrower, the debt service capabilities and global cash flows of the borrower and other guarantors, the projected cash flows of the business and the value of any collateral.

We are part of a network of community banks nationwide that purchase commercial and industrial loans from Bankers Healthcare Group, LLC (BHG). As of December 31, 2025, the aggregate balance of BHG purchased loans totaled $11.5 million. We have an internal policy of limiting the aggregate balance of BHG purchased loans to 15% of capital. BHG originates loans nationwide to licensed or unlicensed or otherwise skilled business professionals for business development, practice improvement, debt consolidation, working capital, equipment purchases, and, occasionally, business purchases. BHG typically originates loans at fixed interest rates and without a prepayment penalty provision. BHG underwrites and funds the loans, which are typically secured by a Uniform Commercial Code blanket lien on the borrowers’ business assets. When we purchase a loan from BHG, we purchase 100% of the loan and BHG establishes a reserve deposit account with us equal to 3% of the loan balance and we remit 97% of the loan balance to BHG. We also become an additional secured party to the loan. The borrower services the loan by authorizing us to withdraw funds electronically from the borrower’s deposit account established at the borrower’s financial institution. If a loan becomes delinquent, BHG handles all collection activity and bears all associated costs. During the delinquency period, we withdraw from the reserve deposit account to service the loan. When a delinquent payment is collected, the collected funds are used to replenish the reserve deposit account. If a loan becomes 90 days delinquent, BHG typically replaces the delinquent loan with a performing loan of equal or greater balance (although this is not a contractual obligation of BHG). We estimate that the typical loan purchased from BHG has an outstanding balance of approximately $150,000 and a maximum term of 12 years at the time of purchase. As of December 31, 2025, no BHG purchased loans were delinquent. At December 31, 2025, our largest BHG purchased loan totaled $329,000 and it was performing according to its original terms.

We also purchase from third party originators or investors the fully guaranteed portion of commercial and industrial loans that are guaranteed by U.S. government agencies, such as the U.S. Department of Agriculture and the U.S. Small Business Administration, among others. As of December 31, 2025, these purchased loans totaled $2.3 million.

Home Equity Loans and Lines of Credit. At December 31, 2025, home equity loans and lines of credit totaled $10.1 million, or 2.7% of total loans. Home equity loans are generally fixed-rate loans for terms of 5, 10, or 15 years. Home equity lines of credit generally provide for a 10-year draw period with a 15-year payback period. The interest rate for home equity lines of credit is based on the prime rate, with a floor rate of 6.25% and an annual lifetime ceiling rate of 18%. The loan to value ratio for home equity loans and lines of credit is generally up to 85%, accounting for any superior mortgage on the collateral property.

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Consumer Loans. At December 31, 2025, consumer loans totaled $4.2, or 1.1% of total loans, consisting of share loans and purchased Banker’s Healthcare Group loans. Share loans are loans fully secured by a deposit account at Fifth District. Bankers’ Healthcare Group (BHG) loans are consumer loans that we purchase. At December 31, 2025, BHG purchased consumer loans totaled $3.2 million. We do not originate automobile loans and other similar type consumer loans.

Loan Underwriting Risks

One- to Four-Family Residential Mortgage Loans. Our one- to four-family residential loans are generally made on the basis of the borrower’s ability to make repayment from his or her employment or other income, and on the appraised value of the underlying real estate. One- to four-family residential mortgage lending is generally sensitive to regional and local economic conditions, particularly the level of unemployment, that significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. Declines in real estate values could cause some of our residential mortgages to become inadequately collateralized, which could expose us to a greater risk of loss if we seek to recover on defaulted loans by selling the real estate collateral.

Construction and Land Development Loans. Our construction loans are based upon estimates of costs and values associated with the completed project. Underwriting is focused on the borrowers’ financial strength, credit history and demonstrated ability to service the debt.

Construction lending involves additional risks when compared with permanent mortgage lending because funds are advanced upon the security of the project, which is of uncertain value before its completion. Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio. If the appraised value of a completed project proves to be overstated, the loan may be inadequately secured, and we may incur a loss. Land development loans have substantially similar risks with respect to estimating the market value of the collateral property.

Commercial Real Estate Loans. Our commercial real estate loans are originated primarily based on the credit quality of the borrowers and secondarily on the collateral provided by borrower. These loans are generally made on the basis of the borrower’s ability to make repayment from the cash flows of the borrower’s business, the borrower’s lending history and personal financial statement, the global cash flows of the borrowers and other guarantors and the value of the subject property. Commercial real estate lending is sensitive to regional and local economic conditions, making loss levels difficult to predict. Declines in commercial real estate values could cause some of our commercial loans to become inadequately collateralized, which could expose us to great risk of loss if we seek to recover on defaulted loans by selling the real estate collateral.

Commercial and Industrial Loans. Unlike residential real estate loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flows of the borrower’s business, and the collateral securing these loans may fluctuate in value. Our commercial loans are originated primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. Collateral for commercial loans typically consists of real estate, however, may include equipment, accounts receivable, or inventory. Credit support provided by the borrower for most of these loans is primarily based on cash flow from operation with the liquidation of the pledged collateral and enforcement of a personal guarantee, if any as a secondary source of repayment. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself.

Loan Originations, Purchases and Sales

We originate loans through employee marketing and advertising efforts, our existing customer base, walk-in customers and referrals from customers.

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As discussed above under “– Lending Activities – Commercial Loans,” we purchase loans from Bankers Healthcare Group, LLC and purchase the fully guaranteed portions of U.S. government agency loans from other banks and investors. Additionally, we purchase participation interest in loans originated by other banks located in our market area as well as from various capital partners.

We typically do not sell the loans we originate but retain them in our loan portfolio, and do not sell the servicing rights.

Loan Approval Procedures and Authority

Our lending is subject to written, non-discriminatory underwriting standards and origination procedures. Decisions on loan applications are made on the basis of detailed applications submitted by the prospective borrower and property valuations. Our policies require that for all real estate loans that we originate, property valuations must be performed by outside independent state-licensed appraisers approved by our board of directors. The loan applications are designed primarily to determine the borrower’s ability to repay the requested loan, and the more significant items on the application are verified through use of credit reports, financial statements and tax returns.

By law, the aggregate amount of loans that we are permitted to make to any one borrower or a group of related borrowers is generally limited to 15% of Fifth District’s unimpaired capital and surplus (25% if the amount in excess of 15% is secured by “readily marketable collateral” or 30% for certain residential development loans). At December 31, 2025, our largest credit relationship to one borrower had an outstanding balance of $4.4 million and is secured by commercial and residential real estate. At December 31, 2025, this loan was performing according to its original terms.

All loans with a maximum potential exposure greater than $2 million are submitted to Fifth District’s Board of Directors for approval. Additionally, the Board of Directors established individual and combined loan authorities for the President and CEO, Chief Credit Officer, Vice President of Lending, and Vice President of Loan Operations. All loans with a maximum potential exposure of $250,000 to $2 million are presented to the Board of Directors for ratification. The Board of Directors typically meets monthly.

Generally, we require property and extended coverage casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property, depending on the type of loan. In addition, we generally request an escrow for flood insurance (where appropriate) and an escrow for property taxes and insurance. We allow borrowers to pay their own taxes, property and casualty, and flood insurance as long as proof of payment is provided.

Delinquencies, Classified Assets and Nonperforming Assets

Delinquency Procedures. When a borrower becomes 15 days past due on a loan, we send the borrower a late notice. Delinquency letters are mailed to borrowers at delinquency intervals of 30 and 60 days. Loans are generally placed on non-accrual status when 90 days delinquent. If a loan becomes 90 days delinquent, the account may be forwarded to our attorney for collection. If the borrower does not respond, we generally initiate foreclosure proceedings when the loan is 120 days past due. If the loan is reinstated, foreclosure proceedings will be discontinued and the borrower will be permitted to continue to make payments. In certain instances, we may modify the loan or grant a limited exemption from loan payments to allow the borrower to reorganize their financial affairs. All delinquent loans are reported to the board of directors monthly.

When we acquire real estate as a result of foreclosure or by deed in lieu of foreclosure, the real estate is classified as other real estate owned until it is sold. The real estate is recorded at estimated fair value at the date of acquisition, less estimated costs to sell, and any write-down resulting from the acquisition is charged to the allowance for credit losses. Subsequent decreases in the value of the property are charged to operations. After acquisition, all costs in maintaining the property are expensed as incurred. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell. At December 31, 2025, we had $42,000 of real estate acquired as a result of foreclosure or by deed in lieu of foreclosure.

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Modifications Made to Borrowers Experiencing Financial Difficulty. We occasionally modify loans to extend the term or make other concessions to help a borrower stay current on his or her loan and to avoid foreclosure. We consider modifications only after analyzing the borrower’s current repayment capacity, evaluating the strength of any guarantors based on documented current financial information, and assessing the current value of any collateral pledged. We generally do not forgive principal or interest on loans, but may do so if it is in our best interest and increases the likelihood that we can collect the remaining principal balance. We may modify the terms of loans to lower interest rates (which may be at below market rates), to provide for fixed interest rates on loans where fixed rates are otherwise not available, to provide for longer amortization schedules, or to provide for interest-only terms. These modifications are made only when a workout plan has been agreed to by the borrower that we believe is reasonable and attainable and in our best interests. At December 31, 2025, we had no modified loans.

Delinquent Loans. The following table sets forth our loan delinquencies (including non-accrual loans), by type and amount at the dates indicated.


	At December 31,
	2025						2024
	30-59		60-89		90 Days		30-59		60-89		90 Days
	Days Past		Days Past		or More		Days Past		Days Past		or More
	Due		Due		Past Due		Due		Due		Past Due

	(In thousands)
One-to-four family mortgages
Home equity lines of credit	$	2,933	$	1,194	$	544	$	2,925	$	1,011	$	956
Construction and land		72		—		—		—		—		—
Commercial real estate		130		—		—		332		—		119
Commercial and industrial		—		—		—		—		—		—
Consumer loans		—		—		—		91		—		—
Total	$	3,135	$	1,194	$	544	$	3,348	$	1,011	$	1,075

Non-Performing Assets. The following table sets forth information regarding our non-performing assets at the dates indicated. There were no non-accruing loans made to borrowers experiencing financial difficulty as of December 31, 2025 and 2024 included in non-accrual loans.


	At December 31,
	2025			2024

	(Dollars in thousands)
Non-accrual loans:
One-to-four family mortgages	$	544		$	956
Home equity lines of credit		—			—
Construction and land		—			119
Commercial real estate		—			—
Commercial and industrial		—			—
Consumer loans		—			—
Total non-accrual loans	$	544		$	1,075
Accruing loans past due 90 days or more	$	—		$	—
Real estate owned:
One-to-four family mortgages		—			—
Construction and land		42			42
Total real estate owned		42			42
Total non-performing assets	$	586		$	1,117
Total non-performing loans to total loans		0.14	%		0.29	%
Total non-accruing loans to total loans		0.14	%		0.29	%
Total non-performing assets to total assets		0.11	%		0.21	%

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Classified Assets. Federal regulations provide that loans and other assets of lesser quality should be classified at the time the asset exhibits unacceptable risk. Although not the exclusive factor, all loans which are 90 or more days delinquent will be classified “substandard.” Assets classified as “substandard” are inadequately protected by the collateral pledged or the current net worth and paying capacity of the obligor. “Substandard” assets include those characterized by the “distinct possibility that the insured institution will sustain “some loss” if the deficiencies are not corrected.” Assets that do not warrant adverse classification but do possess credit deficiencies or potential weaknesses deserving management’s close attention shall be designated “special mention.” Special mention risk could weaken the asset and increase risk in the future, if not corrected.

When an insured institution classifies problem assets as substandard, it may establish general allowances in an amount deemed prudent by management to cover losses that were both probable and reasonable to estimate. General allowances represent allowances which have been established to cover accrued losses associated with lending activities that were both probable and reasonable to estimate, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, which may require the establishment of additional general or specific allowances.

In connection with the filing of our periodic regulatory reports and according to our classification of assets policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification according to applicable regulations. If a problem loan deteriorates in asset quality, the classification is changed to “substandard” or “loss” depending on the circumstances and the evaluation. Generally, loans 90 days or more past due are placed on nonaccrual status and classified “substandard.”

Our classified and special mention assets at the dates indicated were as follows:


	At December 31,
	2025		2024

	(In thousands)
Substandard assets	$	1,251	$	1,075
Total classified assets	$	1,251	$	1,075
Special mention assets	$	2,006	$	3,924
Real Estate Owned	$	42	$	42

Other Loans of Concern. At December 31, 2025, except for loans included in the above table, there were no other loans of concern for which we had information about possible credit problems of borrowers that caused us to have serious doubts about the ability of the borrowers to comply with present loan repayment terms and that may result in disclosure of such loans in the future.

Allowance for Credit Losses

Effective January 1, 2023, ASC 326, Financial Instruments – Credit Losses, became effective for Fifth District and other financial institutions. This standard replaced the incurred loss methodology for most financial assets that are measured at amortized cost, including off-balance sheet credit exposures, with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The adoption of CECL had no effect on our allowance for credit losses on loans as of January 1, 2023, due to immateriality.

The allowance for credit losses represents management’s estimate of lifetime credit losses on loans, including unfunded commitments, as of the reporting date. Management uses relevant available information, from both internal and external sources, related to historical experience, current conditions and reasonable and supportable forecasts. Expected credit losses are measured on a pool basis when similar risk characteristics exist by applying a loss rate based on historical data to each loan pool over the estimated remaining life of the loan pool. The loss rate is adjusted for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience, including adjustments for lending management experience and risk tolerance, loan review and audit results, asset quality and portfolio trends, loan portfolio growth, industry concentrations, trends in underlying collateral, external factors and other economic conditions. Loans that do not share risk characteristics are measured on an individual basis. When a borrower is experiencing financial difficulty and repayment is expected to be provided through the operation or sale of the

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collateral, the expected credit loss is based on the fair value of collateral at the reporting date, adjusted for costs to sell. The allowance is increased by a provision for credit losses, which is charged to expense and reduced by full and partial charge-offs, net of recoveries. Changes in the allowance relating to individually evaluated loans are charged or credited to the provision for credit losses.

The determination of the allowance for credit losses is complex and requires extensive judgement by management regarding matters that are inherently uncertain. Factors influencing the allowance for credit losses include, but are not limited to, loan volume, loan asset quality, delinquency and nonperforming loan trends, historical credit losses, economic and forecasted data. Changes in factors used in evaluating the overall loan portfolio may result in significant changes in the allowance for credit losses and it is reasonably possible that management’s estimate of probable credit losses inherent in the loan portfolio and the related allowance may change materially in the near-term.

The following table sets forth activity in our allowance for loan and lease losses for the periods indicated.


	At or For the Years Ended
	December 31,
	2025			2024

	(Dollars in thousands)
Allowance for credit losses on loans at beginning of period	$	1,699		$	2,802
Recovery of credit losses on loans		—			(1,100)
Charge-offs:
One-to-four family mortgages		—			—
Home equity lines of credit		—			3
Construction and land		—			—
Commercial real estate		—			—
Commercial and industrial		—			—
Consumer loans		—			—
Total charge-offs		—			3

Recoveries:
One-to-four family mortgages		—			—
Home equity lines of credit		—			—
Construction and land		—			—
Commercial real estate		—			—
Commercial and industrial		—			—
Consumer loans		—			—
Total recoveries		—			—

Net (charge-offs) recoveries		—			(3)

Allowance for credit losses on loans at end of period	$	1,699		$	1,699

Allowance for credit losses on unfunded commitments at beginning of period		15			125
Provision (recovery) for credit losses on unfunded commitments		10			(110)
Allowance for credit losses on unfunded commitments at end of period		25			15
Total allowance for credit losses	$	1,724		$	1,714

Allowance for credit losses on loans as a percentage of non-performing loans at end of period		312.32	%		158.05	%
Allowance for credit losses on loans as a percentage of total loans outstanding at end of period		0.45	%		0.46	%
Net (charge-offs) recoveries as a percentage of average loans outstanding during period		—	%		—	%

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Allocation of Allowance for Credit Losses. The following tables set forth the allowance for credit losses on loans allocated by loan category and the percent of the allowance in each category to the total allocated allowance at the dates indicated. The allowance for credit losses on loans allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.


	At December 31,
	2025						2024
			Percent of						Percent of
			Allowance		Percent of				Allowance		Percent of
			in Each		Loans in				in Each		Loans in
			Category		Each				Category		Each
	Allowance for		to Total		Category		Allowance for		to Total		Category
	Credit Losses		Allocated		to Total		Credit Losses		Allocated		to Total
	on Loans		Allowance		Loans		on Loans		Allowance		Loans

	(Dollars in thousands)
One-to-four family mortgages	$	1,202	90.24	%	86.34	%	$	1,392	88.94	%	90.34	%
Home equity lines of credit		42	3.15		2.67			44	2.81		2.16
Construction and land		22	1.65		3.32			7	0.45		2.60
Commercial real estate		32	2.40		2.79			4	0.26		0.16
Commercial and industrial		34	2.55		3.77			118	7.54		3.74
Consumer loans		—	—		1.11			—	—		1.00
Total allocated allowance	$	1,332	100.00	%	100.00	%	$	1,565	100.00	%	100.00	%
Unallocated allowance		367						134
Total allowance	$	1,699					$	1,699

Although we believe that we use the best information available to establish the allowance for credit losses, future adjustments to the allowance for credit losses may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance for credit losses may not be adequate and management may determine that increases in the allowance are necessary if the quality of any portion of our loan portfolio deteriorates as a result. Furthermore, as an integral part of its examination process, the OCC will periodically review our allowance for credit losses and may have judgments that differ from our management, and as a result of such reviews, we may determine to adjust our allowance for credit losses. However, the OCC is not directly involved in the process for establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance for credit losses is the responsibility of our management. Any material increase in the allowance for credit losses may adversely affect our financial condition and results of operations.

Investment Activities

General. The goal of our investment policy is to maximize portfolio yield over the long term in a manner that is consistent with minimizing risk, meeting liquidity needs, meeting pledging requirements, and managing asset/liability management and interest rate risk strategies. Subject to loan demand and our interest rate risk analysis, we will increase the balance of our investment securities portfolio when we have excess liquidity.

Our investment policy was adopted by the board of directors and is reviewed annually by the board of directors. All investment decisions are made by our President (or, in the President’s absence, by our Senior Vice President of Administration and Operations and by our Chief Financial Officer) according to board-approved policies. An investment schedule detailing the investment portfolio is reviewed at least monthly by the board of directors.

Our current investment policy permits, with certain limitations, investments in federal funds, U.S. Treasury and federal agency securities, securities issued by the U.S. government-sponsored enterprises (including mortgage-backed securities), interest-bearing time deposits of the Federal Home Loan Bank of Dallas, among other investments.

At December 31, 2025, our investment securities portfolio consisted of U.S. government agency securities, mortgage-backed securities issued by U.S. government-sponsored enterprises, and collateralized mortgage obligations.

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At December 31, 2025, we also owned $585,000 of Federal Home Loan Bank of Dallas stock. As a member of the Federal Home Loan Bank of Dallas, we are required to purchase stock in the Federal Home Loan Bank of Dallas, which is carried at cost and classified as a restricted investment. At December 31, 2025, we also owned $350,000 of First National Bankers Bank stock, which is carried at cost and classified as a restricted investment.

For additional information regarding our investment securities portfolio, see note 2 to the notes to consolidated financial statements.

Sources of Funds

General. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We may also use borrowings to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and to manage the cost of funds. In addition, we receive funds from scheduled loan payments, investment maturities, loan prepayments, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition.

Deposits. Our deposits are generated primarily from our primary market area. We offer a selection of deposit accounts, including savings accounts, checking accounts, certificates of deposit and individual retirement accounts. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate.

Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. We rely upon personalized customer service, long-standing relationships with customers, and our favorable reputation in the community to attract and retain local deposits. We also seek to obtain deposits from our commercial loan customers.

The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition. The variety of deposit accounts offered allows us to be competitive in obtaining funds and responding to changes in consumer demand. Based on our experience, we believe that our deposits are relatively stable. However, the ability to attract and maintain deposits and the rates paid on these deposits has been and will continue to be significantly affected by market conditions.

The following table sets forth the distribution of total deposits by account type at the dates indicated.


	At December 31,
	2025						2024
					Average
	Amount		Percent		Rate		Amount		Percent		Average Rate

	(Dollars in thousands)
Savings accounts	$	76,419	19.44	%	0.10	%	$	76,020	19.42	%	0.10	%
NOW accounts		56,280	14.31		0.03			53,921	13.77		0.03
Money market accounts		20,729	5.27		0.50			22,726	5.81		0.51
Certificates of deposit		239,734	60.98		3.72			238,809	61.00		3.82
Total	$	393,162	100.00	%			$	391,476	100.00	%

At December 31, 2025 and December 31, 2024, the aggregate amount of all uninsured deposits (deposits in excess of the Federal Deposit Insurance limit of $250,000) was $91.5 million and $86.4 million, respectively.

At December 31, 2025 and December 31, 2024, the aggregate amount of all uninsured certificates of deposit was $50.2 million and $48.3 million, respectively.

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At December 31, 2025 and December 31, 2024, we had no deposits that were uninsured for any reason other than being in excess of the Federal Deposit Insurance Corporation limit.

The following table sets forth the maturity of our uninsured certificates of deposit at December 31, 2025.


		At December 31, 2025
		(In thousands)
Maturity Period:
Three months or less		$	19,203
Over three through six months			20,099
Over six through twelve months			10,247
Over twelve months			681
Total		$	50,230

Borrowings. We may obtain advances from the Federal Home Loan Bank of Dallas upon the security of our capital stock in it and our one- to four-family residential real estate portfolio. We may utilize these advances for asset/liability management purposes and for additional funding for our operations. Advances may be made under several different credit programs, each of which has its own interest rate and range of maturities. At December 31, 2025, we had $-0- in outstanding advances. At December 31, 2025, based on available collateral and our ownership of Federal Home Loan Bank of Dallas common stock, we had access to up to $188.7 million of advances. For further information, see note 8 of the notes to consolidated financial statements.

At December 31, 2025, we also had a $27.2 million credit facility and a $15 million credit facility with two correspondent banks, with no outstanding balance under either facility at that date.

Human Capital Resources

As of December 31, 2025, we had 66 full-time employees and 1 part-time employee. Our employees are not represented by any collective bargaining group. Management believes that we have good working relations with our employees.

The success of our business depends highly on our employees, who provide value to our customers and communities through their dedication to our business. We encourage and support the growth and development of our employees and, wherever possible, seek to fill open positions by promotion and transfer from within the organization. Continual learning and career development are advanced through internally developed training programs. We believe our ability to attract and retain employees is a key to our success and strive to offer competitive salaries and employee benefits to all employees and monitor salaries in our market areas.

Subsidiary Activities

Fifth District is the sole and wholly-owned subsidiary of Fifth District Bancorp. Fifth District has no subsidiaries.

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Supervision and Regulation

General

As a federal savings association (the term “savings association” includes a federal savings bank), Fifth District is subject to examination and regulation by the OCC, and is also subject to examination by the FDIC. This regulation and supervision establishes a comprehensive framework of activities in which an institution may engage and is intended primarily for the protection of the FDIC’s deposit insurance fund and depositors, and not for the protection of security holders. Fifth District also is a member of and owns stock in the Federal Home Loan Bank of Dallas, which is one of the 11 regional banks in the Federal Home Loan Bank System.

Under this system of regulation, the regulatory authorities have extensive discretion in connection with their supervisory, enforcement, rulemaking and examination activities and policies, including rules or policies that: establish minimum capital levels; restrict the timing and amount of dividend payments; govern the classification of assets; determine the adequacy of loan loss reserves for regulatory purposes; and establish the timing and amounts of assessments and fees. Moreover, as part of their examination authority, the banking regulators assign numerical ratings to banks and savings institutions relating to capital, asset quality, management, liquidity, earnings and other factors. The receipt of a less than satisfactory rating in one or more categories may result in enforcement action by the banking regulators against a financial institution. A less than satisfactory rating may also prevent a financial institution, such as Fifth District or its holding company, from obtaining necessary regulatory approvals to access the capital markets, pay dividends, acquire other financial institutions or establish new branches.

In addition, we must comply with significant anti-money laundering and anti-terrorism laws and regulations, Community Reinvestment Act laws and regulations, and fair lending laws and regulations. Government agencies have the authority to impose monetary penalties and other sanctions on institutions that fail to comply with these laws and regulations, which could significantly affect our business activities, including our ability to acquire other financial institutions or expand our branch network.

Fifth District Bancorp is a savings and loan holding company and is required to comply with the rules and regulations of the Federal Reserve Board. It is required to file certain reports with the Federal Reserve Board and is subject to examination by the enforcement authority of the Federal Reserve Board. It is also subject to the rules and regulations of the Securities and Exchange Commission under the federal securities laws.

Any change in applicable laws or regulations, whether by the OCC, the FDIC, the Federal Reserve Board, the Securities and Exchange Commission or Congress, could have a material adverse impact on the operations and financial performance of Fifth District Bancorp and Fifth District.

Set forth below is a brief description of material regulatory requirements that are applicable to Fifth District and Fifth District Bancorp. The description is limited to certain material aspects of the statutes and regulations addressed, and is not intended to be a complete description of such statutes and regulations and their effects on Fifth District and Fifth District Bancorp.

Federal Banking Regulation

Business Activities. A federal association derives its lending and investment powers from the Home Owners’ Loan Act, as amended, and applicable federal regulations. Under these laws and regulations, Fifth District may invest in mortgage loans secured by residential and commercial real estate, commercial business and consumer loans, certain types of debt securities and certain other assets, subject to applicable limits. Fifth District may also establish subsidiaries that may engage in certain activities not otherwise permissible for Fifth District to engage in directly, including real estate investment and securities and insurance brokerage.

Capital Requirements. Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-weighted assets ratio of 4.5%, a Tier 1 capital to

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risk-weighted assets ratio of 6.0%, a total capital to risk-weighted assets of 8.0%, and a 4.0% Tier 1 capital to adjusted average total assets leverage ratio.

Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (Loss) (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities). Fifth District exercised its AOCI opt-out election. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.

In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one- to four-family residential real estate loans, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented at 2.5% of risk-weighted assets on January 1, 2019.

The federal banking agencies have developed a “Community Bank Leverage Ratio (CBLR)” (the ratio of Tier 1 capital to average total consolidated assets) for financial institutions with assets of less than $10 billion that meet certain qualifying criteria. A “qualifying community bank” that exceeds this ratio is compliant with all other capital requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum Community Bank Leverage Ratio at not less than 8% and not more than 10%, and as of January 1, 2022, it is set at 9%. Fifth District has not elected to be subject to the CBLR framework.

Loans-to-One Borrower. Generally, a federal savings association may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. At December 31, 2025, Fifth District complied with the loans-to-one borrower limitations.

Qualified Thrift Lender Test. As a federal savings association, Fifth District must satisfy the qualified thrift lender, or “QTL,” test. Under the QTL test, it must maintain at least 65% of its “portfolio assets” in “qualified thrift investments” (primarily residential mortgages and related investments, including mortgage-backed securities) in at least nine months of the most recent 12-month period. “Portfolio assets” generally means total assets of a savings association, less the sum of specified liquid assets up to 20% of total assets, goodwill and other intangible assets, and the value of property used in the conduct of the savings association’s business.

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Fifth District also may satisfy the QTL test by qualifying as a “domestic building and loan association” as defined in the Internal Revenue Code of 1986, as amended. This test generally requires a savings association to have at least 75% of its deposits held by the public and earn at least 25% of its income from loans and U.S. government obligations. Alternatively, a savings association can satisfy this test by maintaining at least 60% of its assets in cash, real estate loans and U.S. Government or state obligations.

A savings association that fails the qualified thrift lender test must operate under specified restrictions set forth in the Home Owners’ Loan Act. The Dodd-Frank Act made noncompliance with the QTL test subject to agency enforcement action for a violation of law. At December 31, 2025, Fifth District complied with the qualified thrift lender test, with a percentage of qualified thrift investments to total assets of approximately 101.3%.

Capital Distributions. Federal regulations govern capital distributions by a federal savings association, which include cash dividends, stock repurchases and other transactions charged to its capital account. A federal savings association must file an application with the OCC for approval of a capital distribution if:

●

the total capital distributions for the applicable calendar year exceed the sum of the savings association’s net income for that year to date plus its retained net income for the preceding two years;

●

the savings association would not be at least adequately capitalized following the distribution;

●

the distribution would violate any applicable statute, regulation, agreement or regulatory condition; or

●

the savings association is not eligible for expedited treatment of its filings, generally due to an unsatisfactory CAMELS rating or being subject to a cease and desist order or formal written agreement that requires action to improve the institution’s financial condition.

Even if an application is not otherwise required, every savings association that is a subsidiary of a savings and loan holding company, such as Fifth District, must still file a notice with the Federal Reserve Board at least 30 days before the board of directors declares a dividend or approves a capital distribution.

A notice or application related to a capital distribution may be disapproved if:

●

the savings association would be undercapitalized following the distribution;

●

the proposed capital distribution raises safety and soundness concerns; or

●

the capital distribution would violate a prohibition contained in any statute, regulation or agreement.

In addition, an insured depository institution may not make any capital distribution if, after making such distribution, the institution would fail to meet any applicable regulatory capital requirement. A federal savings association also may not make a capital distribution that would reduce its regulatory capital below the amount required for the liquidation account established in connection with its conversion to stock form.

Community Reinvestment Act and Fair Lending Laws. All federal savings associations have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-income borrowers. In connection with its examination of a federal savings association, the OCC is required to assess the federal savings association’s record of compliance with the Community Reinvestment Act. A savings association’s failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in denial of certain corporate applications such as branches or mergers, or in restrictions on its activities. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the OCC, as well as other federal regulatory agencies and the Department of Justice.

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The Community Reinvestment Act requires all institutions insured by the FDIC to publicly disclose their rating. Fifth District received an “outstanding” Community Reinvestment Act rating in its most recent federal examination.

Transactions with Related Parties. A federal savings association’s authority to engage in transactions with its affiliates is limited by Sections 23A and 23B of the Federal Reserve Act and federal regulations. An affiliate is generally a company that controls, or is under common control with, an insured depository institution such as Fifth District. Fifth District is an affiliate of Fifth District because it controls Fifth District. In general, transactions between an insured depository institution and its affiliates are subject to certain quantitative limits and collateral requirements. In addition, federal regulations prohibit a savings association from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary. Finally, transactions with affiliates must be consistent with safe and sound banking practices, not involve the purchase of low-quality assets and be on terms that are as favorable to the institution as comparable transactions with non-affiliates.

Fifth District’s authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board. Among other things, these provisions generally require that extensions of credit to insiders:

●

be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and

●

not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of Fifth District’s capital.

In addition, extensions of credit in excess of certain limits must be approved by Fifth District’s board of directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved.

Enforcement. The OCC has primary enforcement responsibility over federal savings associations and has authority to bring enforcement action against all “institution-affiliated parties,” including directors, officers, stockholders, attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on a federal savings association. Formal enforcement action by the OCC may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of the institution and the appointment of a receiver or conservator. Civil penalties cover a wide range of violations and actions, and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million per day. The FDIC also has the authority to terminate deposit insurance or recommend to the OCC that enforcement action be taken with respect to a particular savings association. If such action is not taken, the FDIC has authority to take the action under specified circumstances.

Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation and other operational and managerial standards as the agency deems appropriate. Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to implement an acceptable compliance plan. Failure to implement such a plan can result in further enforcement action, including the issuance of a cease and desist order or the imposition of civil money penalties.

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Interstate Banking and Branching. Federal law permits well capitalized and well managed holding companies to acquire banks in any state, subject to Federal Reserve Board approval, certain concentration limits and other specified conditions. Interstate mergers of banks are also authorized, subject to regulatory approval and other specified conditions. In addition, among other things, amendments made by the Dodd-Frank Act permit banks to establish de novo branches on an interstate basis provided that branching is authorized by the law of the host state for the banks chartered by that state.

Prompt Corrective Action. Federal law requires, among other things, that federal bank regulators take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For this purpose, the law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. Under the regulations, as amended effective January 1, 2015 to incorporate the previously mentioned amendments to the regulatory capital requirements, an institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater. An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater. An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%. An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%. An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.

Federal law and regulations also specify circumstances under which a federal banking agency may reclassify a well-capitalized institution as adequately capitalized and may require an institution classified as less than well-capitalized to comply with supervisory actions as if it were in the next lower category.

The OCC may order savings associations that have insufficient capital to take corrective actions. For example, a savings association that is categorized as “undercapitalized” is subject to growth limitations and is required to submit a capital restoration plan, and a holding company that controls such a savings association is required to guarantee that the savings association complies with the restoration plan. A “significantly undercapitalized” savings association may be subject to additional restrictions. Savings associations deemed by the OCC to be “critically undercapitalized” would be subject to the appointment of a receiver or conservator.

At December 31, 2025, Fifth District met the criteria for being considered “well capitalized.” For further information, see note 10 to the notes to consolidated financial statements.

Insurance of Deposit Accounts. Fifth District is a member of the Deposit Insurance Fund, which is administered by the FDIC. Its deposit accounts are insured by the FDIC, generally up to a maximum of $250,000 per depositor.

The FDIC imposes deposit insurance assessments against all insured depository institutions. An institution’s assessment rate depends upon the perceived risk of the institution to the Deposit Insurance Fund, with institutions deemed less risky paying lower rates. Currently, assessments for institutions of less than $10 billion of total assets are based on financial measures and supervisory ratings derived from statistical models estimating the probability of failure within three years. That system was effective July 1, 2016 and replaced a system under which each institution was assigned to a risk category. Assessment rates (inclusive of possible adjustments) currently range from 1.5 to 30 basis points of each institution’s total assets less tangible capital. The current scale, also effective July 1, 2016, is a reduction from the previous range of 2.5 to 45 basis points. The FDIC may increase or decrease the range of assessments uniformly, except that no adjustment can deviate more than two basis points from the base assessment rate without notice and comment rulemaking. The existing system represents a change, required by the Dodd-Frank Act, from the FDIC’s prior practice of basing the assessment on an institution’s aggregate deposits.

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The FDIC has the authority to increase insurance assessments. A significant increase in insurance premiums would have an adverse effect on the operating expenses and results of operations of Fifth District. We cannot predict what deposit insurance assessment rates will be in the future.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not know of any practice, condition or violation that might lead to termination of deposit insurance for Fifth District.

Privacy Regulations. Federal regulations generally require that Fifth District disclose its privacy policy, including identifying with whom it shares a customer’s “non-public personal information,” to customers at the time of establishing the customer relationship and annually thereafter. In addition, Fifth District is required to provide its customers with the ability to “opt-out” of having their personal information shared with unaffiliated third parties and not to disclose account numbers or access codes to non-affiliated third parties for marketing purposes. Fifth District has a privacy protection policy in place and believes that such policy is in compliance with the regulations.

USA Patriot Act. Fifth District is subject to the USA PATRIOT Act, which gives federal agencies additional powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering requirements. The USA PATRIOT Act contains provisions intended to encourage information sharing among bank regulatory agencies and law enforcement bodies and imposes affirmative obligations on financial institutions, such as enhanced recordkeeping and customer identification requirements.

Prohibitions Against Tying Arrangements. Federal savings associations are prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Other Regulations

Interest and other charges collected or contracted for by Fifth District are subject to state usury laws and federal laws concerning interest rates. Loan operations are also subject to state and federal laws applicable to credit transactions, such as the:

●

Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

●

Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

●

Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; and

●

Rules and regulations of the various federal and state agencies charged with the responsibility of implementing such federal and state laws.

The deposit operations of Fifth District also are subject to, among others, the:

●

Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

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●

Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; and

●

Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.

Federal Home Loan Bank System

Fifth District is a member of the Federal Home Loan Bank of Dallas, which is one of 11 regional Federal Home Loan Banks in the Federal Home Loan Bank System. The Federal Home Loan Bank of Dallas provides a central credit facility primarily for its member institutions. Members of the Federal Home Loan Bank of Dallas are required to acquire and hold shares of capital stock in the Federal Home Loan Bank of Dallas. Fifth District complied with this requirement at December 31, 2025. Based on redemption provisions of the Federal Home Loan Bank of Dallas, the stock has no quoted market value and is carried at cost. Fifth District reviews for impairment, based on the ultimate recoverability, the cost basis of the Federal Home Loan Bank of Fifth District stock. At December 31, 2025, no impairment was recognized.

Holding Company Regulation

Fifth District Bancorp is a unitary savings and loan holding company subject to regulation and supervision by the Federal Reserve Board. The Federal Reserve Board has enforcement authority over Fifth District Bancorp and its non-savings institution subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a risk to Fifth District.

As a savings and loan holding company, Fifth District Bancorp’s activities are limited to those activities permissible by law for financial holding companies (if Fifth District makes an election to be treated as a financial holding company and meets the other requirements to be a financial holding company) or multiple savings and loan holding companies. Fifth District does not intend to make an election to be treated as a financial holding company. A financial holding company may engage in activities that are financial in nature, incidental to financial activities or complementary to a financial activity. Such activities include lending and other activities permitted for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, insurance and underwriting equity securities. Multiple savings and loan holding companies are authorized to engage in activities specified by federal regulation, including activities permitted for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act.

Federal law prohibits a savings and loan holding company, directly or indirectly, or through one or more subsidiaries, from acquiring more than 5% of another savings institution or savings and loan holding company without prior written approval of the Federal Reserve Board, and from acquiring or retaining control of any depository institution not insured by the FDIC. In evaluating applications by holding companies to acquire savings institutions, the Federal Reserve Board must consider such things as the financial and managerial resources and future prospects of the company and institution involved, the effect of the acquisition on and the risk to the federal deposit insurance fund, the convenience and needs of the community and competitive factors. A savings and loan holding company may not acquire a savings institution in another state and hold the target institution as a separate subsidiary unless it is a supervisory acquisition under Section 13(k) of the Federal Deposit Insurance Act or the law of the state in which the target is located authorizes such acquisitions by out-of-state companies.

Savings and loan holding companies historically have not been subject to consolidated regulatory capital requirements. The Dodd-Frank Act requires the Federal Reserve Board to establish minimum consolidated capital requirements for all depository institution holding companies that are as stringent as those required for the insured depository subsidiaries. However, legislation was enacted in May 2018 that required the Federal Reserve Board to amend its “Small Bank Holding Company” exemption from consolidated holding company capital requirements to generally extend its applicability to bank and savings and loan holding companies of up to $3.0 billion in assets. Regulations implementing this amendment were effective in August 2018. Consequently, savings and loan holding

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companies of under $3.0 billion in consolidated assets remain exempt from consolidated regulatory capital requirements, unless the Federal Reserve determines otherwise in particular cases.

The Dodd-Frank Act extended the “source of strength” doctrine to savings and loan holding companies. The Federal Reserve Board has promulgated regulations implementing the “source of strength” policy that require holding companies to act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.

The Federal Reserve Board has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies and savings and loan holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition. Regulatory guidance provides for prior regulatory consultation with respect to capital distributions in certain circumstances such as where the company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate of earnings retention is inconsistent with the company’s capital needs and overall financial condition. The ability of a holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. The policy statement also states that a holding company should inform the Federal Reserve Board supervisory staff before redeeming or repurchasing common stock or perpetual preferred stock if the holding company is experiencing financial weaknesses or if the repurchase or redemption would result in a net reduction, at the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. These regulatory policies may affect the ability of Fifth District Bancorp to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.

For Fifth District Bancorp to be regulated by the Federal Reserve Board as savings and loan holding company rather than as a bank holding company, Fifth District must qualify as a “qualified thrift lender” under federal regulations or satisfy the “domestic building and loan association” test under the Internal Revenue Code. Under the qualified thrift lender test, a savings institution is required to maintain at least 65% of its “portfolio assets” (total assets less: (i) specified liquid assets up to 20% of total assets; (ii) intangible assets, including goodwill; and (iii) the value of property used to conduct business) in certain “qualified thrift investments” (primarily residential mortgages and related investments, including certain mortgage-backed and related securities) in at least nine out of each 12 month period. At December 31, 2025, Fifth District maintained approximately 101.3% of its portfolio assets in qualified thrift investments and complied with the qualified thrift lender requirement.

Federal Securities Laws

Fifth District Bancorp common stock is registered with the Securities and Exchange Commission. Fifth District Bancorp is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934, as amended.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures required under the federal securities laws. We have policies, procedures and systems designed to comply with these regulations, and we review and document such policies, procedures and systems to ensure continued compliance with these regulations.

Change in Control Regulations

Under the Change in Bank Control Act, a federal statute, no person may acquire control of a savings and loan holding company such as Fifth District Bancorp unless the Federal Reserve Board has been given 60 days prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition. Control,

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as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of the institution’s directors, or a determination by the regulator that the acquiror has the power, directly or indirectly, to exercise a controlling influence over the management or policies of the institution. Acquisition of more than 10% of any class of a savings and loan holding company’s voting stock constitutes a rebuttable presumption of control under the regulations under certain circumstances including where, as is the case with Fifth District Bancorp, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.

In addition, federal regulations provide that no company may acquire control of a savings and loan holding company without the prior approval of the Federal Reserve Board. Any company that acquires such control becomes a “savings and loan holding company” subject to registration, examination and regulation by the Federal Reserve Board.

Emerging Growth Company Status

Fifth District Bancorp is an emerging growth company. For as long as it continues to be an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to public companies. These exemptions include, but are not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, Fifth District Bancorp also is not subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require our independent auditors to audit our internal control over financial reporting. In addition, as an emerging growth company, we have elected to take advantage of the extended transition periods for adopting new or revised financial accounting standards until the date they are required to be adopted by private companies (however, if any new or revised financial accounting standards would not apply to private companies, we would not be able to delay their adoption). Accordingly, our consolidated financial statements may not be comparable to those of public companies that adopt new or revised financial accounting standards as of an earlier date.

Fifth District Bancorp will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the completion of the Conversion (i.e., on December 31, 2029); (ii) the first fiscal year after our annual gross revenues are $1.07 billion (adjusted for inflation) or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million at the end of the second quarter of that fiscal year.

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Taxation

Federal Taxation

General. Fifth District Bancorp and Fifth District are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to summarize material federal income tax matters and is not a comprehensive description of the tax rules applicable to Fifth District Bancorp and Fifth District.

Method of Accounting. For federal income tax purposes, Fifth District currently reports its income and expenses on the accrual method of accounting and uses a tax year ending December 31 for filing its federal income tax returns. The Small Business Protection Act of 1996 eliminated the use of the reserve method of accounting for bad debt reserves by savings institutions, effective for taxable years beginning after 1995.

Minimum Tax. The alternative minimum tax (“AMT”) for corporations has been repealed for tax years beginning after December 31, 2017. Any unused minimum tax credit of a corporation may be used to offset regular tax liability for any tax year. In addition, a portion of unused minimum tax credit was refundable in 2018 through 2021. The refundable portion is 50% (100% in 2021) of the excess of the minimum tax credit for the year over any credit allowable against regular tax for that year. At December 31, 2025, Fifth District had no minimum tax credit carryforward.

Net Operating Loss Carryovers. Generally, a corporation may carry forward net operating losses generated in tax years beginning after December 31, 2017 indefinitely and can offset up to 80% of taxable income. At December 31, 2025, Fifth District $896,000 in net operating loss carryforwards.

Capital Loss Carryovers. Generally, a corporation may carry back capital losses to the preceding three taxable years and forward to the succeeding five taxable years. Any capital loss carryback or carryover is treated as a short-term capital loss for the year to which it is carried. As such, it is grouped with any other capital losses for the year to which it is carried and is used to offset any capital gains. Any undeducted loss remaining after the five-year carryover period is not deductible. At December 31, 2025, Fifth District had no capital loss carryovers.

Corporate Dividends. Fifth District Bancorp may generally exclude from our income 100% of dividends received from Fifth District as a member of the same affiliated group of corporations.

Audit of Tax Returns. Fifth District’s federal income tax returns have not been audited in the most recent five-year period.

State Taxation

Louisiana. Fifth District Bancorp is subject to the Louisiana Corporation Income Tax based on its Louisiana taxable income. The Corporation Income Tax applies at graduated rates from 4% upon the first $25,000 of Louisiana taxable income to 8% on all Louisiana taxable income in excess of $200,000. For these purposes, “Louisiana taxable income” means net income which is earned within or derived from sources within the State of Louisiana, after adjustments permitted under Louisiana law, including a federal income tax deduction. Fifth District Bancorp files its Louisiana corporation income tax return on a separate corporation basis. Because Fifth District is subject to the Louisiana bank shares tax, its income is exempt from the Louisiana corporation income tax and any future dividends paid by Fifth District to Fifth District Bancorp will not be included in the Louisiana taxable income of Fifth District Bancorp.

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The Louisiana bank shares tax is imposed on the assessed value of Fifth District’s retained earnings and on its retained earnings and capital stock accounts. The formula for deriving the assessed value is to calculate 15% of the sum of:

(i)

20% of Fifth District’s capitalized earnings, plus

(ii)

80% of Fifth District’s taxable stockholders’ equity, minus

(iii)

50% of Fifth District’s real and personal property assessment.

Various items may also be subtracted in calculating Fifth District’s capitalized earnings.

Maryland. As a Maryland business corporation, Fifth District Bancorp is required to file an annual report with and pay personal property taxes to the State of Maryland.

ITEM 1A. Risk Factors

Not applicable, as Fifth District Bancorp is a “smaller reporting company.”

ITEM 1B. Unresolved Staff Comments

None.

ITEM 1C. Cybersecurity

Risk Management and Strategy. Our risk management program is designed to identify, assess, and mitigate risks across various aspects of the Company, including financial, operational, regulatory, reputational, and legal. Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential of cyber threats. Our Information Security Officer (ISO) and virtual Chief Information Officer (CIO) is primarily responsible for this cybersecurity component and is a key member of the risk management organization, reporting directly to the President and Chief Executive Officer, as discussed below, periodically to our board of directors.

Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse our system or information. The structure of our information security program is designed around the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework, regulatory guidance, and other industry standards. In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence fees to facilitate and promote program effectiveness. Our Computer Systems Operations Manager and Information Security Officer, who report directly to our board of directors, regularly collaborate with peer banks and industry groups to discuss cybersecurity trends and issues and identify best practices. The information security program is reviewed by such personnel with the goal of addressing changing threats and conditions.

We employ an in-depth, layered, defensive strategy that embraces a “trust by design” philosophy when designing new products, services, and technology. We leverage people, processes, and technology as part of our efforts to manage and maintain cybersecurity controls. We also employ a variety of preventative and detective tools designed to monitor, block, and provide alerts regarding suspicious activity, as well as to report on suspected advanced persistent threats. We have established processes and systems designed to mitigate cyber risk, including regular and on-going education and training for employees, preparedness simulations and tabletop exercises, and recovery and reliance tests. We engage in regular assessments of our infrastructure, software systems, and network architecture, using third-party cybersecurity experts. We also maintain a third-party risk management program designed to identify, assess, and manage risks, including cybersecurity risks, associated with external service providers and our supply chain. We also actively monitor our email gateways for malicious phishing email campaigns and monitor remote connections. We leverage external auditors and independent external partners to periodically review our processes, systems, and controls,

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including with respect to our information security program, to assess their design and operating effectiveness and make recommendations to strengthen our risk management program.

We maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the appropriate Board-approved management committees, as discussed further below, and to the board of directors. The Incident Response Plan is coordinated through the Computer Systems Operations Manager and key members of management are embedded into the Plan by its design. The Incident Response Plan facilitates coordination across multiple parts of our organization and is evaluated at least annually.

Notwithstanding our defensive measures and processes, the threat posed by cyber-attacks is severe. Our internal systems, processes, and controls are designed to mitigate loss from cyber-attacks and, while we have experienced cybersecurity incidents in the past, risks from cybersecurity threats have not materially affected our company.

Governance. Our Computer Systems Operations Manager is accountable for managing our enterprise information security function and delivering our information security program. The responsibilities of this position include cybersecurity risk assessment, defense operations, incident response, vulnerability assessment, threat intelligence, identity access governance, third-party risk management, and business resilience. The foregoing responsibilities are covered on a day-to-day basis by a first line of defense function, and our second line of defense function, including the Information Security Officer, provides guidance, oversight, monitoring and challenge of the first line’s activities. The second line of defense function is separated from the first line of defense function through organizational structure and ultimately reports directly to the board of directors. The function, as a whole, consists of information security professionals with varying degrees of education and experience. Individuals responsible, including third-party vendors, are generally subject to professional education and certification requirements.

Our board of directors has approved management committees including the Information Technology Steering Committee, which focuses on technology impact, and its business impact. This committee provides oversight and governance of the technology program and the information security program. This committee includes the Information Security Officer (Corporate Secretary), the Computer Systems Operation Manager, the virtual Chief Information Officer and other members of senior management. This committee generally meets quarterly to provide oversight of the risk management strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage security risks. More frequent meetings occur from time to time in accordance with the Incident Response Plan in order to facilitate timely informing and monitoring efforts. The Computer Systems Operations Manager and Virtual Chief Information Officer reports summaries of key issues, including significant cybersecurity and/or privacy incidents, discussed at committee meetings and the actions taken to the board of directors on an annual basis (or more frequently as may be required by the Incident Response Plan).

The board of directors is responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks. The board of directors reviews and approves our information security and technology budgets and strategies annually.

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ITEM 2. Properties

At December 31, 2025, the net book value of our properties (including land, buildings and improvements, and furniture and fixtures) was $11.6 million. The following table sets forth information regarding our offices at December 31, 2025.


		Leased or				Approximate
Location		Owned		Year Acquired		Square Footage
Main Office:
4000 General DeGaulle Drive
New Orleans, LA 70114
Orleans Parish		Owned		1971		5,000

Branch Offices:
850 Avenue D
Marrero, LA 70072
Jefferson Parish		Owned		2024		3,500

2476 Barataria Boulevard
Marrero, LA 70072
Jefferson Parish		Owned		1979		2,400

1317 Westbank Expressway
Westwego, LA 70094
Jefferson Parish		Owned		1981		2,840

4526 W. Esplanade Avenue
Metairie, LA 70006
Jefferson Parish		Owned		2007		2,500

69285 Highway 21
Covington, LA 70433
St. Tammany Parish		Owned		2018		4,000

425 Harrison Avenue, Suite 1100
New Orleans, LA 70124
Orleans Parish		Owned		2020		1,600

Each location has an ATM and a drive-thru facility. We believe that our current facilities are adequate to meet our present and foreseeable needs. We currently do not have any current plans or understandings to expand our office network.

ITEM 3. Legal Proceedings

We are not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. At December 31, 2025, we were not involved in any legal proceedings, the outcome of which we believe would be material to our consolidated financial condition or results of operations.

ITEM 4. Mine Safety Disclosures

Not applicable.

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PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Fifth District Bancorp’s common stock is listed on the Nasdaq Capital Market under the symbol “FDSB.” As of December 31, 2025, we had 345 stockholders of record (excluding persons or entities holding stock in street name through various brokerage firms), and 5,349,039 shares of common stock outstanding.

To date, Fifth District Bancorp has not paid any cash dividends to our stockholders. The payment and amount of any dividend payments is subject to statutory and regulatory limitations, and depends upon a number of factors, including the following: regulatory capital requirements; our financial condition and results of operations; tax considerations; and general economic conditions.

There were no sales of unregistered equity securities during the quarter ended December 31, 2025.

The following table presents information regarding the Company’s stock repurchase activity during the quarter ended December 31, 2025:


						Total Number of		Maximum
						Shares		Number of Shares
						Purchased as		That May Yet be
		Total Number		Average Price		Part of Publicly		Purchased Under
		of Shares		Paid Per		Announced Plans		the Plans or
Period		Purchased		Share		or Programs ⁽¹⁾		Programs
October 1, 2025 through October 31, 2025		22,153		$ 13.54		22,153		497,071
November 1, 2025 through November 30, 2025		42,417		13.29		42,417		454,654
December 1, 2025 through December 31, 2025		109,141		14.31		109,141		345,513
Total		173,711		13.72		173,711		345,513

(1)

On August 25, 2025, the Company authorized a stock repurchase program for up to 555,947 shares of its common stock, representing 10% of shares then outstanding. The program was publicly announced on the same date. The Company intends to conduct the repurchases on the open market, including by means of a trading plan adopted under SEC Rule 10b5-1, subject to market conditions and other factors. There is no guarantee as to the number of shares that the Company may ultimately repurchase. The Company may suspend or discontinue the program at any time.

ITEM 6. Reserved

ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis reflects our consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from the consolidated financial statements, which appear elsewhere in this annual report. You should read the information in this section in conjunction with the other business and financial information provided in this annual report.

Overview

Our loan portfolio consists primarily of fixed-rate one- to four-family residential mortgage loans that we have originated. To a substantially lesser extent, we also originate construction loans, home equity loans, home equity lines of credit, land loans, and share loans (loans secured by deposit accounts at Fifth District). With regard to commercial lending, the bank is originating loans, purchasing loan participations, and purchasing whole loans through third party originators. We typically retain in our portfolio the loans we originate. We offer a variety of deposit accounts including checking accounts, money market accounts, and certificates of deposit.

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Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations also are affected by our provisions for credit losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of service charges on deposit accounts, other service charges and fees, income from bank owned life insurance, and fees from third parties for loan referrals. Non-interest expense currently consists primarily of expenses related to salaries and employee benefits, occupancy and equipment, data processing, contract services, director fees, FDIC deposit insurance premiums, and other expenses.

Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Business Strategy

Our principal objective is to build long-term value for our stockholders by operating a profitable community-oriented financial institution dedicated to meeting the banking needs of our customers by emphasizing personalized and efficient customer service. Highlights of our current business strategy include:

●

Continue to focus on originating fixed-rate one- to four-family residential mortgage loans for retention in our portfolio. We are primarily a fixed-rate one- to four-family residential mortgage loan lender for borrowers in our primary market area. At December 31, 2025, $325.8 million, or 86.3% of our total loan portfolio, consisted of residential mortgage loans. We expect residential mortgage lending to remain our primary lending activity.

●

Continue to moderately increase our commercial and industrial loan portfolio. To a limited extent, we have originated and purchased commercial real estate loans, commercial and industrial loans, and loan participations from other lenders and investors. At December 31, 2025, $24.8 million, or 6.6% of our total loan portfolio, consisted of commercial real estate, commercial and industrial loans, and loan participations. These loans are higher-yielding and have shorter terms, which helps to mitigate interest rate risk, than one- to four-family residential mortgage loans.

●

Maintain our strong asset quality through conservative loan underwriting. We intend to maintain strong asset quality through what we believe are our conservative underwriting standards and credit monitoring processes. At December 31, 2025, our nonperforming assets totaled $586,000, or 0.1% of total assets.

●

Continue efforts to grow low-cost “core” deposits. We consider our core deposits to include all deposits other than certificates of deposit. We will continue our efforts to increase our core deposits, both retail and commercial, to provide a stable source of funds to support loan growth at costs consistent with improving our interest rate spread and net interest margin. Core deposits totaled $153.4 million, or 39.0% of total deposits, at December 31, 2025.

●

Remain a community-oriented institution and rely on high quality service to maintain and build a loyal local customer base. We were established in 1926. By servicing all the loans we originate our loan customers are able to deal directly with us when questions may arise about their loans. Through the goodwill we have developed over years of providing timely, efficient banking services, we believe that we have been able to attract a loyal base of local retail customers on which we expect to continue to build our banking business.

●

Grow organically and through opportunistic branching and/or acquisitions. We intend to grow our balance sheet organically on a managed basis, and the capital we raised in the stock offering has enabled us to increase our lending and investment capacity. In addition to organic growth, we may also consider expansion opportunities in our market area or in contiguous markets that we believe would enhance both our franchise value and stockholder returns. These opportunities may include

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establishing loan production offices, establishing new, or de novo, branch offices, acquiring branch offices and/or acquiring other financial institutions.

Critical Accounting Policies and Use of Critical Accounting Estimates

The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with GAAP. The preparation of these financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our consolidated financial statements may not be comparable to companies that comply with such new or revised accounting standards.

We consider the following accounting policies to be our critical accounting policies:

Allowance for Credit Losses. Allowance for credit losses represents management’s estimate of lifetime credit losses in loans as of the balance sheet date using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

Deferred Taxes. Deferred income tax assets and liabilities are computed using the asset and liability method, which recognizes a liability or asset representing the tax effects, based on current tax law, of future deductible or taxable amounts attributable to events recognized in the financial statements. A valuation allowance may be established to the extent necessary to reduce the deferred tax asset to a level at which it is “more likely than not” that the tax asset or benefit will be realized. Realization of tax benefits depends on having sufficient taxable income, available tax loss carrybacks or credits, the reversal of taxable temporary differences and/or tax planning strategies within the reversal period, and that current tax law allows for the realization of recorded tax benefits.

Fair Value Measurements. Certain assets and liabilities are measured at fair value on a recurring basis, including securities and derivative instruments. Assets and liabilities carried at fair value inherently include subjectivity and may require the use of significant assumptions, adjustments and judgment including, among others, discount rates, rates of return on assets, cash flows, default rates, loss rates, terminal values and liquidation values. A significant change in assumptions may result in a significant change in fair value, which in turn, may result in a higher degree of financial statement volatility and could result in significant impact on our results of operations, financial condition or disclosures of fair value information.

The fair value hierarchy requires use of observable inputs first and subsequently unobservable inputs when observable inputs are not available. Fair value measurements involve inputs that are observable (Level 1 or Level 2 in fair value hierarchy), when available. The level of judgment required to determine fair value is dependent on the methods or techniques used in the process. Assets and liabilities that are measured at fair value using quoted prices in active markets (Level 1) do not require significant judgment while the valuation of assets and liabilities when quoted market prices are not available (Levels 2 and 3) may require significant judgment to assess whether observable or unobservable inputs for those assets and liabilities provide reasonable determination of fair value.

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Selected Financial Data

The following selected financial data sets forth certain financial highlights of the Company and should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.


		At December 31,
		2025		2024

		(In thousands)
Selected Financial Condition Data:
Total assets		$	534,394	$	527,307
Cash and cash equivalents			33,852		37,916
Investment securities available-for-sale			99,077		92,987
Loans receivable, net			376,391		367,333
Premises and equipment, net			11,636		11,923
Bank owned life insurance			7,689		10,685
Deferred tax asset, net			1,722		2,447
Deposits			393,162		391,476
Federal Home Loan Bank advances			—		—
Total stockholders' equity			129,757		125,775


		For the Years Ended December 31,
		2025		2024

		(In thousands)
Selected Operating Data:
Total interest and dividend income		$	22,058	$	19,277
Total interest expense			9,210		9,221
Net interest income			12,848		10,056
Provision for (Recovery of) credit losses			10		(1,210)
Net interest income after provision for (recovery of) credit losses			12,838		11,266
Total non-interest income			4,430		11
Total non-interest expense			13,083		12,713
Income (loss) before income taxes			4,185		(1,436)
Provision (benefit) for income taxes			97		(358)
Net income (loss)		$	4,088	$	(1,078)

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		At or For the Years Ended December 31,
		2025		2024

Performance Ratios:
Return on average assets		0.76	%	(0.21)	%
Return on average equity		3.17		(0.98)
Interest rate spread ⁽¹⁾		2.04		1.68
Net interest margin ⁽²⁾		2.55		2.13
Noninterest expense as a percentage of average assets		2.44		2.52
Efficiency ratio ⁽³⁾		75.72		126.28
Average interest-earning assets as a percentage of average interest-bearing liabilities		127.93		123.06

Capital Ratios (Bank only):
Average equity as a percentage of average assets		24.04	%	21.75	%
Total capital as a percentage of risk-weighted assets		41.79		43.91
Tier 1 capital as a percentage of risk-weighted assets		41.17		43.24
Common equity Tier 1 capital as a percentage of risk-weighted assets		41.17		43.24
Tier 1 capital as a percentage of average assets		21.07		20.78

Asset Quality Ratios:
Allowance for credit losses on loans as a percentage of total loans		0.45	%	0.46	%
Allowance for credit losses on loans as a percentage of non-performing loans		312.32		158.05
Allowance for credit losses on loans as a percentage of non-accrual loans		312.32		158.05
Non-accrual loans as a percentage of total loans		0.14		0.29
Net recoveries (charge-offs) as a percentage of average outstanding loans		—		—
Non-performing loans as a percentage of total loans		0.14		0.29
Non-performing loans as a percentage of total assets		0.10		0.20
Total non-performing assets as a percentage of total assets		0.11		0.21

Other Data:
Number of offices		7		7
Number of full-time employees		66		67
Number of part-time employees		1		1

(1)	Represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(2)	Represents net interest income as a percentage of average interest-earning assets.

(3)	Represents noninterest expenses divided by the sum of net interest income and noninterest income.

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Comparison of Financial Condition at December 31, 2025 and December 31, 2024

Total Assets. Total assets were $534.4 million at December 31, 2025, an increase of $7.1 million, or 1.3%, compared to $527.3 million at December 31, 2024. This increase is primarily due to $6.1 million increase in investment securities available-for-sale, and $9.1 million increase in loans receivable, net offset by a $4.1 million decrease in cash and cash equivalents, and a $3.0 million decrease in bank owned life insurance.

Cash and Cash Equivalents. Cash and cash equivalents decreased by $4.1 million, or 10.7%, to $33.9 million at December 31, 2025 from $37.9 million at December 31, 2024. This decrease is primarily due to the purchase of investments available for sale and the origination of loans, primarily commercial real estate loans.

Investment Securities Available-For-Sale. Investment securities available-for-sale increased $6.1 million, or 6.5%, to $99.1 million at December 31, 2025 from $93.0 million at December 31, 2024. Securities purchased totaled $18.3 million, and calls, maturities, and repayments totaled $15.9 million. Adding to the increase was a fair market value adjustment of $3.8 million

Loans Receivable, Net. Loans receivable, net, increased by $9.1 million, or 2.5%, to $376.4 million at December 31, 2025 from $367.3 million at December 31, 2024. Loan originations were $58.5 million and loan repayments totaled $49.4 million. Commercial loans increased by $10.4 million, primarily from the origination of commercial real estate loans, and commercial and industrial loans, 1-4 single family mortgages decreased by $6.9 million, home equity loans increased by $2.1 million, and construction and land loans increased by $3.0 million.

Deposits. Deposits increased by $1.7 million, or 0.4%, to $393.2 million at December 31, 2025, from $391.5 million at December 31, 2024. Certificates of deposit increased $925,000, or 0.4%, to $239.7 million at December 31, 2025, from $238.8 million at December 31, 2024. The majority of the increase in certificates of deposit was driven by new customer activity and migration from lower yielding money markets and savings accounts. NOW accounts increased $2.4 million, or 4.4%, to $56.3 million at December 31, 2025, from $53.9 million at December 31, 2024. MMDA accounts decreased $2.0 million, or 8.8%, to $20.7 million at December 31, 2025, from $22.7 million at December 31, 2024. Savings Accounts increased $399,000, or 0.5%, to $76.4 million at December 31, 2025, from $76.0 million at December 31, 2024.

Total Stockholders’ Equity. Total stockholders’ equity increased by $4.0 million, or 3.2%, to $129.8 million at December 31, 2025, from $125.8 million at December 31, 2024. The increase resulted primarily from the accumulated other comprehensive loss (as a result of market value adjustment of investment securities available-for-sale due to the rise in market interest rates during the period) declining $2.5 million and retained earnings increasing $3.2 million due to the net income for the year offset by the $2.0 million decrease in additional paid-in capital as we deploy excess capital to repurchase shares of our common stock.

Average Balances and Yields

The following table sets forth average balance sheets, average yields and rates, and other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects are immaterial. Average balances are calculated using daily average balances. Non-accrual loans are included in average balances only. Average yields include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Net deferred loan fees/costs are immaterial.

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		For the Year Ended December 31,
		2025						2024
		Average						Average
		Outstanding				Average		Outstanding				Average
		Balance		Interest		Yield/Rate		Balance		Interest		Yield/Rate

		(Dollars in thousands)
Interest-earning assets:
Cash and cash equivalents		$	27,943	$	1,101	3.94	%	$	28,246	$	1,418	5.02	%
Investment securities available-for-sale			98,902		4,083	4.13			76,068		2,574	3.38
Loans receivable, net			376,887		16,841	4.47			366,986		15,253	4.16
Restricted stock			920		33	3.59			892		32	3.59
Total interest-earning assets			504,652		22,058	4.37			472,192		19,277	4.08
Noninterest-earning assets			31,001						32,576
Total assets		$	535,653					$	504,768

Interest-bearing liabilities:
Savings accounts		$	77,186		77	0.10	%	$	80,656		81	0.10	%
NOW accounts			53,904		14	0.03			43,564		13	0.03
Money market accounts			21,172		106	0.50			23,565		120	0.51
Certificates of deposit			242,215		9,013	3.72			235,851		9,003	3.82
Total interest-bearing deposits			394,477		9,210	2.33			383,636		9,217	2.40
Federal Home Loan Bank advances			—		—	—			87		4	4.60
Total interest-bearing liabilities			394,477		9,210	2.33			383,723		9,221	2.40
Noninterest-bearing demand deposits			1,697						1,168
Other noninterest-bearing liabilities			10,699						10,110
Total liabilities			406,873						395,001
Total stockholders' equity			128,780						109,767
Total liabilities and stockholders' equity		$	535,653						504,768
Net interest income				$	12,848					$	10,056
Net interest rate spread ⁽¹⁾						2.04	%					1.68	%
Net interest-earning assets ⁽²⁾		$	110,175					$	88,469
Net interest margin ⁽³⁾						2.55	%					2.13	%
Average interest-earning assets to interest-bearing liabilities						127.93	%					123.06	%

(1)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

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

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Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.


		Year Ended December 31, 2025 vs. 2024
		Increase (Decrease) Due to:						Total Increase
		Volume			Rate			(Decrease)
					(In thousands)
Interest-earning assets:
Cash and cash equivalents		$	(15)		$	(302)		$	(317)
Investment securities available-for-sale			773			736			1,509
Loans receivable, net			412			1,176			1,588
Restricted stock			1			—			1
Total interest-earning assets			1,171			1,610			2,781

Interest-bearing liabilities:
Savings accounts			(3)			(1)			(4)
NOW accounts			3			(2)			1
Money market accounts			(12)			(2)			(14)
Certificates of deposit			243			(233)			10
Total deposits			231			(238)			(7)
Federal Home Loan Bank advances			(4)			—			(4)
Total interest-bearing liabilities			227			(238)			(11)

Change in net interest income		$	944		$	1,848		$	2,792

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Comparison of Operating Results for the Years Ended December 31, 2025 and December 31, 2024

General. Net income (loss) for the year ended December 31, 2025, was $4.1 million, an increase of $5.2 million, or 479.2%, compared to ($1.1) million for the year ended December 31, 2024. The increase in net income was primarily from an increase in interest income of $2.8 million, an increase in non-interest income of $4.4 million mainly due to a gain on bank owned life insurance proceeds, partially offset by a decrease in recovery of credit losses on loans of $1.2 million, a $370,000 increase in non-interest expense, and a $455,000 decrease in the (benefit) for income taxes.

Interest Income. Interest and dividend income increased by $2.8 million, or 14.4%, to $22.1 million for the year ended December 31, 2025, compared to $19.3 million for the year ended December 31, 2024. The increase is attributed to a $1.6 million, or 10.4%, increase in interest on loans, a $1.5 million, or 58.6%, increase in interest on investment securities available-for-sale, offset by a $316,000, or 2.2%, decrease in other interest-earning assets.

During the year ended December 31, 2025, average loans receivable, net, increased by $9.9 million, or 2.7%, from year ended December 31, 2024. The average yield on loans increased to 4.47% for the year ended December 31, 2025, from 4.16% for the year ended December 31, 2024, due to the making higher yielding loans such as commercial loans.

The average balance of investment securities available-for-sale increased $22.8 million, or 30.0%, to $98.9 million for the year ended December 31, 2025, from $76.1 million for the year ended December 31, 2024. The average yield on available-for-sale investment securities increased to 4.13% for the year ended December 31, 2025, from 3.38% for the year ended December 31, 2024. The increase in the average yield on available-for-sale investment securities was primarily due to reinvesting in higher yielding securities.

Interest income on cash and cash equivalents, comprised primarily of overnight deposits, decreased by $317,000, or 22.4%, for the year ended December 31, 2025, primarily due to a decrease in the average balance of cash and cash equivalents by $303,000 to $27.9 million for the year ended December 31, 2025, from $28.2 million for the year ended December 31, 2024. The average yield decreased to 3.94% for year ended December 31, 2025, from 5.02% for the year ended December 31, 2024. The decrease in average yield was due to the decrease in market interest rates.

Interest Expense. Total interest expense decreased $11,000 or 0.1%, to $9.2 million for the year ended December 31, 2025, compared to $9.2 million for the year ended December 31, 2024. The decrease was primarily due to the decrease in the average cost of deposits to 2.33% for the year ended December 31, 2025, from 2.40% for the year ended December 31, 2024, reflecting the decreasing market interest rate environment. The average balance of interest-bearing deposits increased by $10.8 million, or 2.8%, to $394.5 million for the year ended December 31, 2025, from $383.6 million for the year ended December 31, 2024.

Net Interest Income. Net interest income increased $2.8 million, or 27.8%, to $12.8 million for the year ended December 31, 2025, compared to $10.1 million for the year ended December 31, 2024. The interest rate spread increased to 2.04% for the year ended December 31, 2025 from 1.68% for the year ended December 31, 2024, while average net interest-earning assets increased $21.7 million period-to-period. The net interest margin increased to 2.55% for the year ended December 31, 2025, from 2.13% for the year ended December 31, 2024. The average yield on interest-earning assets increased from 4.08% for the year ended December 31, 2024, to 4.37% for the year ended December 31, 2025. The average rate paid on interest-bearing liabilities decreased from 2.40% for the year ended December 31, 2024, to 2.33% for the year ended December 31, 2025, primarily due to a decrease in the average rate paid on certificates of deposit from 3.82% in 2024 to 3.72% in 2025. The decrease in the average rate paid on certificates of deposit was attributed to decreasing market interest rates. The average balance of certificates of deposit increased from $235.9 million as of December 31, 2024, to $242.2 million as December 31, 2025, while over the same period the average balance of savings accounts decreased from $80.7 million to $77.2 million, and the average balance of money market accounts decreased from $23.6 million to $21.2 million.

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Provision (Recovery) for Credit Losses. The provision for credit losses on loans was $-0- for the year ended December 31, 2025, compared to ($1.1 million) for the year ended December 31, 2024. The allowance for credit losses on loans represented 0.45% of total loans at December 31, 2025, and 0.46% of total loans at December 31, 2024. The recovery of credit losses is based on our evaluation of the adequacy of the allowance for credit losses throughout the reporting period.

The provision of credit losses on unfunded commitments was $10,000 for the year ended December 31, 2025 compared to a ($110,000) on unfunded commitments for the year ended December 31, 2024. The increase in the provision was primarily due to an increase on the unfunded balance of construction loans in process. The recovery of credit losses on unfunded commitments is based on an evaluation of the historical usage rate.

Total non-performing loans were $544,000 at December 31, 2025, and $1.1 million December 31, 2024. Classified loans totaled $1.3 million at December 31, 2025, compared to $1.1 at December 31, 2024, and total past due greater than 30 days were $4.9 million and $5.4 million at those respective dates. As a percentage of nonperforming loans, the allowance for credit losses on loans was 312.3% at December 31, 2025, 158.0% at December 31, 2024.

.Noninterest Income. Non-interest income increased $4.4, or 4017.3% to $4.4 million for the year ended December 31, 2025, compared to $11,000 for the year ended December 31, 2024. A $1.1 million realized loss on the sale of investment securities available-for-sale was recorded for the year ended December 31, 2024, compared to no such realized losses recorded for the year ended December 31, 2025. A $3.5 million gain on bank owned life insurance proceeds was recorded for the year ended December 31, 2025, while no such gain was recorded for the year ended December 31, 2024. A $141,000 gain on sale of premises and equipment was recorded for the year ended December 31, 2024, while no such gain was recorded for the year ended December 31, 2025. A gain on real estate owned of $14,000 was recorded for the year ended December 31, 2025, while no such gain was recorded for the year ended December 31, 2024.

Noninterest Expense. Noninterest expense increased $370,000, or 2.9%, to $13.1 million for the year ended December 31, 2025, compared to $12.7 million for the year ended December 31, 2024. The increase was primarily due to an increase in salaries and employee benefits of $958,000 or 14.3%, an increase in occupancy and equipment expense of $210,000, or 11.5%, an increase in professional and legal fees of $136,000, or 70.1%, an increase in data processing expense of $125,000, or 10.6%, an increase in audit and examination fees of $28,000, or 9.2%, partially offset by a $37,000, or 13.4% decrease in directors fees, a $1.3 million, or 99.7%, decrease in charitable contributions from establishing the Fifth District Community Foundation Inc. in 2024, and a $26,000, or 19.8% decrease in advertising. The increase in salaries and employee benefits is mainly from a death benefit paid to the intended beneficiaries of the late President and Chief Executive Officer from the proceeds of the bank owned life insurance.

Provision (benefit) for Income Taxes. The provision (benefit) for income taxes increased by $455,000, or 127.1%, to $97,000 for the year ended December 31, 2025, compared to ($358,000) for the year ended December 31, 2024. The increase was due to a $5.6 million, or 391.4%, increase in pretax income. The effective tax rate was 21% for both years.

Management of Market Risk

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. All directors participate in discussions during the regular board meetings evaluating the interest rate risk inherent in our assets and liabilities, and the level of risk that is appropriate. These discussions take into consideration our business strategy, operating environment, capital, liquidity and performance objectives consistent with the policy and guidelines approved by them. The board of directors establishes policies and guidelines for managing interest rate risk.

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Our asset/liability management strategy attempts to manage the impact of changes in interest rates on net interest income, our primary source of earnings. Among the techniques we are using to manage interest rate risk are:

●

maintaining capital levels that substantially exceed the thresholds for well-capitalized status under federal regulations;

●

maintaining a high liquidity level;

●

growing our core deposit accounts; and

●

managing our investment securities portfolio to reduce the average maturity and effective life of the portfolio.

By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.

We have not engaged in hedging activities, such as investing in futures or options. We do not anticipate entering into similar transactions in the future.

Economic Value of Equity. We compute amounts by which the net present value of our assets and liabilities (economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases instantaneously by 100, 200, 300 and 400 basis point increments or decreases instantaneously by 100, 200, 300 and 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

The following table sets forth, as of December 31, 2025, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve. All estimated changes presented in the table are within the policy limits established by the board of directors.


At December 31, 2025
							EVE as a Percentage of Present Value
							of Assets ⁽³⁾
			Estimated Increase (Decrease) in						Increase
			EVE						(Decrease)
Change in Interest Rates (basis points) ⁽¹⁾	Estimated EVE ⁽²⁾		Amount		Percent		EVE Ratio ⁽⁴⁾		(basis points)
(Dollars in thousands)

400	$	64,101	$	(58,200)	(47.59)	%	15.83	%	(921)
300		75,621		(46,680)	(38.17)	%	17.92	%	(712)
200		90,623		(31,678)	(25.90)	%	20.46	%	(458)
100		106,649		(15,652)	(12.80)	%	22.91	%	(213)
Level		122,301		—	—	%	25.04	%	—
(100)		133,457		11,156	9.12	%	26.14	%	110
(200)		141,983		19,682	16.09	%	26.68	%	164
(300)		146,710		24,409	19.96	%	26.58	%	154
(400)		148,805		26,504	21.67	%	26.06	%	102

(1)	Assumes an immediate uniform change in interest rates at all maturities.

(2)	EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3)	Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4)	EVE Ratio represents EVE divided by the present value of assets.

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The table above indicates that at December 31, 2025, we would experience 25.90% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 16.09% increase in EVE in the event of an instantaneous 200 basis point decrease in interest rates.

Change in Net Interest Income. The following table sets forth, at December 31, 2025, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve. All estimated changes presented in the table are within the policy limits established by the board of directors.


At December 31, 2025
Change in Interest Rates		Net Interest Income Year 1
(basis points) ⁽¹⁾		Forecast			Year 1 Change from Level
		(Dollars in thousands)

400		$	9,340		(33.34)	%
300			10,508		(25.00)
200			11,689		(16.57)
100			12,848		(8.30)
Level			14,011		—
(100)			14,445		3.10
(200)			14,794		5.59
(300)			15,020		7.21
(400)			15,241		8.78

(1)	Assumes an immediate uniform change in interest rates at all maturities.

The table above indicates that at December 31, 2025, we would have experienced a 16.57% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 5.59% increase in net interest income in the event of an instantaneous 200 basis point decrease in market interest rates.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurement. Modeling changes in EVE and NII require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. For instance, the EVE and NII tables presented above assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. However, the shape of the yield curve changes constantly and the value and pricing of our assets and liabilities, including our deposits, may not closely correlate with changes in market interest rates. Accordingly, although the EVE and NII tables may provide an indication of our interest rate risk exposure at a particular point in time and in the context of a particular yield curve, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on EVE and NII and will differ from actual results.

EVE and net interest NII calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We also have the ability to borrow from the Federal Home Loan Bank of Dallas and from two correspondent banks and, until March 11, 2024, had the ability to obtain advances under the Federal Reserve Board’s Bank Term Funding Program. Under the terms of the Bank Term Funding Program, advances cannot be obtained after March 11, 2024. At December 31, 2025, we had $-0- of outstanding advances under

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the Bank Term Funding Program. At December 31, 2025, we had no outstanding advances from the Federal Home Loan Bank of Dallas.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets depend on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. For additional information, see the Consolidated Statements of Cash Flows.

We believe we maintain a strong liquidity position, and are committed to maintaining it. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

Fifth District Bancorp is a separate legal entity from Fifth District and must provide for its own liquidity to pay its operating expenses and other financial obligations. Fifth District Bancorp’s primary source of income is dividends received from Fifth District. The amount of dividends that Fifth District may declare and pay to Fifth District Bancorp is governed by applicable bank regulations. At December 31, 2025, Fifth District Bancorp (on an unconsolidated basis) had liquid assets of $19.2 million.

At December 31, 2025, Fifth District was categorized as well-capitalized under regulatory capital guidelines. Management is not aware of any conditions or events since the most recent notification that would change our category. For further information, see note 10 to the notes to consolidated financial statements.

Off-Balance Sheet Arrangements. At December 31, 2025, we had $35.9 million of outstanding commitments to originate loans, which primarily consists of HELOC’s totaling $17.4 million, construction loans totaling $14.2 million, and Board approved loans totaling $3.1 million. At December 31, 2025, certificates of deposit that are scheduled to mature on or before December 31, 2026 totaled $224.1 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may raise interest rates on deposits to attract new accounts or utilize Federal Home Loan Bank of Dallas advances, which may result in higher levels of interest expense.

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see note 1 of the notes to the consolidated financial statements appearing elsewhere in this annual report.

Impact of Inflation and Changing Prices

The consolidated financial statements and related data presented in this annual report have been prepared according to GAAP which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk

The information regarding this Item is contained in Item 7 under the heading “Management of Market Risk.”

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 274)

To the Board of Directors

Fifth District Bancorp, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Fifth District Bancorp, Inc. (the “Company”) as of December 31, 2025, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

We have served as the Company’s auditor since 2025.

/s/ EISNERAMPER LLP

Metairie, Louisiana

March 24, 2026

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Report of Independent Registered Public Accounting Firm (PCAOB ID 149)

To the Stockholders and Board of Directors

Fifth District Bancorp, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fifth District Bancorp, Inc. and its subsidiary (the “Company”) as of December 31, 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We served as the Company's auditor from 2023 to 2024.

/s/ Elliott Davis, LLC

Franklin, Tennessee

March 26, 2025

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ITEM 8.Financial Statements and Supplementary Data

FIFTH DISTRICT BANCORP, INC.

Consolidated Balance Sheets


	December 31,		December 31,
(in thousands, except per share amounts)	2025		2024
Assets
Cash and Due from Banks	$	4,993	$	5,850
Interest-Bearing Deposits at Other Financial Institutions		28,859		32,066
Total Cash and Cash Equivalents		33,852		37,916

Investment Securities Available-for-Sale, at Fair Value (amortized cost $104,010 and $101,712 respectively)		99,077		92,987
Restricted Stock		935		910
Loans Receivable, Net of Unearned Income		378,090		369,032
Allowance for Credit Losses		(1,699)		(1,699)
Loans Receivable, Net		376,391		367,333
Bank Owned Life Insurance		7,689		10,685
Premises and Equipment, Net		11,636		11,923
Accrued Interest Receivable		1,999		1,967
Real Estate Owned		42		42
Deferred Tax Asset, Net		1,722		2,447
Other Assets		1,051		1,097

Total Assets	$	534,394	$	527,307

Liabilities and Stockholders' Equity
Liabilities
Deposits
Interest-Bearing	$	391,364		389,860
Noninterest-Bearing		1,798		1,616
Advances from Borrowers for Taxes, Insurance, and Repairs		6,178		5,280
Other Liabilities		5,297		4,776

Total Liabilities		404,637		401,532

Stockholders' Equity
Preferred Stock - $0.01 Par Value; 1,000,000 Shares Authorized, None Issued and Outstanding at December 31, 2025 and 2024		—		—
Common Stock - $0.01 Par Value; 20,000,000 Shares Authorized: 5,349,039 and 5,559,473 Shares Issued and Outstanding at December 31, 2025 and December 31, 2024		54		56
Additional Paid-In Capital		51,195		53,163
Unearned ESOP Stock		(4,005)		(4,226)
Retained Earnings		86,941		83,693
Accumulated Other Comprehensive Loss		(4,428)		(6,911)

Total Stockholders' Equity		129,757		125,775

Total Liabilities and Stockholders' Equity	$	534,394	$	527,307

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

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FIFTH DISTRICT BANCORP, INC.

Consolidated Statements of Operations



	Years Ended December 31,
(in thousands)	2025		2024
Interest and Dividend Income
Loans, Including Fees	$	16,841	$	15,253
Investment Securities		4,083		2,574
Other Interest-Earning Assets		1,134		1,450

Total Interest and Dividend Income		22,058		19,277

Interest Expense
Deposits		9,210		9,217
Short-Term Federal Home Loan Bank Advances		—		4

Total Interest Expense		9,210		9,221

Net Interest Income		12,848		10,056

Recovery of Credit Losses on Loans		—		(1,100)
Provision for (Recovery of) Credit Losses on Unfunded Commitments		10		(110)

Total Provision for (Recovery of) Credit Losses		10		(1,210)

Net Interest Income After Provision for (Recovery of) Credit Losses		12,838		11,266

Non-Interest Income
Deposit Service Charges and Fees		212		217
ATM and Check Card Fees		393		402
Bank Owned Life Insurance		304		353
Loss on Investments Securities		—		(1,144)
Gain on Sale of Premises and Equipment		—		141
Gain on Sale of Real Estate Owned		14		—
Gain on Insurance Proceeds		3,469		—
Other		38		42

Total Non-Interest Income		4,430		11

Non-Interest Expense
Salaries and Employee Benefits		7,667		6,709
Occupancy and Equipment		2,030		1,820
Federal Deposit Insurance		215		205
Directors		240		277
Professional and Legal		330		194
Audit and Examination		332		304
Data Processing		1,304		1,179
Advertising		105		131
Charitable Contributions		4		1,281
Other		856		613

Total Non-Interest Expense		13,083		12,713

Income (Loss) Before Income Taxes		4,185		(1,436)

Income Tax Expense (Benefit)		97		(358)

Net Income (Loss)	$	4,088	$	(1,078)

Income (Loss) per Share - Basic and Diluted	$	0.80	$	(0.21)

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

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FIFTH DISTRICT BANCORP, INC.

Consolidated Statements of Comprehensive Income (Loss)



	Years Ended December 31,
(in thousands)	2025			2024
Net Income (Loss)	$	4,088		$	(1,078)

Other Comprehensive Income
Unrealized Net Gain (Loss) on Investment Securities Available-for-Sale Arising During the Period		3,792			(965)

Reclassification Adjustment for Net Losses Realized		—			1,144

Net Loss on Defined Benefit Pension Plan		(649)			(101)

Tax Effect		(660)			(16)

Total Other Comprehensive Income		2,483			62

Comprehensive Income (Loss)	$	6,571		$	(1,016)

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

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FIFTH DISTRICT BANCORP, INC.

Consolidated Statements of Stockholders’ Equity

Year ended December 31, 2025 and December 31, 2024


									Accumulated
			Additional		Unearned				Other		Total
	Common		Paid-In		ESOP		Retained		Comprehensive		Stockholders'
(in thousands, except share amounts)	Stock		Capital		Shares		Earnings		Loss		Equity
Balance at December 31, 2023	$	—	$	—	$	—	$	84,771	$	(6,973)	$	77,798

Net Loss		—		—		—		(1,078)		—		(1,078)

Other Comprehensive Income		—		—		—		—		62		62

Issuance of Common Stock, Net of Offering Expense		56		53,139		(4,448)		—		—		48,747

ESOP Shares Released for Allocation		—		24		222		—		—		246

Balance at December 31, 2024	$	56	$	53,163	$	(4,226)	$	83,693	$	(6,911)	$	125,775

Balance at December 31, 2024		56		53,163		(4,226)		83,693		(6,911)		125,775

Net Income		—		—		—		4,088		—		4,088

Other Comprehensive Income		—		—		—		—		2,483		2,483

Repurchase of Common Stock (210,434 Shares)		(2)		(2,102)		—		(840)		—		(2,944)

ESOP Shares Released for Allocation		—		66		221		—		—		287

Stock-Based Compensation		—		68		—		—		—		68

Balance at December 31, 2025	$	54	$	51,195	$	(4,005)	$	86,941	$	(4,428)	$	129,757

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

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FIFTH DISTRICT BANCORP, INC.

Consolidated Statements of Cash Flows


	Year Ended
	December 31,
(in thousands)	2025		2024
Cash Flows from Operating Activities
Net Income (Loss)	$	4,088	$	(1,078)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided by (Used in) Operating Activities
Provision for (Recovery of) Credit Losses		10		(1,210)
Gain on Insurance Proceeds		(3,469)		—
Gain on Sale of Premises and Equipment		—		(141)
Gain on Sale of Real Estate Owned		(14)		—
Depreciation		671		694
Net Accretion of Deferred Loan Costs		(55)		(11)
Net Amortization on Investment Securities		128		248
Loss on Sale of Investment Securities		—		1,144
Federal Home Loan Bank Stock Dividend		(25)		(29)
Deferred Tax Expense (Benefit)		65		(400)
Increase in Cash Surrender Value on Bank Owned Life Insurance		(304)		(353)
ESOP Compensation Expense		287		246
Stock-Based Compensation		68		—
Changes in Operating Assets and Liabilities
Accrued Interest Receivable		(32)		(210)
Other Assets		46		(95)
Other Liabilities		(138)		141

Net Cash Provided by (Used in) Operating Activities		1,326		(1,054)

Cash Flows from Investing Activities
Proceeds from Sale or Maturities of Investment Securities
Available-for-Sale		15,877		28,051
Purchases of Investment Securities Available-for-Sale		(18,303)		(54,350)
Increase in Loans Receivable, Net		(9,133)		(1,184)
Bank Owned Life Insurance Proceeds		6,769		—
Proceeds from Sale of Real Estate Owned		144		—
Proceeds from Sale of Premises and Equipment		—		509
Purchases of Premises and Equipment		(384)		(510)

Net Cash Used in Investing Activities		(5,030)		(27,484)

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

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FIFTH DISTRICT BANCORP, INC.

Consolidated Statements of Cash Flows (Continued) (Unaudited)

(in thousands)


	Year Ended
	December 31,
	2025		2024
Cash Flows from Financing Activities
Increase in Deposits, Net		1,686		1,473
Federal Home Loan Bank Advances		—		(4,000)
Increase in Advances by Borrowers for Taxes, Insurance and Repairs		898		928
(Repurchase) Net Proceeds from Issuance of Common Stock		(2,944)		48,747

Net Cash Provided by (Used in) Financing Activities		(360)		47,148

Net Increase (Decrease) in Cash and Cash Equivalents		(4,064)		18,610

Cash and Cash Equivalents, Beginning of Year		37,916		19,306

Cash and Cash Equivalents, End of Year	$	33,852	$	37,916

Supplemental Disclosures of Cash Flow Information
Cash Paid During the Period for Interest	$	9,278		8,975
Cash Paid During the Period for Taxes	$	—		—

Non-Cash Investing and Financing Activities
Real Estate Owned Acquired Through Foreclosure	$	130	$	—

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

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Note 1.

Summary of Significant Accounting Policies (Unaudited)

Description of Business

Fifth District Bancorp, Inc. (“Fifth District Bancorp” or the “Company”), a Maryland corporation, was incorporated on February 15, 2024, to serve as the bank holding company for Fifth District Savings Bank (“Fifth District” or the “Bank”) in connection with the Bank’s conversion from the mutual to stock form of organization (the “Conversion”). The Conversion was completed on July 31, 2024. In connection with the Conversion, Fifth District Bancorp acquired 100% ownership of Fifth District and the Company offered and sold 5,459,473 shares of its common stock at $10.00 per share, for gross offering proceeds of $54,594,730. The cost of the Conversion and issuance of common stock was approximately $2,400,000, which was deducted from the gross offering proceeds. Additionally, the Company contributed 100,000 shares to a newly formed charitable foundation. The Bank’s employee stock ownership plan (“ESOP”) purchased 444,758 shares of the common stock sold by the Company, which was equal to 8% of the 5,559,473 shares of common stock issued by the Company. The ESOP purchased the shares using a loan from the Company. The Company contributed approximately $26,097,000 of the net proceeds from the offering to the Bank, loaned $4,447,580 of the net proceeds to the ESOP and retained approximately $21,400,000 of the net proceeds.

The Bank is a federally-chartered stock savings bank which attracts deposits from the general public and uses such deposits primarily to originate loans secured by first mortgages on owner-occupied, family residences. The Bank’s primary regulator is the Office of the Comptroller of the Currency (OCC). The Bank’s activities are provided to customers of the Bank by branch offices located in the greater New Orleans area; however, loan and deposit customers are found dispersed in a wider geographical area covering southeast Louisiana. The Bank operates as one reporting segment.

Basis of Presentation

The accounting and reporting policies and practices of the Company conform with accounting principles generally accepted in the United States of America (U.S. GAAP) and predominant practices within the banking industry.

Principles of Consolidation

The consolidated financial statements as of and for the period ended December 31, 2025 include the amounts of Fifth District Bancorp and its wholly-owned subsidiary, Fifth District. All intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Material estimates that are particularly susceptible to significant change in the near-term relate to the valuation of the allowance for credit losses, deferred taxes, and fair value of financial instruments.

The determination of the adequacy of the allowance for credit losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of estimated losses on loans and unfunded commitments, management obtains independent

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

appraisals for significant collateral. While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination processes, periodically review the estimated losses on loans. Based on such reviews the Company may determine to recognize additional losses based on their judgements about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near-term. However, the amount of the change that is reasonably possible cannot be estimated.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash on hand, cash items, amounts due from banks, and interest-bearing deposits at other financial institutions with an original maturity of 90 days or less, and federal funds sold. Generally, federal funds are sold for one-day periods.

Cash and due from banks include bank deposit accounts aggregating approximately $25,808,000 and $27,065,000 in excess of the Federal Deposit Insurance Corporation limit of $250,000 per insured account on December 31, 2025 and December 31, 2024, respectively. The Company has not experienced any losses and does not believe that significant credit risk exists as a result of this practice.

The Company may be required to maintain cash reserves with the Federal Reserve Bank. The requirement is dependent upon the Company’s cash on hand or noninterest-bearing balances. There was no reserve requirement as of December 31, 2025, and December 31, 2024.

Investment Securities

Debt securities classified as held-to-maturity are those debt securities the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or changes in general economic conditions. These securities are carried at cost, adjusted for amortization of premium and accretion of discounts. Purchase premiums and discounts are recognized in interest income using the effective interest method over the terms of the securities, identified as the call date as to premiums and maturity date as to discounts. The Company held no held-to-maturity securities as of December 31, 2025 or December 31, 2024.

Debt securities classified as available-for-sale are those debt securities that the Company intends to hold for an indefinite period of time but not necessarily to maturity. Any decision to sell a security classified as available-for-sale would be based on various factors, including significant movement in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors. These securities are carried at estimated fair value by a third-party pricing service with any unrealized gains or losses excluded from net income and reported in accumulated other comprehensive income (loss), which is reported as a separate component of stockholders’ equity, net of the related deferred tax effect.

Debt securities that are classified as trading are acquired and held principally for the purpose of selling in the near term. These securities are carried at estimated fair value by a third-party pricing service with any unrealized gains or losses included in net income and reported in non-interest income in the consolidated statements of operations. The Company held no trading securities as of December 31, 2025 or December 31, 2024.

Gains and losses realized on sales of debt securities, determined using the adjusted cost basis of the specific securities sold, are included in non-interest income in the consolidated statements of operations. Dividend and interest income, including amortization of premium and accretion of discount arising at acquisition, from all categories of investment securities are included in interest income in the consolidated statements of operations.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Restricted Stock

Restricted stock is stock from the Federal Home Loan Bank (FHLB) and First National Bankers Bank (FNBB), which is restricted as to its marketability. Because no ready market exists for these investments and they have no quoted market value, the Company’s investment in these stocks is carried at cost. A determination as to whether there has been an impairment of a restricted stock investment is performed on an annual basis and includes a review of the current financial condition of the issuer.

Allowance for Credit Losses - Investment Securities Available-for-Sale

For available-for-sale securities, management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security, the security is written down to fair value, and the entire loss is recorded in earnings.

If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance on underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments, and adverse conditions specifically related to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected is compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit loss, limited to the amount that the fair value is less than the amortized cost basis, recognized as a provision for credit loss in the consolidated statements of operations. Any amount of noncredit related unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive income.

Changes in the allowance for credit loss are recorded as provision for (or recovery of) credit loss expense. Losses are charged against the allowance for credit loss when management believes an available-for-sale security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met. At December 31, 2025 and December 31, 2024, there was no allowance for credit loss related to the available-for-sale portfolio.

Accrued interest receivable on available-for-sale securities totaled approximately $411,000 and $348,000 at December 31, 2025 and December 31, 2024, respectively, and was excluded from the estimate of credit losses.

Loans Receivable

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts and deferred fees and costs.

Accrued interest receivable related to loans totaled approximately $1,588,000 and $1,619,000 at December 31, 2025, and December 31, 2024, respectively, and was reported in accrued interest receivable on the consolidated balance sheets. Interest income is accrued on the unpaid principal balance as earned using the interest method over the life of the loan. Loan origination and commitment fees and certain direct loan origination costs are deferred and amortized as an adjustment to the related loan’s yield using the effective interest method over the contractual life of the loan.

The accrual of interest is generally discontinued when a loan becomes 90 days past due, is not well collateralized and in the process of collection, or when management believes, after considering economic and

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

business conditions and collection efforts, that the principal or interest will not be collectible in the normal course of business. Past due status is based on contractual terms of the loan. A loan is considered to be past due when a scheduled payment has not been received 30 days after the contractual due date.

All accrued interest is reversed against interest income when a loan is placed on nonaccrual status. Interest received on such loans is accounted for using the cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a sustained period of repayment performance, and future payments are reasonably assured.

Allowance for Credit Losses - Loans Receivable

The allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate amounts previously charged-off and expected to be charged-off. Accrued interest receivable is excluded from the estimate of credit losses.

The allowance for credit losses represents management’s estimate of lifetime credit losses in loans as of the balance sheet date. The allowance for credit losses is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

Expected credit losses are measured on a pooled basis when similar risk characteristics exist using the modified open pool method. The modified open pool method applies a loss rate to a given pool of loans over the estimated remaining life of the given pool, which is based on historical data. Loan losses are calculated using the modified open pool method due to the nature and limited complexity of the loan portfolio.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The Company has identified and calculates the allowance for credit losses for each of the following portfolio segments:

Loan Pool		Risk Characteristics
One-to-Four Family Mortgages		This category consists of loans secured by residential real estate. The performance of these loans may be adversely affected by, among other factors, local residential real estate market conditions, the interest rate environment, and inflation.

Construction Loans		This category consists of loans to finance the ground-up construction and/or improvement of residential and vacant lot loans. The performance of construction loans is generally dependent upon the successful completion of improvements and/or land development for the end user. The successful completion of planned improvements and development may be adversely affected by changes in the estimated property value upon completion of construction, projected costs, and other conditions leading to project delays.

Home Equity Loans/ Lines of Credit		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, among other factors, local residential real estate market conditions, the interest rate environment, and inflation.

Commercial Real Estate		This category consists of loans primarily secured by office and industrial buildings, warehouses, retail shopping facilities and various special purpose properties, including hotel and restaurants. The performance of these loans may be adversely affected by, among other factors, conditions specific to the relevant industry, the real estate market for the property type and geographic region where the property of the borrower is located. This category consists of loans to finance the ground-up construction and/or improvement of commercial properties. The performance of these loans is generally dependent upon the successful completion of improvements and/or land development for the end user. The successful completion of planned improvements and development may be adversely affected by changes in the estimated property value upon completion of construction, projected costs and other conditions leading to project delays.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Commercial and Industrial

This category consists of purchased business loans made to various practitioners and other professionals. These loans are often originally secured by blanket UCC-1 filings. When the loan is purchased, the Bank purchases 100% of the loan and remits 97% of the loan balance to the seller and the seller establishes a reserve deposit account with the Bank equal to 3% of the loan balance. If a loan becomes delinquent, the Bank withdraws payment from the reserve deposit account. If a loan becomes 90 days delinquent, the seller typically replaces the delinquent loan with a performing loan of equal or greater balance (although this is not a contractual obligation of the seller). The performance of these loans may be adversely affected by among other factors, local and national market conditions, the interest rate environment and inflation.

This category consists of purchased business loans to independent insurance professionals for the purpose of business acquisition, expansion, refinance and working capital. These loans are fully collateralized by the business assets of the insurance agency, and typically require a life insurance policy for the agent in the amount of the loan. All loan payments are received directly via electronic transfer. Loans have a 10 year commitment on a 15 year amortization with a fixed rate for the first 5 years. Loans reprice for the remaining 5 years at prime plus a margin. The performance of these loans may be adversely affected by local and national market conditions, the interest rate environment, inflation and other factors.

This category consists of commercial loans purchased from a third-party originator that provide short-term, 12-month interim financing to small businesses. These loans serve as bridge financing for borrowers waiting to secure permanent funding through Small Business Administration (SBA) guaranteed loan programs. The primary source of repayment for these loans is the planned SBA buyout at the end of the 12-month interim period.

The performance of these loans may be adversely affected by, among other factors, local and national market conditions, the interest rate environment and inflation.

Consumer Loans

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, inflation, and other factors affecting the borrower’s income available to service the debt.

Additionally, the allowance for credit losses calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending management experience and risk tolerance, loan review and audit results, asset quality and portfolio trends, loan portfolio growth, industry concentrations, trends in underlying collateral, external factors, and economic conditions not already captured. The Company estimates reasonable and supportable forecasts of expected credit losses and reverts to historical loss information for periods beyond the forecast period for the remaining life of the loan pool.

Loans that do not share risk characteristics are evaluated on an individual basis. When the borrower is experiencing financial difficulty and repayment is expected to be provided through the operation or sale of the

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

collateral, the expected credit losses are based on the fair value of collateral at the reporting date, adjusted for estimated selling costs, as appropriate.

Allowance for Credit Losses - Unfunded Commitments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for unfunded commitments in the consolidated statements of operations. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for unfunded commitments is included in other liabilities on the consolidated balance sheets.

Bank Owned Life Insurance

The Bank is the beneficiary of life insurance contracts purchased on the lives of certain officers of the Bank which are reported at their cash surrender value. At December 31, 2025, and December 31, 2024, life insurance contracts totaled approximately $7,689,000 and $10,685,000, respectively. Appreciation in the cash surrender value amounted to approximately $304,000 and $353,000 for the years ended December 31, 2025 and 2024, respectively. Appreciation in value of the insurance policies is included in bank owned life insurance within non-interest income in the consolidated statements of operations.

Premises and Equipment

Premises and equipment are carried at cost, less accumulated depreciation. Depreciation is computed generally on the straight-line method based upon the estimated useful lives of the assets. Estimated useful lives for building and improvements range from 15 to 40 years, and for furniture and fixtures from 5 to 10 years.

Major expenditures for property acquisitions and those expenditures which substantially increase useful lives are capitalized. Expenditures for maintenance, repairs, and minor replacements that do not significantly improve or extend the lives of the respective assets are charged to expense as incurred.

When assets are retired or otherwise disposed of, their cost and related accumulated depreciation are removed from the respective accounts, and any gain or loss is reflected in other non-interest income or expense.

Real Estate Owned

Real estate acquired through, or in lieu of, loan foreclosure is initially recorded at fair value on the date of acquisition, less estimated costs to sell. Any write-downs at the time of acquisition are charged to the allowance for credit losses. Subsequent to acquisition, a valuation allowance is established, if necessary, to report these assets at the lower of (a) fair value minus estimated costs to sell or (b) cost.

The ability of the Company to recover the carrying value of real estate is based upon future sales of the real estate owned. The ability to affect such recovery is subject to market conditions and other factors, many of which are beyond the Company’s control. Operating income of such properties, net of related expenses, and gains and losses on their disposition, are included in the consolidated statements of operations. The Company had $42,000 of real estate owned as of December 31, 2025, and December 31, 2024.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Income Taxes

Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the financial statement carrying amounts and the tax bases of the Company’s assets and liabilities. Deferred income tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more-likely-than-not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the consolidated balance sheets, along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the consolidated statements of operations.

Accounting principles generally accepted in the United States of America provide accounting and disclosure guidance about positions taken by an entity in its tax returns that might be uncertain. The Company believes that it has appropriate support for any tax positions taken, and management has determined that there are no uncertain tax positions that are material to the consolidated financial statements.

The Company recognized no interest and/or penalties in the consolidated statements of operations for the year ended December 31, 2025 and 2024, nor any amount of interest and/or penalties payable that were recognized in the consolidated balance sheets as of December 31, 2025 and December 31, 2024, in relation to its income tax returns.

Any penalties or interest would be recognized in income tax expense.

The Bank is no longer subject to U.S. federal examinations for years prior to 2022.

Comprehensive Income (Loss)

Comprehensive income consists of net income (loss) and other comprehensive income, net of applicable income taxes. Other comprehensive income includes unrealized gains and losses on available-for-sale securities and pension-related changes other than net periodic pension cost. Accumulated other comprehensive (loss) consists of the cumulative unrealized gains and losses on available-for-sale securities and the cumulative unrealized gain or loss for the funded status of the pension plan liability, net of tax.

Stock-Based Compensation

Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Compensation cost is recognized over the requisite service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. The Company’s accounting policy is to recognize compensation cost net of estimated forfeitures.

Earnings per Share

Basic earnings (loss) per share (“EPS”) represents income available or loss attributable to common shareholders divided by the weighted average number of common shares outstanding during the period. Unallocated common shares held by the ESOP are shown as a reduction in stockholders’ equity and are excluded from the weighted-average common shares outstanding for both basic and diluted earnings per share calculations until they are committed to be released.

The Company had no dilutive or potentially dilutive securities during the year ended December 31, 2025 and 2024.

Revenue Recognition

In the ordinary course of business, the Company recognizes income from various revenue generating activities. Revenue from contracts with customers within the scope of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 606 is measured based on the consideration the Company expects to be entitled to receive in exchange for those goods or services as the related performance obligation is satisfied. Some obligations are satisfied at a point in time while others are satisfied over a period of time. A performance obligation is deemed to be satisfied when the control over goods or services is transferred to the customer.

The majority of the Company’s revenue is specifically excluded from the scope of ASC 606. Service charges on deposit accounts and ATM and check card fees are the most significant categories of revenue within the scope of ASC 606 and is included in non-interest income on the consolidated statements of operations.

Service charges on deposit accounts include charges related to depository accounts under standard service agreements. Fees are generally recognized at a point in time as services are delivered to or consumed by the customer or as penalties are assessed.

ATM and check card fees includes interchange fees from credit and debit cards processed through card association networks, annual fees, and other transaction and account management fees. Interchange rates are generally set by the credit card associations and based on purchase volumes and other factors. The Company records interchange fees on a per transaction basis at a point in time as services are provided. Transaction and account management fees are recognized at a point in time as services are provided, except for annual fees which are recognized over the applicable period. The costs of related loyalty rewards programs are netted against interchange revenue as a direct cost of the revenue generating activity.

Non-Direct-Response Advertising

The Company expenses all advertising costs, except for direct-response advertising, as incurred. Advertising and promotional expenses totaled approximately $105,000 and $131,000 for the years ended December 31, 2025 and 2024, respectively. If the Company incurs expenses for material direct-response advertising, it will be amortized over the estimated benefit period. Direct-response advertising consists of advertising whose primary purpose is to elicit sales to customers who could be shown to have responded specifically to the advertising and results in probable future benefits. For the years ended December 31, 2025 and 2024, the Company did not incur any amount of direct-response advertising costs.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Segment Reporting

The Company adopted Accounting Standards Update 2023-07 “Segment Reporting (Topic 280) – Improvement to Reportable Segment Disclosures” on January 1, 2024. The Company has determined that all of its banking divisions and subsidiaries meet the aggregation criteria of ASC 280, Segment Reporting, as its current operating model is structured whereby banking divisions and subsidiaries serve a similar base of clients utilizing a company-wide offering of similar products and services managed through similar processes and platforms that are collectively reviewed by the Company’s President and Chief Executive Officer, who has been identified as the chief operating decision maker (“CODM”).

The Company has a single operating segment and thus a single reporting segment. The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based on net income calculated on the same basis as is net income (loss) reported in the Company’s consolidated statements of operations. The CODM is also regularly provided with expense information at a level consistent with that disclosed in the Company’s consolidated statements of operations.

Recent Accounting Pronouncements – Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, Which amended the Income Taxes topic in the Accounting Standards Codification 740 to improve the transparency of income tax disclosures. The amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statement that have not yet been issued or made available for issuance.

The Company adopted the standard on January 1, 2025 on a prospective basis. The adoption of this ASU resulted in expanded disclosures for income taxes. The adoption did not have a material effect on the Company’s consolidated financial statements.

Recent Accounting Pronouncements- Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures, which requires the disaggregation of certain expenses in the notes to the consolidated financial statements, to provide enhanced transparency into the expense captions presented on the face of the consolidated statements of operations. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 31, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU may be applied either prospectively or retrospectively. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In November 2025, the FASB issued ASU 2025-08, Financial Instruments-Credit Losses (Topic 326) Purchased Loans, which amends the accounting for acquired financial assets under the Current Expected Credit Loss (CECL) methodology. The update introduces the concept of Purchased Seasoned Loans (PSLs) and effectively eliminates the double counting of credit losses for most acquired loans. Under the guidance, the gross-up approach is expanded to include all PSLs and an initial allowance for credit losses will be recorded by increasing the amortized cost basis of the loan at the date of acquisition, rather than recognizing an immediate credit loss expense in the consolidated statement of operations. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those years. Early adoption is permitted. The Company does not expect the amendment to have a material effect on its consolidated financial statements.

Reclassifications:

Certain prior year amounts have been reclassified to conform to the current presentation. Reclassifications had no effect on prior year net loss or stockholders’equity.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Note 2.

Investment Securities

The amortized cost and estimated fair values of investment securities available-for-sale at December 31, 2025 and December 31, 2024 are as follows:

December 31, 2025

Gross

Estimated

Amortized

Unrealized

Fair

(in thousands)

 

Cost

 

Gains

 

Losses

 

Value

U.S. Government Agencies

1,000

—

(4)

996

Mortgage-Backed Securities

88,432

629

(5,484)

83,577

Collateralized Mortgage Obligations

1,953

—

(74)

1,879

Corporate Bonds

12,625

—

12,625

Total

104,010

629

(5,562)

99,077


	December 31, 2024
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gains		Losses		Value
U.S. Government Agencies	$	1,000	$	—	$	(4)	$	996
Mortgage-Backed Securities		94,003		90		(8,674)		85,419
Collateralized Mortgage Obligations		2,459		—		(137)		2,322
Corporate Bonds		4,250		—		—		4,250

Total	$	101,712	$	90	$	(8,815)	$	92,987

The following tables show the gross unrealized losses and estimated fair value of investment securities available-for-sale for which an allowance for credit losses has not been recorded by category and length of time that securities have been in a continuous unrealized loss position at December 31, 2025, and December 31, 2024:

December 31, 2025

Securities

With Losses Under

With Losses Over

12 Months

Total

Gross

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(in thousands)

 

Value

 

Loss

 

Value

 

Loss

 

Value

 

Loss

U.S. Government Agencies

—

996

(4)

996

(4)

Mortgage-Backed Securities

5,420

(20)

44,675

(5,464)

50,095

(5,484)

Collateralized Mortgage Obligations

—

1,879

(74)

1,879

(74)

Total

5,420

(20)

47,550

(5,542)

52,970

(5,562)

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements


	December 31, 2024
	Securities				Securities
	With Losses Under				With Losses Over
	12 Months				12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. Government Agencies	$	—	$	—	$	996	$	(4)	$	996	$	(4)
Mortgage-Backed Securities		38,128		(433)		39,103		(8,241)		77,231		(8,674)
Collateralized Mortgage Obligations		962		(10)		1,360		(127)		2,322		(137)

Total	$	39,090	$	(443)	$	41,459	$	(8,372)	$	80,549	$	(8,815)

At December 31, 2025, 67 of the Company’s available-for-sale securities had unrealized losses totaling 9.5% of the individual securities’ amortized cost basis and 5.3% of the Company’s total amortized cost basis of the investment securities portfolio. At December 31, 2025, 61 of these 67 securities had been in a continuous loss position for over 12 months. The unrealized losses of these securities are believed to be caused by interest rate increases and changing market conditions and the Company does not intend to sell the securities, and it is not likely to be required to sell these securities prior to maturity. Management has determined that the declines in the fair value of these securities are not attributable to credit losses.

The Company’s securities in an unrealized loss position are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the implicit guarantee of the U.S. government and have a long history of zero credit loss. No allowance for credit losses was recorded for available-for-sale securities at December 31, 2025 and 2024.

The amortized cost and estimated fair value of securities classified as available-for-sale at December 31, 2025, by contractual maturity, are shown in the table below. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. The expected maturity of a security may differ from its contractual maturity because of the exercise of call options and potential paydowns. Accordingly actual maturities may differ from contractual maturities.


		Amortized			Fair
(in thousands)		Cost			Value
Available-for-Sale
Due in 1 Year or Less		$	—		$	—
Due after 1 Year through 5 Years			1,592			1,599
Due after 5 Years through 10 Years			17,084			16,763
Due after 10 Years			85,334			80,715

Total		$	104,010		$	99,077

There was no sales of securities during the year ended December 31, 2025. During the year ended December 31, 2024, the Company recorded no gross gains and gross losses of $1,144,000 to the sales of securities.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Note 3.

Restricted Stock

The following table shows the amount of restricted stock as of December 31, 2025 and 2024:


(in thousands)		2025		2024
Federal Home Loan Bank		$	585	$	560
First National Bankers Bank			350		350

Total		$	935	$	910

Note 4.

Loans Receivable and Allowance for Credit Losses

Loans receivable at December 31, 2025 and 2024 are summarized as follows:


(in thousands)		2025		2024
Real Estate Loans
One-to-Four Family Mortgages		$	325,774	$	332,659
Home Equity Lines of Credit			10,091		7,952
Construction and Land			12,538		9,588
Commercial Real Estate			10,547		594
Total			358,950		350,793

Other Loans
Commercial and Industrial			14,227		13,761
Consumer			4,189		3,699

Total Loans Receivable			377,366		368,253

Allowance for Credit Losses			(1,699)		(1,699)
Net Deferred Loan Costs			724		779

Total Loans Receivable, Net		$	376,391	$	367,333

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following tables present an analysis of past-due loans as of December 31, 2025 and 2024:


	December 31, 2025
					Loans 90 Days or
	30-59 Days		60-89 Days		More Past Due and		Nonaccrual		Current		Total Loans
(in thousands)	Past Due		Past Due		Still Accruing		Loans		Loans		Receivable
Real Estate Loans
One-to-Four Family Mortgages	$	2,933	$	1,194	$	—	$	544	$	321,103	$	325,774
Home Equity Lines of Credit		72		—		—		—		10,019		10,091
Construction and Land		130		—		—		—		12,408		12,538
Commercial Real Estate		—		—		—		—		10,547		10,547
Total		3,135		1,194		—		544		354,077		358,950

Commercial and Industrial		—		—		—		—		14,227		14,227
Consumer		—		—		—		—		4,189		4,189

Total Loans Receivable	$	3,135	$	1,194	$	—	$	544	$	372,493	$	377,366


	December 31, 2024
					Loans 90 Days or
	30-59 Days		60-89 Days		More Past Due and		Nonaccrual		Current		Total Loans
(in thousands)	Past Due		Past Due		Still Accruing		Loans		Loans		Receivable
Real Estate Loans
One-to-Four Family Mortgages	$	2,925	$	1,011	$	—	$	956	$	327,767	$	332,659
Home Equity Lines of Credit		—		—		—		—		7,952		7,952
Construction and Land		332		—		—		119		9,137		9,588
Commercial Real Estate		—		—		—		—		594		594
Total		3,257		1,011		—		1,075		345,450		350,793

Commercial and Industrial		—		—		—		—		13,761		13,761
Consumer		91		—		—		—		3,608		3,699

Total Loans Receivable	$	3,348	$	1,011	$	—	$	1,075	$	362,819	$	368,253

Credit Quality Indicators

The Company uses the following criteria to assess risk ratings with respect to its loan portfolio, which are consistent with regulatory guidelines:

Pass – Loans that comply in all material respects with the loan policies that are adequately secured with conforming collateral and that are extended to borrowers with documented ability to safely cover their total debt service requirements.

Special Mention – Includes loans that do not warrant adverse classification but do possess credit deficiencies or potential weaknesses that deserve close attention.

Substandard – Includes loans that are inadequately protected by the collateral pledged or the current net worth and paying capacity of the borrower. Such loans have one or more weaknesses that jeopardize the liquidation of the debt and expose the Company to loss if the weaknesses are not corrected.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The Company’s credit quality indicators are reviewed and updated annually.

The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of December 31, 2025:


		Term Loans by Year of Origination
(in thousands		2025		2024		2023		2022		2021		Prior		Revolving		Total
One-to-Four Family Mortgages
Pass		$	4,364	$	19,886	$	22,644	$	38,297	$	51,438	$	185,963	$	—	$	322,592
Special Mention			—		—		—		393		467		1,071		—		1,931
Substandard			—		—		—		—		742		509		—		1,251
Total One-to-Four Family Mortgages		$	4,364	$	19,886	$	22,644	$	38,690	$	52,647	$	187,543	$	—	$	325,774

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home Equity Lines of Credit
Pass		$	437	$	603	$	65	$	11	$	—	$	494	$	8,406	$	10,016
Special Mention			—		—		—		—		—		—		75		75
Substandard			—		—		—		—		—		—		—		—
Total Home Equity Lines of Credit		$	437	$	603	$	65	$	11	$	—	$	494	$	8,481	$	10,091

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction and Land
Pass		$	11,372	$	412	$	131	$	56	$	357	$	210	$	—	$	12,538
Special Mention			—		—		—		—		—		—		—		—
Substandard			—		—		—		—		—		—		—		—
Total Construction and Land		$	11,372	$	412	$	131	$	56	$	357	$	210	$	—	$	12,538

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate
Pass		$	8,110	$	1,884	$	—	$	467	$	—	$	86	$	—	$	10,547
Special Mention			—		—		—		—		—		—		—		—
Substandard			—		—		—		—		—		—		—		—
Total Commercial Real Estate		$	8,110	$	1,884	$	—	$	467	$	—	$	86	$	—	$	10,547

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial and Industrial
Pass		$	4,025	$	4,370	$	3,615	$	2,217	$	—	$	—	$	—	$	14,227
Special Mention			—		—		—		—		—		—		—		—
Substandard			—		—		—		—		—		—		—		—
Total Commercial and Industrial		$	4,025	$	4,370	$	3,615	$	2,217	$	—	$	—	$	—	$	14,227

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer
Pass		$	1,330	$	2,388	$	166	$	25	$	31	$	249	$	—	$	4,189
Special Mention			—		—		—		—		—		—		—		—
Substandard			—		—		—		—		—		—		—		—
Total Consumer		$	1,330	$	2,388	$	166	$	25	$	31	$	249	$	—	$	4,189

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following table presents the Company’s recorded investment in loans by credit quality indicator as of December 31, 2024:


		Term Loans by Year of Origination
(in thousands)		2024		2023		2022		2021		2020		Prior		Revolving		Total
One-to-Four Family Mortgages
Pass		$	10,209	$	22,131	$	39,963	$	55,912	$	46,651	$	152,989	$	—	$	327,855
Special Mention			—		—		778		836		357		1,877		—		3,848
Substandard			—		—		—		406		—		550		—		956
Total One-to-Four Family Mortgages		$	10,209	$	22,131	$	40,741	$	57,154	$	47,008	$	155,416	$	—	$	332,659

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home Equity Lines of Credit
Pass		$	378	$	66	$	82	$	—	$	—	$	531	$	6,819	$	7,876
Special Mention			—		—		—		—		—		—		76		76
Substandard			—		—		—		—		—		—		—		—
Total Home Equity Lines of Credit		$	378	$	66	$	82	$	—	$	—	$	531	$	6,895	$	7,952

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	3	$	3

Construction and Land
Pass		$	7,385	$	1,360	$	62	$	400	$	113	$	149	$	—	$	9,469
Special Mention			—		—		—		—		—		—		—		—
Substandard			—		—		119		—		—		—		—		119
Total Construction and Land		$	7,385	$	1,360	$	181	$	400	$	113	$	149	$	—	$	9,588

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate
Pass		$	—	$	—	$	495	$	—	$	—	$	99	$	—	$	594
Special Mention			—		—		—		—		—		—		—		—
Substandard			—		—		—		—		—		—		—		—
Total Commercial Real Estate		$	—	$	—	$	495	$	—	$	—	$	99	$	—	$	594

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial and Industrial
Pass		$	5,119	$	6,004	$	2,638	$	—	$	—	$	—	$	—	$	13,761
Special Mention			—		—		—		—		—		—		—		—
Substandard			—		—		—		—		—		—		—		—
Total Commercial and Industrial		$	5,119	$	6,004	$	2,638	$	—	$	—	$	—	$	—	$	13,761

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer
Pass		$	3,002	$	236	$	55	$	35	$	71	$	300	$	—	$	3,699
Special Mention			—		—		—		—		—		—		—		—
Substandard			—		—		—		—		—		—		—		—
Total Consumer		$	3,002	$	236	$	55	$	35	$	71	$	300	$	—	$	3,699

Current Period Gross Write-Offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Nonaccrual Loans

The following table is a summary of the Company’s nonaccrual loans by major categories at December 31, 2025 and 2024:

December 31, 2025

 

December 31, 2024

Nonaccrual

Total

Loans

with

Total

with

 

Nonaccrual

 

Nonaccrual

 

(in thousands)

Allowance

Loans

Allowance

Loans

One-to-Four Family Mortgages

544

—

544

956

—

956

Home Equity Lines of Credit

—

Construction and Land

—

119

—

119

Commercial Real Estate

Commercial and Industrial

—

Consumer

—

Total

544

—

544

1,075

—

1,075

Interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Payments received while on nonaccrual status are applied to the principal balance of nonaccrual loans. The Company does not recognize interest income while loans are on nonaccrual status.

The following table represents the accrued interest receivables written off by reversing interest income during the year ended December 31, 2025 and 2024:


		For the Year Ended December 31,
(in thousands)		2025		2024
One-to-Four Family Mortgages		$	9	$	15
Home Equity Lines of Credit			—		—
Construction and Land			—		7
Commercial Real Estate			—		—
Commercial and Industrial			—		—
Consumer			—		—

Total		$	9	$	22

Collateral-Dependent Loans

The Company designates individually evaluated loans on nonaccrual status as collateral-dependent loans, as well as other loans that management of the Company designates as having higher risk. Collateral-dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. For collateral-dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following table presents an analysis of collateral-dependent loans of the Company as of December 31, 2025 and 2024:


		December 31, 2025
		Residential						Business
(in thousands)		Properties			Land			Assets			Other			Total
One-to-Four Family Mortgages		$	1,251		$	—		$	—		$	—		$	1,251
Home Equity Lines of Credit			—			—			—			—			—
Construction and Land			—			—			—			—			—
Commercial Real Estate			—			—			—			—			—
Commercial and Industrial			—			—			—			—			—
Consumer			—			—			—			—			—

Total		$	1,251		$	—		$	—		$	—		$	1,251


		December 31, 2024
		Residential						Business
(in thousands)		Properties			Land			Assets			Other			Total
One-to-Four Family Mortgages		$	956		$	—		$	—		$	—		$	956
Home Equity Lines of Credit			—			—			—			—			—
Construction and Land			—			119			—			—			119
Commercial Real Estate			—			—			—			—			—
Commercial and Industrial			—			—			—			—			—
Consumer			—			—			—			—			—

Total		$	956		$	119		$	—		$	—		$	1,075

Allowance for Credit Losses

There was no change in the allowance for credit losses as of December 31, 2025 as compared to December 31, 2024. This was driven by various factors, including the evolving economic outlook, values in the local real estate market remained relatively stable, consistent trends in past due and nonperforming loans, and low net charge-offs.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The following table summarizes the activity related to the allowance for credit losses for the year ended December 31, 2025 and 2024:


		December 31, 2025
		One-to-Four
		Family			Home Equity			Construction			Commercial			Commercial
(in thousands)		Mortgages			Lines of Credit			and Land			Real Estate			and Industrial			Consumer			Unallocated			Total
Allowance for Credit Losses
Beginning Balance		$	1,392		$	44		$	7		$	4		$	118		$	—		$	134		$	1,699
Recovery of Credit Loss			(190)			(2)			15			28			(84)			—			233			—
Loans Charged-Off			—			—			—			—			—			—			—			—
Recoveries Collected			—			—			—			—			—			—			—			—

Ending Balance		$	1,202		$	42		$	22		$	32		$	34		$	—		$	367		$	1,699

The following table includes disclosures related to the allowance for loan losses for the year ended December 31, 2025 and 2024:


		December 31, 2024
		One-to-Four
		Family			Home Equity			Construction			Commercial			Commercial
(in thousands)		Mortgages			Lines of Credit			and Land			Real Estate			and Industrial			Consumer			Unallocated			Total
Allowance for Credit Losses
Beginning Balance		$	2,554		$	57		$	32		$	4		$	122		$	9		$	24		$	2,802
Recovery of Credit Loss			(1,162)			(10)			(25)			—			(4)			(9)			110			(1,100)
Loans Charged-Off			—			(3)			—			—			—			—			—			(3)
Recoveries Collected			—			—			—			—			—			—			—			—

Ending Balance		$	1,392		$	44		$	7		$	4		$	118		$	—		$	134		$	1,699

Modifications Made to Borrowers Experiencing Financial Difficulty

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectable, the loan (or portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

The Company had no loans with modifications to borrowers experiencing financial difficulty as of December 31, 2025 and 2024.

The Company had no loans which had defaults during the year ended December 31, 2025 which were modified in the 12 months before default to borrower’s experiencing financial difficulty. There were no modifications to borrower’s experiencing financial difficulty entered into during the year ended December 31, 2025 and 2024 and no loans which had defaults during the year ended December 31, 2025 and 2024.

Unfunded Commitments

At December 31, 2025 and 2024, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities was approximately $25,000 and $15,000.

Related Party Loans

In the normal course of business, loans are made to officers and directors of the Company, as well as to their affiliates. Such loans are made in the ordinary course of business with substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons. They do not involve more than normal risk of collectability or present other unfavorable features.

An analysis of the related party activity during the year ended December 31, 2025 and 2024 is as follows:


		December 31,
(in thousands)		2025		2024
Balance, Beginning of Period		$	511	$	546
New Loans			—		—
Change in Related Parties, Net			—		—
Repayments, Net			(25)		(35)

Balance, End of Period		$	486	$	511

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Related Party Other

The Company generally requires an inspection of the property before disbursement of funds during the term of the construction loan and inspections are typically performed by one of the Company’s directors. There is no revenue or expense recorded by the Company related to those services as the customer pays these fees through their closing costs.

Note 5.

 Accrued Interest Receivable

Accrued interest receivable at December 31, 2025 and 2024 consisted of the following:


(in thousands)		2025		2024
Loans		$	1,588	$	1,619
Investments			411		348

Total		$	1,999	$	1,967

Note 6.

 Premises and Equipment

Premises and equipment at December 31, 2025 and 2024 are summarized as follows:


(in thousands)		2025		2024
Land		$	2,603	$	2,603
Building and Improvements			13,824		13,571
Furniture and Fixtures			5,547		5,416
			21,974		21,590
Less: Accumulated Depreciation			(10,338)		(9,667)

Total		$	11,636	$	11,923

Depreciation expense for the years ended December 31, 2025 and 2024 amounted to approximately $671,000 and $694,000, respectively.

Note 7.

Deposits

The composition of deposits at December 31, 2025 and 2024 is as follows:


(in thousands)	2025		2024
NOW Accounts	$	56,280	$	53,921
Savings Accounts		76,419		76,020
Money Market Fund Accounts		20,729		22,726
Certificates of Deposit		239,734		238,809

Total	$	393,162	$	391,476

Time deposits that meet or exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit of $250,000 at December 31, 2025 and 2024 were $50,230,000 and $48,338,000, respectively.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Time deposits at December 31, 2025 mature as follows:



(in thousands)	Amount
2026	$	224,051
2027		10,998
2028		2,784
2029		835
2030		1,003
Thereafter		63

Total	$	239,734

As of December 31, 2025 and 2024, deposits from related parties totaled $512,000 and $862,000, respectively.

As of December 31, 2025 and 2024, the Company held no brokered deposits.

Note 8.

Borrowings

As of December 31, 2025 and 2024, the Company had no FHLB advances outstanding. .

Based on collateral pledged, consisting of all shares of FHLB stock owned and a blanket pledge of approximately $237,460,000 of its qualifying mortgage loans as of December 31, 2025, the Bank was eligible to borrow up to an additional $188,669,000 as of December 31, 2025.

The Bank has an unsecured federal funds line of credit with FNBB that expires on June 30, 2026. The Bank is eligible to borrow up to $27,200,000. There was no amount outstanding on this line of credit as of the years ended December 31, 2025 and 2024.

The Bank is eligible to borrow from TIB’s Federal Funds Purchase Line Program, which provides overnight liquidity through pledge of certain qualifying securities. The Bank is eligible to borrow up to $15,000,000 and repayment is due the next day. There was no amount outstanding on this line of credit as of the years ended December 31, 2025 and 2024.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Note 9.

Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2025 and 2024 are as follows:


(in thousands)		2025		2024
Deferred Tax Assets
Deferred Compensation - Pension Benefits		$	781	$	662
Unrealized Loss on Investment Securities Available-for-Sale			1,036		1,832
Allowance for Credit Losses			362		360
Charitable Contribution Carryforward			270		262
Net Operating Loss			188		289

Total Deferred Tax Assets			2,637		3,405

Deferred Tax Liabilities
Tax Over Book Accumulated Depreciation			(574)		(628)
Federal Home Loan Bank Stock Dividend			(41)		(35)
Deferred Loan Fees			(247)		(248)
Other			(53)		(47)

Total Deferred Tax Liabilities			(915)		(958)

Deferred Tax Asset, Net		$	1,722	$	2,447

Components of income tax expense (benefit) are as follows:


(in thousands)		2025		2024
Current		$	32	$	42
Deferred			65		(400)

Total		$	97	$	(358)

The calculation of income tax and the effective tax rate are as follows:



					Effective					Effective
(dollars in thousands)		2025			Rate		2024			Rate
Income Tax Expense at Statutory Rates		$	879		21.0	%	$	(302)		21.0	%
Non-Taxable or Non-Deductible Items:
Increase in Bank Owned Life Insurance			(54)		(1.3)			—		—
Bank Owned Life Insurance Proceeds			(729)		(17.4)			(63)		4.4
Other			1		—			7		(0.5)

Net		$	97		2.3	%	$	(358)		24.9	%

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The Company is not subject to state income tax. Retained earnings at December 31, 2025 and 2024 include approximately $4,021,000 for which no deferred federal income tax liability has been recognized. This amount represents an allocation of income to bad debt deductions prior to January 1, 1988 for tax purposes only. Reduction of such allocated amounts for other than bad debt reserves would create income for tax purposes subject to the then-current income tax rate. The unrecorded deferred income tax liability on these amounts was approximately $844,000 at December 31, 2025 and 2024.

Based on the evaluation of available evidence, management determined that a valuation allowance was not required for deferred tax assets because it is more likely than not that these assets will be realized through future reversal of existing taxable temporary differences and there will be sufficient future taxable income exclusive of reversing temporary differences.

Note 10.

Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the OCC. Failure to meet the minimum regulatory 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’s consolidated 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 assets, liabilities, and certain off-balance-sheet items, as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications 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 (set forth in the table below) of common equity Tier I capital, Tier I capital and total capital to risk-weighted assets and Tier I capital to average assets. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel Ill rules) became fully effective for the Company on January 1, 2019. Management believes, as of December 31, 2025 and 2024, that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2025 and 2024, the most recent notification from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total ratios as disclosed in the table below. There are no conditions or events since the notification that management believes have changed the Bank’s prompt corrective action category.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

The Bank’s regulatory capital amounts and ratios as of December 31, 2025 and 2024 are also presented in the table below:


									Required to Be Well-
					Required for				Capitalized Under
					Capital Adequacy				Prompt Corrective
	Actual				Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2025
Tier 1 Capital to Average Assets	$	115,012	21.07	%	$	21,838	4.00	%	$	27,298	5.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets		115,012	41.17			12,572	4.50			18,159	6.50
Tier 1 Capital to Risk-Weighted Assets		115,012	41.17			16,762	6.00			22,349	8.00
Total Capital to Risk-Weighted Assets		116,736	41.79			22,349	8.00			27,937	10.00

December 31, 2024
Tier 1 Capital to Average Assets	$	110,777	20.78	%	$	21,322	4.00	%	$	26,653	5.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets		110,777	43.24			11,529	4.50			16,654	6.50
Tier 1 Capital to Risk-Weighted Assets		110,777	43.24			15,373	6.00			20,497	8.00
Total Capital to Risk-Weighted Assets		112,491	43.91			20,497	8.00			25,621	10.00

Note 11.

Employee Benefits

The Company has a defined contribution retirement plan covering substantially all employees. Contributions to the plan are based on a percentage of wages and were approximately $479,000 and $506,000 in 2025 and 2024, respectively.

The Company also has an unfunded supplemental executive retirement plan on seven executive officers and two retired officers of the Company. This plan is accounted for as a defined benefit pension plan, and was amended effective January 1, 2007 to reflect a revised pension benefit formula for the participants. The liability related to this was approximately $3,718,000 and $3,153,000 at December 31, 2025 and 2024, respectively, and is included in other liabilities in the consolidated balance sheets. The Company has also invested in certain life insurance policies, wherein the Bank is designated as the beneficiary on these policies, with the intent to ultimately use the benefit from such policies to fund the liability to be paid under this plan.

During each of the years ended December 31, 2025 and 2024, the Company paid benefits totaling $364,131 and $278,523, respectively. The net periodic pension cost associated with the plan totaled $280,000 and $271,000 for the years ended December 31, 2025 and 2024, respectively, and is included in salaries and employee benefits in the consolidated statements of income. The weighted average discount rate in computing the future benefit was 5.50% at December 31, 2025 and 2024.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Expected future benefits to be paid out are as follows for the years ending December 31:



(in thousands)		Amount
2026		$	450
2027			450
2028			450
2029			450
2030			450
2031 - 2035			1,128

Total		$	3,378

Note 12. ESOP

In connection with the Conversion, the Company established an ESOP for the exclusive benefit of eligible employees. The Company makes quarterly contributions to the ESOP in amounts as defined by the plan document. The contributions are used to pay debt services. Certain ESOP shares are pledged as collateral for debt. As the debt is repaid, shares are released from collateral and allocated to active employees, based on the proportion of debt service paid during the year.

In connection with the Company’s initial public offering, the ESOP borrowed $4,447,580 payable to the Company for the purpose of purchasing shares of the Company’s common stock. A total of 444,758 shares were purchased with loan proceeds. Common stock acquired by the ESOP is shown as a reduction of stockholders’ equity. The loan is expected to be repaid over a period of up to 20 years and bears interest at 8.5%. Principal and interest payments totaling approximately $112,000 are due quarterly.

Contributions to the ESOP totaled $449,000 during the year ended December 31, 2025. Compensation expense is recognized over the service period based on the average fair value of the shares and totaled $287,000 and $246,000, respectively, for the years ended December 31, 2025 and 2024.

The fair value of unallocated ESOP shares totaled $6,008,000 and $4,497,000 at December 31, 2025 and 2024, respectively.

Note 13. Stock-Based Compensation

On September 15, 2025, the stockholders of the Company approved the 2025 Equity Incentive Plan (the Plan) to provide a means to attract, retain, and reward individuals who contribute to that success and to further align their interests with those of the Company's stockholders through the ownership of shares of the Company. Awards that may be granted under the Plan include stock options, restricted stock awards, restricted stock units, and performance awards.

Total compensation cost that has been charged against income for the plan was $68,000 for the year ended December 31, 2025.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Stock Options

The Plan permits the grant of stock options to its employees for up to 555,947 shares of common stock. Any stock option may be either an incentive stock option or a non-qualified stock option. Option awards are generally granted with an exercise price equal to the market price of the Company's common stock at the date of grant; those option awards have vesting periods of 5 years and have 10-year contractual terms.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company's common stock. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The fair value of options was determined using the following weighted-average assumptions as of grant date.


	2025
Risk-Free Interest Rate	3.7	%
Expected Term (In Years)	6.5
Expected Price Volatility	20	%
Dividend Yield	—

A summary of the activity in the Plan as it relates to stock options for 2025 follows:


				Weighted			Weighted		Aggregate
				Average			Average		Intrinsic
		Shares		Exercise Price			Remaining Term		Value
Outstanding as of December 31, 2024		—		$	—		—		$	—
Granted		138,985			13.94		4.8			4.26
Exercised		—
Forfeited or Expired		—
Outstanding as of December 31, 2025		138,985			13.94					4.26
Fully Vested and Expected to Vest		—
Exercisable, End of Year		—

As of December 31, 2025, there was $562,744 total unrecognized compensation costs related to nonvested stock options granted under the Plan. The cost is expected to be recognized over a weighted-average period of 5 years.

Restricted Stock Awards

A Management Retention Plan (MRP) provides for the issuance of shares to directors and officers. Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at issue date. The fair value of the stock was determined using the stock price at the grant date. MRP shares fully vest on the 5th anniversary of the grant date. Total shares issuable under the Plan are 222,378 and 55,595 shares were issued in 2025.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Restricted Stock Awards

A summary of changes in the Company's nonvested shares for the year follows:




		Weighted
		Average
	Nonvested	Grant Date
	Shares	Fair Value
Unvested as of December 31, 2024	—	$	—
Granted	55,595		13.94
Forfeited	—		—
Vested	—		—
Unvested as of December 31, 2025	55,595	$	13.94

As of December 31, 2025, there was $736,000 total unrecognized compensation costs related to nonvested shares granted under the Plan. The cost is expected to be recognized over a weighted-average period of 5 years.

Note 14: Earnings (Losses) Per Share

Income (loss) per common share was computed based on the following for the years ended December 31, 2025 and 2024:


		Year Ended
		December 31,
(In thousands, except per share data)		2025			2024
Numerator:
Net Income (Loss) Available to Common Stockholders		$	4,088		$	(1,078)

Denominator:
Weighted Average Common Shares Outstanding			5,533			5,559
Weighted Average Unearned ESOP Shares			(411)			(428)
Weighted Average Shares			5,122			5,131

Income (Loss) per Common Share - Basic and Diluted		$	0.80		$	(0.21)

Note 15.

Financial Instruments with Off-Balance Sheet Risk

In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers. These financial instruments include commitments to extend credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the Company’s consolidated balance sheets.

The contract amounts of those instruments reflect the extent of the involvement the Company has in particular classes of financial instruments. As of December 31, 2025 and 2024, the Company had made various commitments to extend credit totaling approximately $35,948,000 and $34,607,000, respectively. Of these commitments, approximately $17,425,000 and $13,372,000 are at variable rates as of December 31, 2025 and 2024, respectively.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

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. Since some of the commitments are expected to expire without being fully drawn upon, the total commitment amount disclosed above does not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer.

Note 16.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, accounting guidance has established a hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

Level 1    Quoted prices for identical assets or liabilities in instruments traded in active markets that the entity has the ability to access as of the  measurement date.

Level 2    Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in  markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3  Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would  use in pricing an asset or liability.

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

Assets and Liabilities Measured on a Recurring Basis

The following describes the hierarchy designation, valuation methodology, and key inputs to measure fair value on a recurring basis for designated financial instruments:

Investment Securities Available-for-Sale

Where available, fair value estimates for available-for-sale securities are based on quoted market prices in an active market (Level 1). If quoted market prices are not available, fair values are based on quoted market prices of securities with similar characteristics, quoted prices of identical securities in less active markets, discounted cash flow techniques or matrix pricing models (Level 2). In certain cases where Level 1 or Level 2 are not available, securities are classified as Level 3 of the hierarchy. The carrying amount of accrued interest on securities approximates its fair value.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 are summarized below:

December 31, 2025

Total

Fair Value Measurements

Estimated

(in thousands)

Level 1

Level 2

Level 3

Fair Value

Investment Securities Available-for-Sale

U.S. Government Agencies

—

996

—

996

Mortgage-Backed Securities

—

83,577

—

83,577

Collateralized Mortgage Obligations

—

1,879

—

1,879

Corporate Bonds

—

12,625

—

12,625

Total

—

99,077

—

99,077


	December 31, 2024
							Total
	Fair Value Measurements						Estimated
(in thousands)	Level 1		Level 2		Level 3		Fair Value
Investment Securities Available-for-Sale
U.S. Government Agencies	$	—	$	996	$	—	$	996
Mortgage-Backed Securities		—		85,419		—		85,419
Collateralized Mortgage Obligations				2,322		—		2,322
Corporate Bonds		—		4,250		—		4,250

Total	$	—	$	92,987	$	—	$	92,987

The Company did not record any liabilities at fair market value for which measurement of the fair value was made on a recurring basis at December 31, 2025 or 2024.

There were no transfers into, out of, purchases, or sales of Level 3 securities during the years ended December 31, 2025 and 2024.

Assets and Liabilities Measured on a Non-Recurring Basis

The following describes the hierarchy designation, valuation methodologies, and key inputs for those assets that are measured at fair value on a non-recurring basis:

Collateral Dependent Loans

For collateral dependent loans, fair value is measured based on the value of the collateral securing these loans and is classified at a Level 3 in the fair value hierarchy. Collateral dependent loans consist of one-to-four family mortgages secured by residential properties. The value of residential property collateral is determined based on appraisal by qualified licensed appraisers hired by the Company. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Foreclosed Assets and Real Estate Owned

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired and classified at a Level 3 in the fair value hierarchy. These assets are subsequently accounted for at the lower of cost or fair value less estimated cost to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

The following tables present the Company’s assets and liabilities measured at fair value on a non-recurring basis at December 31, 2025 and 2024:


		December 31, 2025
											Total
		Fair Value Measurements									Estimated
(in thousands)		Level 1			Level 2			Level 3			Fair Value
Assets
Collateral Dependent Loans		$	—		$	—		$	1,251		$	1,251
Real Estate Owned			—			—			42			42

Total		$	—		$	—		$	1,293		$	1,293


		December 31, 2024
											Total
		Fair Value Measurements									Estimated
(in thousands)		Level 1			Level 2			Level 3			Fair Value
Assets
Collateral Dependent Loans		$	—		$	—		$	1,075		$	1,075
Real Estate Owned			—			—			42			42

Total		$	—		$	—		$	1,117		$	1,117

The following tables show significant unobservable inputs used in the fair value measurement of Level 3 assets:


		Valuation		Unobservable		Range of		Weighted Average
December 31, 2025		Technique		Inputs		Discount		Discount
Collateral Dependent Loans		Third-party appraisals and discounted cash flows		Collateral discounts and estimated costs to sell		6% - 10%		6%
Real Estate Owned		Third-party appraisals, sales contracts or brokered price options		Collateral discounts and estimated costs to sell		6% - 10%		6%

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements


		Valuation		Unobservable		Range of		Weighted Average
December 31, 2024		Technique		Inputs		Discount		Discount
Collateral Dependent Loans		Third-party appraisals and discounted cash flows		Collateral discounts and estimated costs to sell		6% - 10%		6%
Real Estate Owned		Third-party appraisals, sales contracts or brokered price options		Collateral discounts and estimated costs to sell		6% - 10%		6%

The following methods and assumptions were used by the Bank to estimate fair value of financial instruments.

Cash and Cash Equivalents – Fair value approximates carrying value.

Investment Securities Available-for-Sale – Fair value is obtained from an independent pricing service based on quoted market prices or quoted market prices of securities with similar characteristics, quoted prices of identical securities in less active markets, discounted cash flow techniques, or matrix pricing models.

Restricted Stock – Consists of stock held as required by the respective institutions for membership and are carried at cost. While a fixed stock amount is required, the Federal Home Loan Bank stock requirement increases or decreases with the level of borrowing activity.

Loans Receivable, Net – Fair value is estimated by discounting the future cash flows using the current rate at which similar loans would be made to borrowers with similar credit rating and for the same remaining maturity. The fair value of loans is measured using an exit price notion.

Deposits – For NOW, savings and certain money market fund accounts, fair value is equal to the amount payable on demand or carrying value. For time deposits, fair value is estimated using a discounted cash flow method.

The carrying amount and estimated fair value of the Company’s financial instruments as of December 31, 2025 and 2024 were as follows:

December 31, 2025

Carrying

Fair Value Measurements

(in thousands)

 

Value

 

Level 1

 

Level 2

 

Level 3

Financial Assets

Cash and Cash Equivalents

33,852

—

Investment Securities Available-for-Sale

99,077

—

99,077

—

Restricted Stock

935

—

935

Loans Receivable, Net

376,391

—

329,594

Financial Liabilities

Deposits

393,162

—

353,299

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements


	December 31, 2024
	Carrying		Fair Value Measurements
(in thousands)	Value		Level 1		Level 2		Level 3
Financial Assets
Cash and Cash Equivalents	$	37,916	$	37,916	$	—	$	—
Investment Securities Available-for-Sale		92,987		—		92,987		—
Restricted Stock		910		—		—		910
Loans Receivable, Net		367,333		—		—		308,645

Financial Liabilities
Deposits		391,476		—		—		351,041

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Fair value estimates may not be realizable in an immediate settlement of the instrument. In some instances, there are no quoted market prices for the Company’s various financial instruments, in which case fair values may be based on estimates using the present value or other valuation techniques, or based on judgements regarding future expected loss experience, current economic conditions, risk characteristics of financial instruments, or other factors. Those techniques are significantly affected by assumptions used, including the discount rate and estimate of future cash flows. Subsequent changes in assumptions could significantly affect the estimates.

Note 17.

Revenue Recognition

Revenue from contracts with customers in-scope of ASC 606 is recognized in non-interest income on the consolidated statements of operations. See Note 1 for revenue recognition policies. The following table presents the Company’s non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the years ended December 31, 2025 and 2024:


(dollars in thousands)	2025		2024
Non-Interest Income
In-Scope of Topic 606
Deposit Service and Account Maintenance Fees	$	51	$	53
Insufficient Funds Fees		161		164
ATM and Check Card Fees		393		402

Non-Interest Income (In-Scope of Toріс 606)		605		619
Non-Interest Income (Out-of-Scope of Topic 606)		3,825		(608)
Total Non-Interest Income	$	4,430	$	11

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

Note 18.

Condensed Parent Company Only Financial Information

Condensed financial statements of Fifth District Bancorp, Inc. (parent company only) are shown below. The parent company has no significant operating activities.

CONDENSED BALANCE SHEET


(dollars in thousands)	December 31, 2025
Assets
Cash and Cash Equivalents	$	19,167
Investment in Subsidiary		110,584
Other Assets		263
Total Assets	$	130,014

Liabilities and Stockholders' Equity
Due to Subsidiary	$	257
Stockholders' Equity		129,757
Total Liabilities and Stockholders' Equity	$	130,014

CONDENSED STATEMENT OF OPERATIONS


	For the Year Ended
(dollars in thousands)	December 31, 2025

Equity in Undistributed Losses of Subsidiary	$	4,235
Total Income		4,235
Operating Expenses		186
Total Expense		186

Income Before Income Tax Benefit		4,049
Income Tax Benefit		(39)
Net Income	$	4,088

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FIFTH DISTRICT BANCORP, INC.

Notes to Consolidated Financial Statements

CONDENSED STATEMENT OF CASH FLOWS


	For the Year Ended
(dollars in thousands)	December 31, 2025

Cash Flows from Operating Activities
Net Loss	$	4,088
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities
Equity in Undistributed Losses of Subsidiary		(4,235)
Increase in Other Assets		—
Increase in Other Liabilities		55

Net Cash Used in Operating Activities		(92)

Cash Flows from Investing Activities
Investment In Subsidiary		355

Net Cash Provided by Investing Activities		355

Cash Flows from Financing Activities
(Repurchase) Net Proceeds from Issuance of Common Stock		(2,944)

Net Cash Used in Financing Activities		(2,944)

Net Decrease in Cash and Cash Equivalents		(2,681)

Cash and Cash Equivalents, Beginning of Year		21,848

Cash and Cash Equivalents, End of Year	$	19,167

Note 19.

Subsequent Events

In accordance with the subsequent events topic of the FASB ASC 855, the Company evaluates events and transactions that occur after the consolidated balance sheets date for potential recognition in the consolidated financial statements. The effects of all subsequent events that provide additional evidence of conditions that existed at the consolidated balance sheets date are recognized in the consolidated financial statements as of December 31, 2025 and 2024. In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred through the date the consolidated financial statements were available to be issued. Management has concluded that there are no events which require disclosure.

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ITEM 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

ITEM 9A.Controls and Procedures

Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including its President, Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of December 31, 2024. Based on that evaluation, the Company’s management, including the President and Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

The Company’s management, including the principal executive officer and principal financial officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, based on the criteria set forth in the “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on such assessment, management concluded that, as of December 31, 2025, the Company’s internal control over financial reporting is effective, based on those criteria.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to provisions of the Dodd-Frank Act that permits the Company to provide only management’s report in this annual report.

Changes to Internal Control Over Financial Reporting

During the quarter ended December 31, 2025, there have been no changes to the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.Other Information

During the three months ended December 31, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement“ (as such term is defined in Item 408 of SEC Regulation S-K).

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ITEM 9C.Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

Not applicable.

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

The information contained in the sections captioned “Business Items to be Voted on by Stockholders – Item 1 Election of Directors.” “Other Information Relating to Directors and Executive Officers” and “Corporate Governance” of the Company’s definitive Proxy Statement for the 2026 Annual Meeting of the Stockholders (the “2026 Proxy Statement”) is incorporated herein by reference.

Insider Trading Policy and Procedures

The Company has adopted a Policy Regarding Insider Trading governing the purchase, sale and/or other dispositions of the Company’s securities by its directors, officers and employees and by the Company itself. A copy of the Policy Regarding Insider Trading is filed as an exhibit to this annual report.

Code of Ethics

The Company has adopted a Code of Ethics that applies to its principal executive officer, principal financial officer, and principal accounting officer or controller or persons performing similar functions. A copy is available on the Investors Relations section of Fifth District Savings Bank’s website at www.fifthdistrict.com.

ITEM 11. Executive Compensation

The information contained in the sections captioned “Executive Compensation” and “Directors’ Compensation” of the 2026 Proxy Statement is incorporated herein by reference.

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ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Securities Authorized for Issuance Under Stock-Based Compensation Plans

The following information is presented as of December 31, 2025, for the Fifth District Bancorp, Inc. 2025 Equity Incentive Plan:


						Number of securities
		Number of securities to be				remaining available for
		issued upon exercise of		Weighted-average exercise		future issuance under
		outstanding options,		price of outstanding		equity compensation
		warrants and rights		options, warrants and		plans (excluding securities
Plan Category		(Column A)		rights (Column B)		reflected in Column A
Equity compensation plans approved by stockholders		194,580		$13.94		583,745
Equity compensation plans not approved by stockholders		N/A		N/A		N/A
Total		194,580		$13.94		583,745

Securities Ownership of Certain Beneficial Owners and Management

The information contained in the section captioned “Stock Ownership” of the 2026 Proxy Statement is incorporated herein by reference.

Changes in Control

Management of the Company knows of no arrangements, including any pledge by any person of securities of the Company, the operation of which may at a later date result in a change in control of the Company.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated herein by reference to the section captioned “Other Information Relating to Directors and Executive Officers – Transactions with Certain Related Persons” and “Corporate Governance” of the 2026 Proxy Statement.

ITEM 14.Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference to the section captioned “Business Items to be Voted on by Stockholders – Item 2 – Ratification of Appointment of Independent Registered Public Accounting Firm” of the 2026 Proxy Statement.

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PART IV

ITEM 15.Exhibits and Financial Statement Schedules

3.1	Articles of Incorporation of Fifth District Bancorp, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-277776), as filed on March 8, 2024)

3.2	Bylaws of Fifth District Bancorp, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-277776), as filed on March 8, 2024)

4.1	Form of Common Stock Certificate of Fifth District Bancorp, Inc. (incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-277776), as filed on March 8, 2024)

4.2	Description of Registrant’s Securities (incorporated by reference to the Company’s Registration Statement on Form 8-A (Commission File No. 001-42198), as filed on July 31, 2024)

10.1	Employment Agreement between Fifth District Savings Bank and Amie L. Lyons (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-277776), as filed on March 8, 2024) †

10.2	Employment Agreement between Fifth District Savings Bank and Melissa C. Burns (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-277776), as filed on March 8, 2024) †

10.3	Second Amended and Restated Executive Salary Continuation Agreement between Fifth District Savings Bank and Amie L. Lyons (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-277776), as filed on March 8, 2024) †

10.4	Second Amended and Restated Executive Salary Continuation Agreement between Fifth District Savings Bank and Melissa C. Burns (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-277776), as filed on March 8, 2024) †

10.5	First Amendment to Second Amended and Restated Executive Salary Continuation Agreement between Fifth District Savings Bank and Melissa C. Burns (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (Commission File No. 001-42198), as filed on July 16, 2025) †

19	Policy Regarding Insider Trading (incorporated by reference to Exhibit 19 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (Commission File No. 001-42198), as filed on March 26, 2025)

21	Subsidiaries of Registrant

23.1	Consent of independent public account firm, EisnerAmper, LLP

23.2	Consent of independent public account firm, Elliot Davis.

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97	Fifth District Bancorp, Inc. Clawback Policy (incorporated by reference to Exhibit 97 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (Commission File No. 001-42198), as filed on March 26, 2025)

101	The following materials from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, formatted in inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

†	Denotes a management contract or compensation plan or arrangement.

ITEM 16.Form 10-K Summary

Not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		FIFTH DISTRICT BANCORP, INC.


Date: March 24, 2026	By:	/s/ Amie L. Lyons
		Amie L. Lyons
		President and Chief Executive Officer (Duly Authorized Representative)

Pursuant to the requirements of the Securities Exchange of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signatures	Title	Date


/s/ Amie L. Lyons	President, Chief Executive	March 24,2026
Amie L. Lyons	Officer and a Director (Principal Executive Officer)


/s/ Melissa C. Burns	Chief Financial Officer and	March 24, 2026
Melissa C. Burns	Treasurer (Principal Financial and Accounting Officer)


/s/ H. Greg Abry	Director	March 24, 2026
H. Greg Abry


/s/ Nolan P. Lambert	Director	March 24, 2026
Nolan P. Lambert


/s/ David C. Nolan	Director (Chairman of the Board)	March 24, 2026
David C. Nolan


/s/ Chris M. Rittiner	Director	March 24, 2026
Chris M. Rittiner


/s/ Linda A. Sins	Director	March 24, 2026
Linda A. Sins

Source: View Original Filing on SEC EDGAR

FAQ

What is Fifth District Bancorp (FDSB) and how was it formed?

Fifth District Bancorp, Inc. is a savings and loan holding company for Fifth District Savings Bank. It was incorporated in February 2024 and became the holding company upon the bank’s mutual-to-stock conversion completed July 31, 2024, including a public stock sale and foundation issuance.

What are Fifth District Bancorp’s key balance sheet figures for 2025?

At December 31, 2025, Fifth District Bancorp reported total assets of $534.4 million, loans of $376.4 million, deposits of $393.2 million, and stockholders’ equity of $129.8 million, reflecting a relatively well-capitalized, deposit-funded community-oriented institution.

How is Fifth District Bancorp’s loan portfolio composed?

The loan portfolio is dominated by one- to four-family residential mortgages, totaling $325.8 million or 86.3% of loans at December 31, 2025. Smaller segments include construction and land, commercial real estate, commercial and industrial, home equity products, and consumer loans.

What is the credit quality of Fifth District Bancorp’s loan portfolio?

Credit quality appears solid. Non-performing assets were $586,000 at December 31, 2025, equal to 0.11% of total assets. The allowance for credit losses on loans was $1.7 million, covering 312.32% of non-performing loans and 0.45% of total loans.

How is Fifth District Bancorp primarily funded?

Fifth District Bancorp is primarily funded through core deposits. At December 31, 2025, deposits totaled $393.2 million, with about 61% in certificates of deposit and the remainder in savings, NOW, and money market accounts. The bank had no Federal Home Loan Bank advances outstanding.

What is notable about FDSB’s commercial and industrial lending?

Commercial and industrial loans totaled $14.2 million, or 3.8% of total loans, at December 31, 2025. A significant portion comes from purchased loans from Bankers Healthcare Group, which are supported by a reserve deposit account and strict performance and collection arrangements.

How strong is Fifth District Bancorp’s deposit insurance and uninsured balances?

Deposits are insured by the FDIC up to applicable limits. At December 31, 2025, uninsured deposits—amounts above $250,000 per depositor—totaled $91.5 million, including $50.2 million of uninsured certificates of deposit, indicating some larger depositor relationships.

Fifth District Bancorp (NASDAQ: FDSB) posts 2025 balance sheet and credit quality details

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