FDSB

Business Context and Reporting Period

Fifth District Bancorp, Inc. (FDSB) is a Maryland corporation serving as the bank holding company for Fifth District Savings Bank, a federally-chartered stock savings bank operating primarily in the greater New Orleans area. The company completed its conversion from mutual to stock form in July 2024. This Form 10-Q covers the quarterly period ended September 30, 2025, and the nine months ended on that date. The company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Turnaround: The company reported a net income of $343,000 for Q3 2025, a significant improvement from a net loss of $788,000 in Q3 2024. Year-to-date net income was $3.5 million compared to a loss of $1.2 million in the prior year.
• Non-Interest Income Surge: YTD non-interest income increased by $4.4 million to $4.2 million. This was primarily driven by a $3.5 million gain on Bank Owned Life Insurance (BOLI) proceeds recorded in 2025, contrasting with a $1.1 million realized loss on the sale of investment securities in the prior year.
• Expense Management: Q3 non-interest expenses decreased by $1.1 million (26.0%) compared to Q3 2024, largely due to a $1.2 million reduction in charitable contributions (specifically funding the Fifth District Savings Foundation) which occurred in the prior year but not the current quarter.
• Asset Growth: Total assets increased by $12.2 million (2.3%) from year-end 2024, driven by a $12.0 million increase in loans receivable and a $7.7 million increase in investment securities.
• Asset Quality: Non-performing loans decreased significantly to $198,000 at September 30, 2025, down from $647,000 at September 30, 2024. The allowance for credit losses remained stable at $1.7 million.

Guidance, Outlook, and Risks

• Capital Position: The Bank is categorized as "well-capitalized" under regulatory guidelines. As of September 30, 2025, the Tier 1 Capital to Risk-Weighted Assets ratio was 41.47%, significantly exceeding the 8.00% requirement.
• Liquidity: The company maintains a strong liquidity position with $34.4 million in cash and cash equivalents. It has access to additional borrowing capacity of approximately $188.8 million from the Federal Home Loan Bank and $27.2 million from a correspondent bank line of credit, with no outstanding balances on these facilities.
• Stock Repurchase Program: In August 2025, the company authorized a program to repurchase up to 555,947 shares (approx. 10% of outstanding shares). During Q3, 36,723 shares were repurchased at an average price of $13.93.
• Market Risk: The primary market risk is interest rate sensitivity. Modeling indicates that a 200 basis point increase in interest rates would result in a 27.91% decrease in Economic Value of Equity (EVE) and a 17.63% decrease in Net Interest Income (NII) over the next year.
• Forward-Looking Statements: Management notes that actual results may differ due to economic conditions, inflation, interest rate changes, and competition. The company does not provide specific numerical guidance for future periods.

Investor Verification Checklist

• BOLI Proceeds Impact: Verify the sustainability of earnings given the $3.5 million non-recurring gain from BOLI proceeds included in YTD 2025 results.
• Charitable Contribution Volatility: Note the significant fluctuation in charitable contributions ($1.3 million decrease in Q3 2025 vs. Q3 2024) and its impact on expense comparisons.
• Interest Rate Sensitivity: Review the EVE and NII stress test tables to understand the bank's exposure to rising interest rates, which could negatively impact economic value.
• Loan Portfolio Concentration: Assess the concentration in One-to-Four Family Mortgages ($334.6 million) and the impact of local real estate market conditions in New Orleans.
• Stock Repurchase Execution: Monitor the progress of the newly authorized stock repurchase program and its effect on share count and EPS.