WILLIAM PENN BANCORPORATION – 10-K – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Statements contained in this report that are not historical facts may constitute
forward-looking statements (within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended), which involve significant risks and
uncertainties. The Company intends such forward-looking statements to be covered
by the safe harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and is including this
statement for purposes of invoking these safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe future plans,
strategies and expectations of the Company, are generally identifiable by the
use of the words "believe," "expect," "intend," "anticipate," "estimate,"
"project," "plan," or similar expressions. The Company's ability to predict
results or the actual effect of future plans or strategies is inherently
uncertain and actual results may differ from those predicted. The Company
undertakes no obligation to update these forward-looking statements in the
future.

The Company cautions readers of this report that a number of important factors
could cause the Company's actual results to differ materially from those
expressed in forward-looking statements. Factors that could cause actual results
to differ from those predicted and could affect the future prospects of the
Company include, but are not limited to: (i) general economic conditions, either
nationally or in our market area, that are worse than expected; (ii) changes in
the interest rate environment that reduce our interest margins, reduce the fair
value of financial instruments or reduce the demand for our loan products; (iii)
increased competitive pressures among financial services companies; (iv) changes
in consumer spending, borrowing and savings habits; (v) changes in the quality
and composition of our loan or investment portfolios; (vi) changes in real
estate market values in our market area; (vii) decreased demand for loan
products,

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deposit flows, competition, or decreased demand for financial services in our
market area; (viii) major catastrophes such as earthquakes, floods or other
natural or human disasters and infectious disease outbreaks, including the
current coronavirus (COVID-19) pandemic, the related disruption to local,
regional and global economic activity and financial markets, and the impact that
any of the foregoing may have on us and our customers and other constituencies;
(ix) legislative or regulatory changes that adversely affect our business or
changes in the monetary and fiscal policies of the U.S. government, including
policies of the U.S. Treasury and the Federal Reserve Board; (x) technological
changes that may be more difficult or expensive than expected; (xi) success or
consummation of new business initiatives may be more difficult or expensive than
expected; (xii) the inability to successfully deploy the proceeds raised in our
recently completed second-step conversion offering; (xiii) adverse changes in
the securities markets; (xiv) the inability of third party service providers to
perform; and (xv) changes in accounting policies and practices, as may be
adopted by bank regulatory agencies or the Financial Accounting Standards Board.

Overview

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, consisting primarily of loans, investment securities,
including mortgage-backed securities, and other interest-earning assets
(primarily cash and cash equivalents), and the interest we pay on our
interest-bearing liabilities, consisting of money market accounts, statement
savings accounts, individual retirement accounts, certificates of deposit and
advances from the Federal Home Loan Bank of Pittsburgh. Our results of
operations also are affected by our provisions for loan losses, noninterest
income and noninterest expense. Noninterest income currently consists primarily
of service fees, service charges, earnings on bank-owned life insurance, net
gains on the sale of loans and investment securities, and net gains on the sale
of other real estate owned. Noninterest expense currently consists primarily of
salaries and employee benefits, occupancy and equipment, data processing and
professional fees. 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

Since our acquisition of Audubon in July 2018, and continuing with our
acquisitions of Fidelity and Washington in May 2020, we have focused on serving
the financial needs of consumers and businesses in our primary markets of
Southeastern Pennsylvania and Southern and Central New Jersey. Through our
wholly owned bank subsidiary, William Penn Bank, we deliver a comprehensive
range of traditional depository and lending products, online banking services,
and cash management tools for small businesses. Our business strategy is to
continue to operate and grow a profitable community-oriented financial
institution. We plan to achieve this by executing our strategy of:

Continuing our transformation to a relationship-based banking business model.

Following our acquisition of Audubon in July 2018, our primary strategic
objective has been to transform the Bank from a price-driven, transaction-based
savings institution to a service-driven, relationship-based bank that emphasizes
securing relationships rather than amassing accounts. We have taken an active
approach toward accomplishing this transformation, a key component of which is
to opportunistically hire talented individuals, or existing teams of
individuals, with relationships in retail, commercial, and small business
banking in furtherance of our efforts to increase our commercial lending
activities. We believe additions to our executive management team, including
Alan Turner as Executive Vice President and Chief Lending Officer, Jeannine
Cimino as Executive Vice President and Chief Retail Officer, and Amy Hannigan as
Executive Vice President and Chief Operating Officer, provide the Company with
opportunities that will continue to improve our financial performance and
enhance the William Penn brand.

We believe that customer satisfaction is a key to sustainable growth and
profitability. While continually striving to ensure that our products and
services meet our customers' needs, we also encourage our employees to focus on
providing personal service and attentiveness to our customers in a proactive
manner. We believe that many opportunities remain to deliver what our customers
want in the form of exceptional service and convenience and we intend to
continue to focus our operating strategy on taking advantage of these
opportunities.  Most recently, we began offering private banking services that
provide high net worth clients a primary point of contact that is dedicated to
their personal and business financial needs.

Increasing our commercial lending activities while also maintaining our
residential portfolio.

At June 30, 2022, $186.2 million, or 38.8%, of our loan portfolio was secured by
commercial non-residential real estate, multi-family real estate, commercial
construction and land, and commercial business loans, compared to $120.4
million, or 25.9%, of our loan portfolio at June 30, 2021.  During the year
ended June 30, 2022, we originated $95.7 million of commercial loans and we
intend to continue to increase our commercial lending activities, particularly
with respect to commercial real estate, multi-family residential and

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commercial business loans, in the future. We believe the expansion of our
multi-family residential and commercial real estate lending activities will
further diversify our balance sheet, help to control our interest rate risk
exposure and increase our presence in our market area. Most recently, we have
added experienced commercial lending personnel and enhanced our infrastructure
in order to implement this component of our business strategy.

At June 30, 2022, $147.1 million, or 30.7%, of our loan portfolio was secured by
owner-occupied one- to four-family residential real estate loans and we intend
to continue to offer this type of lending in the future. We believe there are
opportunities to increase our residential mortgage lending in our market area,
and we intend to take advantage of these opportunities through the additional
lending staff we have welcomed as a result of our acquisitions of Audubon,
Fidelity and Washington, as well as by increasing our existing residential
mortgage origination channels.

We believe that strong asset quality is a key to long-term financial success,
and we have sought to maintain a high level of asset quality and mitigate credit
risk by using conservative underwriting standards for all of our residential and
commercial lending products, combined with diligent monitoring and collection
efforts. We will continue to seek commercial and residential lending
opportunities in our market area that will further our business strategy and
that are also consistent with our conservative underwriting standards.

Recruiting and retaining top talent and personnel.

Our entire executive management leadership team, and a large majority of the
next tier of management, either joined the Bank in connection with the
acquisition of Audubon or have been recruited since our acquisition of Audubon
in July 2018. We have also hired teams of relationship bankers from regional
competitors and intend to continue to opportunistically hire talented
individuals, or existing teams of individuals, with relationships in retail,
commercial, and small business banking. As a result of the Bank's strong capital
levels and expansion strategy, we believe we have the ability to continue hiring
and developing top performers for the foreseeable future.

Continuing to invest in our facilities and expand our branch network through de
novo branching.

In addition to our investment in people, we have been enhancing and optimizing
both our facilities and branch network in recent years. We have consolidated
most of our non-branch operations into one location located in Bristol,
Pennsylvania that opened in November 2019 and we have consolidated our loan
origination and servicing administration operations into one location located in
Philadelphia, Pennsylvania that we acquired in connection with our recent
acquisition of Washington Savings Bank.  Effective June 30, 2022, we
consolidated three existing Bank branches into one branch based on branch
deposit levels and the close geographic proximity of the three consolidating
branches.

We have also improved the infrastructure of our branch footprint and intend to
continue our strategy to broaden our existing branch network by expanding into
new markets and broadening our geographic footprint. In June 2020, we opened a
new branch office in Collingswood, New Jersey, the first de novo branch applying
our strategy of entering walkable towns and suburbs with vibrant commercial
corridors and main streets. In addition, we opened a new branch office in
Yardley, Pennsylvania in March 2021, a new branch office in Doylestown,
Pennsylvania in September 2021 and a new branch office in Hamilton Township, New
Jersey in December 2021. We also plan to continue to open additional new
branches in desirable locations in attractive growth markets. New branches will
feature modern design elements and will include open, collaborative spaces with
room for private meetings.

Executing a multi-faceted expansion plan that involves branch acquisitions and
the possible acquisition of other financial institutions and/or financial
services companies.

Our expansion strategies complement our overall strategic vision. We intend to
expand our franchise and reinvest our excess capital by continuing to hire
talented relationship managers, opening de novo branches, and making
opportunistic whole bank or branch acquisitions, with an emphasis on expanding
our presence in Bucks County, Pennsylvania and Central and Southern New Jersey,
as well as entering the Montgomery County, Pennsylvania market. We believe
significant opportunities exist, and will continue to exist, for additional
expansion through acquisitions both in our current market and in other adjacent
markets within the greater Delaware Valley area. Our acquisition strategy
includes traditional whole bank acquisitions and complementary acquisitions of
select branch banking offices.

We have completed three whole bank acquisitions since 2018, which serve as the
platform for our ability to successfully integrate financial institutions, and
our executive management team has a history of running and integrating highly
efficient banking institutions while focusing on building a culture of expense
control. As a result of these three whole bank acquisitions and our focus on
continued expense control, we have increased our core deposits (consisting of
checking accounts, money market accounts and savings and club accounts) from
$96.8 million at June 30, 2018 to $475.3 million, or 391.0%, at June 30, 2022.

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We believe that maintaining strong relationships with our regulators is an
important component of our long-term strategy. We maintain an active dialogue
with our regulators and we view our relationships with our regulators a
long-term partnership, and we will continue to follow this philosophy as we
implement our plans for future growth.

Improving our technology platform.

We are committed to building a technology platform that enables us to deliver
best-in-class products and services to our customers and is also scalable to
accommodate our long-term growth plans. To accomplish this objective, we have
made and are continuing to make substantial investments in our information
technology infrastructure, including data backup, security, accessibility,
integration, business continuity, website development, online and mobile banking
technologies, cash management technology and internal/external ease of use. We
continue to develop new strategies for streamlining internal and external
practices using technology such as online account opening, an online education
center, and remote appointments.

Employing a stockholder-focused management of capital.

Maintaining a strong capital base is critical to support our long-range business
plan. We intend to manage our capital position through the growth of assets, as
well as the utilization of appropriate capital management tools, consistent with
applicable regulations and policies, and subject to market conditions. Under
current federal regulations, subject to limited exceptions, we were not able to
repurchase shares of our common stock during the first year following the
completion of our second-step conversion offering, which occurred on March 24,
2021.  On March 11, 2022, the Company issued a press release announcing that the
Company's Board of Directors had authorized a stock repurchase program to
acquire up to 758,528 shares of the Company's outstanding common stock, or
approximately 5% of outstanding shares. The stock repurchase program became
effective on March 25, 2022.  On June 9, 2022, the Company issued a press
release announcing that the Company's Board of Directors had authorized a second
stock repurchase program to acquire up to 771,445 shares, or approximately 5.0%,
of the Company's currently issued and outstanding stock, commending upon the
completion of the Company's first stock repurchase program.  On August 18, 2022,
the Company issued a press release announcing that the Company's Board of
Directors has authorized a third stock repurchase program to acquire up to
739,385 shares, or approximately 5.0%, of the Company's currently issued and
outstanding common stock, commencing upon the completion of the Company's second
stock repurchase program. As of August 17, 2022, there were 654,152 shares
remaining to be repurchased under the Company's second repurchase program.

The Company has historically paid an annual cash dividend to stockholders. On
July 21, 2021, the Company also declared a one-time special dividend of $0.30
per common share, payable August 18, 2021, to common shareholders of record at
the close of business on August 2, 2021.  During the fiscal year ended June 30,
2022, the Company paid regular cash dividends of $0.06 per common share,
including dividends of $0.03 per common share in the quarters ended March 31,
2022 and June 30, 2022, but did not pay regular cash dividends during the
quarters ended September 30, 2021 and December 31, 2021.  As previously
disclosed, the Company's Board of Directors has declared a cash dividend of
$0.03 per share, payable on August 11, 2022, to common shareholders of record at
the close of business on August 1, 2022.  In determining the amount of any
future dividends, the board of directors will take into account the Company's
financial condition and results of operations, tax considerations, capital
requirements and alternative uses for capital, industry standards, and economic
conditions.  The Company cannot guarantee that it will continue to pay dividends
or that, if paid, it will not reduce or eliminate dividends in the future.

Critical Accounting Policies

We consider accounting policies involving significant judgments and assumptions
by management that have, or could have, a material impact on the carrying value
of certain assets or on income to be critical accounting policies. We consider
these accounting policies to be our critical accounting policies. The judgments
and assumptions we use are based on historical experience and other factors,
which we believe to be reasonable under the circumstances. Actual results could
differ from these judgments and estimates under different conditions, resulting
in a change that could have a material impact on the carrying values of our
assets and liabilities and our results of operations.

Allowance for Loan Losses

We consider the allowance for loan and losses to be a critical accounting
policy. The allowance for loan losses is determined by management based upon
portfolio segments, past historical experience, evaluation of estimated losses
and impairment in the loan portfolio, current economic conditions, and other
pertinent factors. Management also considers risk characteristics by portfolio
segments including, but not limited to, renewals and real estate valuations. The
allowance for loan losses is maintained at a level that management considers
adequate to provide for estimated losses and impairment based upon an evaluation
of known and inherent risk in the loan

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portfolio. Loan impairment is evaluated based on the fair value of collateral or
present value of expected cash flows. While management uses the best information
available to make such evaluations, future adjustments to the allowance may be
necessary if economic conditions differ substantially from the assumptions used
in making the evaluations.

The allowance for loan and lease losses is established through a provision for
loan losses charged to expense, which is based upon past loan loss experience
and an evaluation of estimated losses in the current loan portfolio, including
the evaluation of impaired loans. Determining the amount of the allowance for
loan losses necessarily involves a high degree of judgment. Among the material
estimates required to establish the allowance are: overall economic conditions;
value of collateral; strength of guarantors; loss exposure at default; the
amount and timing of future cash flows on impaired loans; and determination of
loss factors to be applied to the various segments of the portfolio. All of
these estimates are susceptible to significant change. Management regularly
reviews the level of loss experience, current economic conditions and other
factors related to the collectability of the loan portfolio. Although we believe
that we use the best information available to establish the allowance for loan
losses, future adjustments to the allowance may be necessary if economic
conditions differ substantially from the assumptions used in making the
evaluation. In addition, the Federal Deposit Insurance Corporation and the
Pennsylvania Department of Banking and Securities, as an integral part of their
examination process, periodically review our allowance for loan losses.

Our financial results are affected by the changes in and the level of the
allowance for loan losses. This process involves our analysis of complex
internal and external variables, and it requires that we exercise judgment to
estimate an appropriate allowance for loan losses. As a result of the
uncertainty associated with this subjectivity, we cannot assure the precision of
the amount reserved, should we experience sizeable loan losses in any particular
period. For example, changes in the financial condition of individual borrowers,
economic conditions, or the condition of various markets in which collateral may
be sold could require us to significantly decrease or increase the level of the
allowance for loan losses. Such an adjustment could materially affect net income
as a result of the change in provision for loan losses. For example, a change in
the estimate resulting in a 10% to 20% difference in the allowance would have
resulted in an additional provision for loan losses of $341 thousand to $682
thousand for the year ended June 30, 2022. We also have approximately $6.5
million as of June 30, 2022 in non-performing assets consisting of
non-performing loans and other real estate owned. Most of these assets are
collateral dependent loans where we have incurred credit losses to write the
assets down to their current appraised value less selling costs. We continue to
assess the realizability of these loans and update our appraisals on these loans
each year. To the extent the property values continue to decline, there could be
additional losses on these non-performing loans which may be material. For
example, a 10% decrease in the collateral value supporting the non-performing
loans could result in additional credit losses of $651 thousand. In recent
periods, we experienced steady asset quality metrics including low levels of
delinquencies, net charge-offs and non-performing assets. Management considered
market conditions in deriving the estimated allowance for loan losses; however,
given the continued economic difficulties and uncertainties and the COVID-19
pandemic, the ultimate amount of loss could vary from that estimate.

In June 2016, the FASB issued ASU 2016-13: Financial Instruments - Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments. Topic 326
amends guidance on reporting credit losses for assets held at amortized cost
basis and available for sale debt securities. For assets held at amortized cost
basis, Topic 326 eliminates the probable initial recognition threshold in
current GAAP and, instead, requires an entity to reflect its current estimate of
all expected credit losses. This update affects entities holding financial
assets and net investment in leases that are not accounted for at fair value
through net income. The amendments affect loans, debt securities, trade
receivables, net investments in leases, off balance sheet credit exposures,
reinsurance receivables, and any other financial assets not excluded from the
scope that have the contractual right to receive cash. The amendments in this
update are expected to be effective for us on July 1, 2023. We expect to
recognize a one-time cumulative-effect adjustment to the allowance for loan
losses as of the beginning of the first reporting period in which the new
standard is effective but cannot yet determine the magnitude of any such
one-time adjustment or the overall impact of the new guidance on the
consolidated financial statements.

Goodwill

The acquisition method of accounting for business combinations requires us to
record assets acquired, liabilities assumed, and consideration paid at their
estimated fair values as of the acquisition date. The excess of consideration
paid (or the fair value of the equity of the acquiree) over the fair value of
net assets acquired represents goodwill. Goodwill totaled $4.9 million at June
30, 2022 and June 30, 2021. Goodwill and other indefinite lived intangible
assets are not amortized on a recurring basis, but rather are subject to
periodic impairment testing. The provisions of Accounting Standards Codification
("ASC") Topic 350 allow an entity to first assess qualitative factors to
determine whether it is necessary to perform the two-step quantitative goodwill
impairment test.

The Company performs its annual impairment evaluation on June 30 or more
frequently if events and circumstances indicate that the fair value of the
banking unit is less than its carrying value. During the year ended June 30,
2022
, the Company included considerations

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of the current economic environment caused by COVID-19 in its evaluation, and
determined that it is not more likely than not that the carrying value of
goodwill is impaired.  No goodwill impairment exists during the year ended
June
30, 2022.

Income Taxes
We are subject to the income tax laws of the various jurisdictions where we
conduct business and estimate income tax expense based on amounts expected to be
owed to these various tax jurisdictions. The estimated income tax expense
(benefit) is reported in the consolidated statements of income. The evaluation
pertaining to the tax expense and related tax asset and liability balances
involves a high degree of judgment and subjectivity around the ultimate
measurement and resolution of these matters.

Accrued taxes represent the net estimated amount due to or to be received from
tax jurisdictions either currently or in the future and are reported in other
assets on our consolidated statements of financial condition. We assess the
appropriate tax treatment of transactions and filing positions after considering
statutes, regulations, judicial precedent and other pertinent information and
maintain tax accruals consistent with our evaluation. Changes in the estimate of
accrued taxes occur periodically due to changes in tax rates, interpretations of
tax laws, the status of examinations by the tax authorities and newly enacted
statutory, judicial and regulatory guidance that could impact the relative
merits of tax positions. These changes, when they occur, impact accrued taxes
and can materially affect our operating results. We regularly evaluate our
uncertain tax positions and estimate the appropriate level of reserves related
to each of these positions.

As of June 30, 2022 and 2021, we had net deferred tax assets totaling $7.5
million and $3.6 million, respectively. We use the asset and liability method of
accounting for income taxes. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. If currently available
information raises doubt as to the realization of the deferred tax assets, a
valuation allowance is established. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. We exercise significant judgment in evaluating the amount and timing of
recognition of the resulting tax assets and liabilities. These judgments require
us to make projections of future taxable income. Management believes, based upon
current facts, that it is more likely than not that there will be sufficient
taxable income in future years to realize the deferred tax assets. The judgments
and estimates we make in determining our deferred tax assets are inherently
subjective and are reviewed on a continual basis as regulatory and business
factors change. Any reduction in estimated future taxable income may require us
to record a valuation allowance against our deferred tax assets. A valuation
allowance that results in additional income tax expense in the period in which
it is recognized would negatively affect earnings. Our net deferred tax assets
were determined based on the current enacted federal tax rate of 21%. Any
possible future reduction in federal tax rates, would reduce the value of our
net deferred tax assets and result in immediate write-down of the net deferred
tax assets though our statement of operations, the effect of which would be
material.

Balance Sheet Analysis

Comparison of Financial Condition at June 30, 2022 and 2021

Total assets increased $57.6 million, or 7.0%, to $880.0 million at June 30,
2022, from $822.4 million at June 30, 2021, primarily due to a $53.5 million
increase in deposits and a $24.0 million increase in advances from the Federal
Home Loan Bank ("FHLB") of Pittsburgh, partially offset by a $24.6 million
decrease in total stockholders' equity.

Cash and cash equivalents decreased $132.5 million, or 78.6%, to $36.2 million
at June 30, 2022, from $168.7 million at June 30, 2021.  The decrease in cash
and cash equivalents was primarily driven by $207.4 million of investment
purchases, $113.3 million of new loans funded, the payment of cash dividends
totaling $5.1 million, and the repurchase of 766,936 shares at a cost of $9.1
million, partially offset by a $53.9 million increase in deposits, $99.0 million
of loan paydowns and payoffs, a $24.0 million increase in advances from the FHLB
of Pittsburgh and $18.0 million of investment paydowns.

Investments

Our investment portfolio consists primarily of corporate bonds with maturities
of five to ten years, municipal securities with maturities of five to more than
ten years and mortgage-backed securities issued by Fannie Mae, Freddie Mac or
Ginnie Mae with stated final maturities of 30 years or less. Investments
increased $163.8 million, or 132.8%, to $287.1 million at June 30, 2022, from
$123.3 million at June 30, 2021. During the year ended June 30, 2022, the
Company deployed excess cash into mortgage-backed securities and corporate bonds
in the available for sale and held to maturity investment portfolios.  The
Company remains focused on maintaining a high-quality investment portfolio that
provides a steady stream of cash flows both in falling and in rising interest
rate environments.

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The following table sets forth the amortized cost and fair value of investment
securities at the dates indicated:

                                                                At June 30,
                                                       2022                      2021
                                               Amortized       Fair     Amortized       Fair
(Dollars in thousands)                           Cost          Value       Cost         Value
Securities available for sale:
Mortgage-backed securities                   $   130,146   $  117,506   $   55,385    $  55,064
U.S. agency collateralized mortgage
obligations                                       11,001        9,709       15,641       15,433
U.S. government agency securities                  5,082        5,038      
 6,952        6,896
Municipal bonds                                   20,160       15,642       20,239       19,861
Corporate bonds                                   36,300       34,850       25,200       26,081
Total securities available for sale              202,689      182,745      123,417      123,335
Securities held to maturity:
Mortgage-backed securities                       102,135       88,321            -            -
Total securities held to maturity                102,135       88,321      
     -            -
Total investment securities                  $   304,824   $  271,066   $  123,417    $ 123,335


The following tables set forth the stated maturities and weighted average yields
of investment securities at June 30, 2022. The weighted average yield is
calculated by dividing income, which has not been tax effected on tax-exempt
obligations, within each contractual maturity range by the outstanding amount of
the related investment.  Certain securities have adjustable interest rates and
will reprice monthly, quarterly, semi-annually or annually within the various
maturity ranges. The table presents contractual maturities for mortgage-backed
securities and does not reflect repricing or the effect of prepayments.

                                                              More than                 More than
                                       One                   One Year to              Five Years to              More than
                                  Year or Less                Five Years                Ten Years                Ten Years                   Total
                                            Weighted                  Weighted                 Weighted                  Weighted                 

Weighted

June 30, 2022                 Carrying      Average      Carrying     

Average Carrying Average Carrying Average Carrying

Average

(Dollars in thousands) Value Yield Value Yield Value Yield Value Yield Value

Yield

Securities available for
sale:
Mortgage-backed
securities                    $        -           - %   $       -           - %  $       -           - %  $  117,506        2.23 %  $  117,506        2.23 %
U.S. agency
collateralized mortgage
obligations                            -           -             -           -            -           -         9,709        1.39         9,709       

1.39

U.S. government agency
securities                             -           -            42        1.62        1,170        0.34         3,826        1.57         5,038        1.29
Municipal bonds                        -           -             -           -          915        1.36        14,727        1.87        15,642        1.85
Corporate bonds                        -           -             -           -       34,850        3.99             -           -        34,850        3.99
Total securities
available for sale                     -           -            42        1.62       36,935        3.82       145,768        2.12       182,745        2.45
Securities held to
maturity:
Mortgage-backed
securities                             -           -             -           -            -           -       102,135        1.58       102,135        1.58
Total securities held to
maturity                               -           -             -           -            -           -       102,135        1.58       102,135        1.58
Total investment
securities                    $        -           - %   $      42        1.62 %  $  36,935        3.82 %  $  247,903        1.91 %  $  284,880        2.15 %


Loans

Our loan portfolio consists primarily of one-to four-family residential mortgage
loans, one-to four-family commercial real estate investor loans and
non-residential commercial real estate loans. Our loan portfolio also consists
of multi-family residential real estate, commercial, construction and consumer
loans. Net loans increased $14.3 million, or 3.1%, to $475.5 million at June 30,
2022, from $461.2 million at June 30, 2021.  During the year ended June 30,
2022, the Company originated $113.3 million of new loans, including $95.7
million of commercial loans, that were partially offset by $99.0 million of loan
paydowns and payoffs.  During the fiscal year ended June 30, 2022, the COVID-19
pandemic and low interest rate environment have intensified an already highly
competitive market for lending and we have experienced increased levels of
one-to four-family residential mortgage loan prepayments.  We maintain
conservative lending practices and are focused on lending to borrowers with high
credit quality located within our market footprint.

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The following table shows the loan portfolio at the dates indicated:

                                                       At June 30,
                                               2022                    2021
(Dollars in thousands)                  Amount      Percent     Amount     

Percent

Residential real estate loans:
One- to four-family                    $ 147,061      30.66 %  $ 173,306      37.22 %
Home equity and HELOCs                    32,529       6.78       37,222       7.99
Residential construction                  14,834       3.09       10,841       2.33

Total residential real estate loans 194,424 40.53 221,369

47.54

Commercial real estate loans:
One- to four-family investor              96,850      20.19      120,581   

25.90

Multi-family                              13,069       2.72       12,315   

2.64

Commercial non-residential               158,727      33.10       96,612   

20.75

Commercial construction and land           4,951       1.03        6,377   

1.37

Total commercial real estate loans 273,597 57.04 235,885

  50.66
Commercial loans                           9,409       1.96        5,145       1.10
Consumer loans                             2,239       0.47        3,230       0.70
Total loans                              479,669     100.00 %    465,629     100.00 %

Unearned loan origination fees             (749)                   (820)
Allowance for loan losses                (3,409)                 (3,613)
Loans, net                             $ 475,511               $ 461,196


The following table sets forth certain information at June 30, 2022 regarding
the dollar amount of loan principal repayments becoming due during the periods
indicated. The table below does not include any estimate of prepayments which
significantly shorten the average life of all loans and may cause our actual
repayment experience to differ from that shown below. Demand loans having no
stated schedule of repayments and no stated maturity are reported as due in
one
year or less.

                                                 Home
                                  One- to       Equity                       One- to                   Commercial     Commercial
June 30, 2022                   Four-Family      and       Residential     Four-Family     Multi-         Non-       Construction                                 Total
(Dollars in thousands)          Residential     HELOCs    Construction      Investor       Family     Residential      and Land       Commercial    Consumer      Loans
Amounts due in:
One year or less               $         458   $  1,426   $       8,349   $       1,853   $      44   $      6,872   $       2,737   $      5,107   $     480   $   27,326
More than 1 - 5 years                  5,098      3,917           6,485          10,168         388         23,527           2,214          1,787         203       53,787
More than 5 - 15 years                48,133     17,172               -          35,003       3,014         83,567               -          2,515         328      189,732
More than 15 years                    93,372     10,014               -          49,826       9,623         44,761               -              -       1,228      208,824
Total                          $     147,061   $ 32,529   $      14,834   $      96,850   $  13,069   $    158,727   $       4,951   $      9,409   $   2,239   $  479,669


The following table sets forth all loans at June 30, 2022 that are due after
June 30, 2023 and have either fixed interest rates or floating or adjustable
interest rates:

                                                Due After June 30, 2023
At June 30, 2022                                        Floating or
(Dollars in thousands)               Fixed Rates      Adjustable Rates       Total
Residential real estate loans:
One- to four-family                  $    120,263      $         26,340    $ 146,603
Home equity and HELOCs                     11,217                19,886       31,103
Residential construction                        -                 6,485        6,485
Commercial real estate loans:
One- to four-family investor               35,639                59,358    

94,997

Multi-family                                3,261                 9,764    

13,025

Commercial non-residential                 27,515               124,340    

151,855

Commercial construction and land                -                 2,214    
   2,214
Commercial loans                              994                 3,308        4,302
Consumer loans                                362                 1,397        1,759
Total                                $    199,251      $        253,092    $ 452,343


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Premises and equipment, net

During the year ended June 30, 2022, the Company transferred properties with a
total carrying value of $1.6 million to the held for sale classification and
recorded a $20 thousand loss on disposition of fixed assets.  The Company
intends to sell these properties by December 31, 2022.

Bank-owned life insurance

Bank-owned life insurance increased $4.0 million, or 11.2%, to $39.2 million at
June 30, 2022, from $35.2 million at June 30, 2021.  Management purchased $2.9
million of bank-owned life insurance during the year ended June 30, 2022.

Management believes that bank-owned life insurance is a low-risk investment
alternative with an attractive yield.

Deposits

Deposits are a major source of our funds for lending and other investment
purposes, and our deposits are provided primarily by individuals within our
market area. Deposits increased $53.5 million, or 9.7%, to $606.6 million at
June 30, 2022, from $553.1 million at June 30, 2021.  The increase in deposits
was primarily due to an $82.5 million, or 21.0%, increase in core deposits,
partially offset by a $29.0 million decrease in non-core time deposits.  The
decrease in time deposits was consistent with the planned run-off associated
with our re-pricing of higher-cost, non-relationship-based deposit accounts.

The following table sets forth the deposits as a percentage of total deposits
for the dates indicated:

                                                    At June 30,
                                          2022                       2021
                                              Percent of                 Percent of
                                                Total                      Total
(Dollars in thousands)            Amount       Deposits      Amount       Deposits

Non-interest bearing checking $ 75,758 12.50 % $ 51,086

   9.24 %
Interest bearing checking          122,675         20.22      104,214         18.84
Money market accounts              171,316         28.24      136,719         24.72
Savings and club accounts          105,507         17.39      100,781         18.22
Certificates of deposit            131,361         21.65      160,303         28.98
Total                            $ 606,617        100.00 %  $ 553,103        100.00 %

The following table sets forth the maturity of the portion of our certificates
of deposit that are in excess of the $250,000 Federal Deposit Insurance
Corporation
insurance limit as of June 30, 2022:

June 30, 2022                   Certificates
(Dollars in thousands)           of Deposit
Maturity Period:
Three months or less            $       2,201
Over three through six months             999
Over six through twelve months          2,806
Over twelve months                      2,852
Total                           $       8,858


The estimated amount of total uninsured deposits as of June 30, 2022 was $134.1
million
compared to $85.6 million as of June 30, 2021.

The following table sets forth the deposit activity for the periods indicated:

                                                  Year Ended June 30,
(Dollars in thousands)                             2022          2021
Beginning balance                               $   553,103    $ 559,848

Increase (decrease) before interest credited 51,767 (9,914)
Interest credited

                                     1,747        3,169
Net increase (decrease) in deposits                  53,514      (6,745)
Ending balance                                  $   606,617    $ 553,103


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The following table sets forth the average balances and weighted average rates
of our deposit products for the periods indicated:

                                                            Year Ended June 30,
                                           2022                                        2021
                                    Average     Weighted    Average       Average     Weighted    Average
                                    Balance     Percent      Cost         Balance     Percent      Cost
Non-interest bearing checking
accounts                           $  55,806        9.53 %        - %    $  58,248        9.89 %        - %
Interest-bearing checking
accounts                             115,753       19.77       0.06        100,032       16.98       0.11
Money market deposit accounts        166,195       28.38       0.34        146,085       24.79       0.58
Savings and club accounts            104,010       17.76       0.07        
98,100       16.65       0.13
Certificates of deposit              143,756       24.55       0.72        186,740       31.69       1.11
Total                              $ 585,520      100.00 %     0.30 %    $ 589,205      100.00 %     0.54 %


Borrowings
Borrowings increased $24.0 million, or 58.5%, to $65.0 million at June 30, 2022,
from $41.0 million at June 30, 2021.  The increase in borrowings was due to
$65.0 million of new short-term advances, partially offset by the strategic
prepayment of $41.0 million of high-cost, long-term advances during the year
ended June 30, 2022.

The following table sets forth the outstanding borrowings and weighted averages
at the dates or for the periods indicated. We did not have any outstanding
borrowings other than Federal Home Loan Bank advances for any of the periods
presented.

                                                                At or For the Year Ended
                                                                        June 30,
(Dollars in thousands)                                            2022             2021

Maximum amount outstanding at any month-end during period:
Federal Home Loan Bank advances

                               $     65,000     $     64,854
Atlantic Community Bankers Bank overnight borrowings                     -                -
Average outstanding balance during period:
Federal Home Loan Bank advances                               $     31,644     $     44,550
Atlantic Community Bankers Bank overnight borrowings                    20                7
Weighted average interest rate during period:
Federal Home Loan Bank advances                                       2.43 %           2.59 %
Atlantic Community Bankers Bank overnight borrowings                  0.50             0.50
Balance outstanding at end of period:
Federal Home Loan Bank advances                               $     65,000     $     41,000
Atlantic Community Bankers Bank overnight borrowings                     -                -
Weighted average interest rate at end of period:
Federal Home Loan Bank advances                                       1.73 %           2.55 %
Atlantic Community Bankers Bank overnight borrowings                     - 
              -


Stockholders' Equity

Stockholders' equity decreased $24.6 million, or 11.3%, to $192.3 million at
June 30, 2022, from $216.9 million at June 30, 2021.  The decrease in
stockholders' equity was primarily due to a $15.3 million increase in the
accumulated other comprehensive loss component of the unrealized loss on
available for sale securities, the repurchase of 766,936 shares at a cost of
$9.1 million, or $11.84 per share, the payment of a $0.30 per share one-time
special cash dividend in August 2021 totaling $4.6 million and the payment of
two $0.03 quarterly cash dividends in February 2022 and May 2022 totaling $592
thousand, partially offset by $4.2 million of net income recorded during the
year ended June 30, 2022.

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  Table of Contents

Results of Operations for the Years Ended June 30, 2022 and 2021

Summary

The following table sets forth the income summary for the periods indicated:

                                                                  Year Ended June 30,
                                                                                Change 2022/2021
(Dollars in thousands)                                  2022        2021         $           %
Net interest income                                   $ 22,984    $ 21,483    $  1,501         6.99 %
(Recovery) provision for loan losses                      (20)         133 
     (153)     (115.04)
Non-interest income                                      2,075       2,368       (293)      (12.37)
Non-interest expenses                                   20,274      18,992       1,282         6.75
Income tax expense                                         568         947       (379)      (40.02)
Net income                                            $  4,237    $  3,779    $    458        12.12
Return on average assets                                  0.51 %      0.49 %
Core return on average assets(1) (non-GAAP)               0.51        0.45
Return on average equity                                  2.00        2.93
Core return on average equity(1) (non-GAAP)               2.00        2.70

Core return on average assets and core return on average equity are non-GAAP
(1) financial measures. For a reconciliation of these non-GAAP measures, see

“Non-GAAP Financial Information.”

General

We recorded net income of $4.2 million, or $0.30 per basic and diluted share,
for the year ended June 30, 2022 compared to net income of $3.8 million, or
$0.26 per basic and diluted share, for the year ended June 30, 2021.  We
recorded core net income(  1  ) of $4.2 million, or $0.30 per basic and diluted
share, for the year ended June 30, 2022 compared to core net income(1) of $3.5
million, or $0.24 per basic and diluted share, for the year ended June 30, 2021.

Net Interest Income

For the year ended June 30, 2022, net interest income was $23.0 million, an
increase of $1.5 million, or 6.99%, from the year ended June 30, 2021.  The
increase in net interest income was primarily due to an increase in interest
income on investments and a decrease in interest expense on deposits and
borrowings, partially offset by a decrease in interest income on loans.  As
previously discussed, we improved our asset mix by utilizing some of the excess
cash we hold to purchase high-quality investments resulting in an increase in
interest income on investments. During the year ended June 30, 2022, we
originated $113.3 million of new loans, including $89.5 million of commercial
loans, that were partially offset by significant payoffs primarily in the
residential portfolio. In addition, we experienced a $1.8 million decrease in
interest expense primarily due to the re-pricing of deposits and the prepayment
of advances from the FHLB of Pittsburgh.  During the year ended June 30, 2022,
we replaced high-cost, long-term advances with short-term advances.  The net
interest margin measured 3.02% for the year ended June 30, 2022 compared to
3.03% for the same period in 2021.  The decrease in the net interest margin is
consistent with the decrease in interest rates and margin compression during the
period that was primarily due to the COVID-19 pandemic and its impact on the
economy and interest rate environment.

Provision for Loan Losses

The provision for loan losses was a $20 thousand net recovery during the year
ended June 30, 2022 compared to an expense of $133 thousand during the year
ended June 30, 2021.  The provision credit for the year ended June 30, 2022 was
primarily due to stable asset quality metrics, including continued low levels of
net charge-offs and non-performing assets.  Our allowance for loan losses
totaled $3.4 million, or 0.71% of total loans and 0.94% of total loans,
excluding acquired loans(  2  ), compared to $3.6 million, or 0.78% of total
loans

(1) Core net income is a non-GAAP financial measure. For a reconciliation of
this non-GAAP measure, see “Non-GAAP Financial Information.”

(2) Allowance for loan losses to total loans (excluding acquired loans) is a
non-GAAP measure that represents our allowance for loan losses divided by
adjusted total loans (excluding acquired loans). For a reconciliation of this
non-GAAP measure, see "Non-GAAP Financial Information."

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Table of Contents

and 1.19% of total loans, excluding acquired loans(2), as of June 30, 2021. As
of June 30, 2022, management believes that the allowance is maintained at a
level that represents its best estimate of inherent losses in the loan portfolio
that were both probable and reasonably estimable at such date.

Management uses available information to establish the appropriate level of the
allowance for loan losses. Future additions or reductions to the allowance may
be necessary based on estimates that are susceptible to change as a result of
changes in economic conditions and other factors. As a result, our allowance for
loan losses may not be sufficient to cover actual loan losses, and future
provisions for loan losses could materially adversely affect our operating
results. In addition, various regulatory agencies, as an integral part of their
examination process, periodically review our allowance for loan losses.

Non-Interest Income

The following table sets forth a summary of non-interest income for the periods
indicated:

                                                            Year Ended June 30,
(Dollars in thousands)                                       2022          2021
Service fees                                              $      863     $    785
Net gain on sale of other real estate owned                       18       

206

Net gain on sale of securities                                    62       

36

Earnings on bank-owned life insurance                          1,038       

473

Net (loss) gain on disposition of premises and equipment (7)

495

Unrealized loss on equity securities                           (242)       
    -
Other                                                            343          373
Total                                                     $    2,075     $  2,368

For the year ended June 30, 2022, non-interest income totaled $2.1 million, a
decrease of $293 thousand, or 12.4%, from the year ended June 30, 2021.  The
decrease in non-interest income was primarily due to a $495 thousand net gain on
the disposition of premises recorded during the year ended June 30, 2021 in
connection with the sale of several properties acquired as part of the
acquisitions of Fidelity and Washington in May 2020, a $206 thousand net gain on
the sale of other real estate owned recorded during the year ended June 30, 2021
and a $242 thousand unrealized net loss on equity securities recorded during the
year ended June 30, 2022.  These decreases to non-interest income were partially
offset by a $565 thousand increase in earnings on bank-owned life insurance and
a $78 thousand increase in service fees consistent with our increase in core
deposits.

Non-Interest Expense

The following table sets forth an analysis of non-interest expense for the
periods indicated:

                                     Year Ended June 30,
(Dollars in thousands)                2022          2021

Salaries and employee benefits $ 11,482 $ 10,282
Occupancy and equipment

                  2,759       2,912
Data processing                          1,744       1,795
Professional fees                        1,154       1,064
Amortization of intangible assets          225         255
(Gain) loss on lease abandonment         (117)         162
Prepayment penalties                       460         161
Other                                    2,567       2,361
Total                              $    20,274    $ 18,992


For the year ended June 30, 2022, non-interest expense totaled $20.3 million, an
increase of $1.3 million, or 6.8%, from the year ended June 30, 2021.  The
increase in non-interest expense was primarily due to a $1.2 million increase in
salaries and employee benefits due to annual merit increases and the addition of
new employees in connection with the build out of the Company's commercial
lending and credit functions and branch expansion and a $299 thousand increase
in prepayment penalties associated with the prepayment of advances from the FHLB
of Pittsburgh.  These increases to non-interest expense were partially offset by
a $117 thousand gain on lease abandonment recorded during the year ended June
30, 2022 associated with the release from a lease agreement related to the
former Frankford branch office that was closed effective June 30, 2021 and a
$162 thousand loss on lease abandonment that was recorded during the quarter
ended June 30, 2021.

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  Table of Contents

Income Taxes
For the year ended June 30, 2022, we recorded a provision for income taxes of
$568 thousand, reflecting an effective tax rate of 11.8%, compared to a $947
thousand provision for income taxes, reflecting an effective tax rate of 20.0%,
for the same period in 2021.  The decrease in the provision for income taxes for
the year ended June 30, 2022 compared to the prior fiscal year is primarily due
to a $288 thousand income tax benefit recorded during the year ended June 30,
2022 related to refunds received associated with the carryback of net operating
losses under the CARES Act.  The effective tax rate for the year ended June 30,
2022 compared to the prior fiscal year was also impacted by the previously
discussed income tax benefit from refunds received associated with the carryback
of net operating losses under the CARES Act.

Average Balances and Yields

The following tables present information regarding average balances of assets
and liabilities, the total dollar amounts of interest income and dividends from
average interest-earning assets, the total dollar amounts of interest expense on
average interest-bearing liabilities, and the resulting annualized average
yields and costs. The yields and costs for the periods indicated are derived by
dividing income or expense by the average daily balances of assets or
liabilities, respectively, for the periods presented. Loan fees, including
prepayment fees, are included in interest income on loans and are not material.
Non-accrual loans are included in the average balances only. Any adjustments
necessary to present yields on a tax equivalent basis are insignificant.

                                                           Year Ended June 30,
                                              2022                                      2021
                              Average      Interest and     Yield/      Average      Interest and     Yield/
(Dollars in thousands)        Balance       Dividends        Cost       Balance       Dividends        Cost
Interest-earning assets:
Loans(1)                     $ 461,160    $       20,693       4.49 %  $ 492,070    $       23,390       4.75 %
Investment securities(2)       221,885             4,555       2.05      110,143             2,093       1.90
Other interest-earning
assets                          77,902               250       0.32      106,499               306       0.29
Total interest-earning
assets                         760,947            25,498       3.35      708,712            25,789       3.64
Non-interest-earning
assets                          77,017                                    64,134
Total assets                 $ 837,964                                 $ 772,846
Interest-bearing
liabilities:
Interest-bearing checking
accounts                     $ 115,753                73       0.06 %  $ 100,032               110       0.11 %
Money market deposit
accounts                       166,195               562       0.34      146,085               841       0.58
Savings and club accounts      104,010                72       0.07       98,100               124       0.13
Certificates of deposit        143,756             1,037       0.72      186,740             2,078       1.11
Total interest-bearing
deposits                       529,714             1,744       0.33      530,957             3,153       0.59
FHLB advances and other
borrowings                      31,664               770       2.43       44,550             1,153       2.59
Total interest-bearing
liabilities                    561,378             2,514       0.45      575,507             4,306       0.75
Non-interest-bearing
liabilities:
Non-interest-bearing
deposits                        55,806                                    58,248
Other
non-interest-bearing
liabilities                      8,489                                    10,179
Total liabilities              625,673                                   643,934
Total equity                   212,291                                   128,912
Total liabilities and
equity                       $ 837,964                                 $ 772,846
Net interest income                       $       22,984                            $       21,483
Interest rate spread(3)                             2.90 %                                    2.89 %
Net interest-earning
assets(4)                    $ 199,569                                 $ 133,205
Net interest margin(5)                              3.02 %                                    3.03 %
Ratio of interest-earning
assets to
interest-bearing
liabilities                    135.55%                                   123.15%

(1) Includes nonaccrual loan balances and interest, if any, recognized on such

loans.

(2) Includes securities available for sale and securities held to maturity.

Net interest rate spread represents the difference between the yield on

(3) average interest-earning assets and the cost of average interest-bearing

liabilities.

(4) Net interest-earning assets represents total interest-earning assets less

total interest-bearing liabilities.

(5) Net interest margin represents net interest income divided by average total

     interest-earning assets.


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  Table of Contents

Rate/Volume Analysis

The following table sets forth the effects of changing rates and volumes on our
net interest income. 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
current 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.

                                            Year Ended 6/30/2022
                                                 Compared to
                                            Year Ended 6/30/2021
                                             Increase (Decrease)
                                                   Due to
(Dollars in thousands)                Volume       Rate         Total
Interest income:
Loans                                 $ (710)    $ (1,987)    $ (2,697)
Investment securities                   2,309          153        2,462
Other interest-earning assets            (89)           33         (56)
Total interest-earning assets           1,510      (1,801)        (291)

Interest expense:
Interest-bearing checking accounts 15 (52) (37)
Money market deposit accounts

             104        (383)        (279)
Savings and club accounts                   7         (59)         (52)
Certificates of deposit                 (797)        (244)      (1,041)

Total interest-bearing deposits (671) (738) (1,409)
FHLB advances and other borrowings (308) (75) (383)
Total interest-bearing liabilities (979) (813) (1,792)
Net change in net interest income $ 2,489 $ (988) $ 1,501

Risk Management

General

Managing risk is an essential part of successfully managing a financial
institution. Our most prominent risk exposures are credit risk, interest rate
risk and market risk. Credit risk is the risk of not collecting the interest
and/or the principal balance of a loan or investment when it is due. Interest
rate risk is the potential reduction of interest income as a result of changes
in interest rates. Market risk arises from fluctuations in interest rates that
may result in changes in the values of financial instruments, such as available
for sale securities that are accounted for at fair value. Other risks that we
face are operational risk, liquidity risk and reputation risk. Operational risk
includes risks related to fraud, regulatory compliance, processing errors,
technology, and disaster recovery. Liquidity risk is the possible inability to
fund obligations to depositors, lenders or borrowers. Reputation risk is the
risk that negative publicity or press, whether true or not, could cause a
decline in our customer base or revenue.

Management of Credit Risk

The objective of our credit risk management strategy is to quantify and manage
credit risk and to limit the risk of loss resulting from an individual customer
default. Our credit risk management strategy focuses on conservatism,
diversification within the loan portfolio and significant levels of monitoring.
Our lending practices include conservative exposure limits and underwriting,
extensive documentation and collection standards. Our credit risk management
strategy also emphasizes diversification on both an industry and customer level
as well as regular credit examinations and management reviews of large credit
exposures and credits experiencing deterioration of credit quality.

Classified Assets

Federal Deposit Insurance Corporation regulations and our Asset Classification
Policy provide that loans and other assets considered to be of lesser quality be
classified as "substandard," "doubtful" or "loss" assets. An asset is considered
"substandard" if it is inadequately protected by the current net worth and
paying capacity of the obligor or of the collateral pledged, if any.
"Substandard" assets include those characterized by the "distinct possibility"
that the institution will sustain "some loss" if the deficiencies are not
corrected. Assets classified as "doubtful" have all of the weaknesses inherent
in those classified as "substandard," with the added characteristic that the

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  Table of Contents

weaknesses present make "collection or liquidation in full," on the basis of
currently existing facts, conditions and values, "highly questionable and
improbable." Assets classified as "loss" are those considered "uncollectible"
and of such little value that their continuance as assets without the
establishment of a specific loss reserve is not warranted. We classify an asset
as "special mention" if the asset has a potential weakness that warrants
management's escalated level of attention. While such assets are not impaired,
management has concluded that if the potential weakness in the asset is not
addressed, the value of the asset may deteriorate, adversely affecting the
repayment of the asset. Loans classified as impaired for financial reporting
purposes are generally those loans classified as substandard or doubtful for
regulatory reporting purposes.

An insured institution is required to establish allowances for loan losses in an
amount deemed prudent by management for loans classified as substandard or
doubtful, as well as for other problem loans. General allowances represent loss
allowances which have been established to recognize the inherent losses
associated with lending activities, 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 to charge off such amounts.
An institution's determination as to the classification of its assets and the
amount of its valuation allowances is subject to review by the Federal Deposit
Insurance Corporation and the Pennsylvania Department of Banking and Securities.

The following table sets forth information with respect to our non-performing
assets at the dates indicated.

                                                    At June 30,
(Dollars in thousands)                            2022       2021
Non-accrual loans:
Residential real estate loans:
One- to four-family                              $ 4,781    $ 3,774
Home equity and HELOCs                               341        345
Residential construction                               -          -
Total residential real estate loans                5,122      4,119

Commercial real estate loans:
One- to four-family investor                         106        352
Multi-family                                         291        176
Commercial non-residential                           875        536
Commercial construction and land                       -          -
Total commercial real estate loans                 1,272      1,064
Commercial loans                                       -          -
Consumer loans                                       117        118
Total non-accrual loans                            6,511      5,301

Accruing loans past due 90 days or more:
Residential real estate loans:
One- to four-family                                    -          -
Home equity and HELOCs                                 -          -
Residential construction                               -          -
Total residential real estate loans                    -          -
Commercial real estate loans:
Multi-family                                           -          -
Commercial non-residential                             -          -
Commercial construction and land.                      -          -
Total commercial real estate loans                     -          -
Commercial loans                                       -          -
Consumer loans                                         -          -

Total accruing loans past due 90 days or more – –
Total non-performing loans

                       $ 6,511    $ 5,301
Real estate owned                                      -         75
Total non-performing assets                      $ 6,511    $ 5,376
Total non-performing loans to total loans           1.36 %     1.14 %

Total non-performing assets to total assets 0.74 0.65

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During the year ended June 30, 2022, nonperforming assets increased 21.1% to
$6.5 million from $5.4 million as of June 30, 2021. The increase in
nonperforming assets was primarily the result of a one- to four-family
residential real estate loan with a carrying value of $1.7 million becoming 90
days or more delinquent and placed on non-accrual during the year ended June 30,
2022.  The Company recorded a $137 thousand charge-off on this loan during the
year ended June 30, 2022 based on a recent appraisal of the property securing
the loan.  Please refer to note 20 of these consolidated financial statements
for a subsequent event update on the status of this delinquent $1.7 million
non-accrual loan. This increase to nonperforming assets was partially offset by
the pay-off of a one- to four-family residential real estate loans with a
carrying value of $617 thousand as of June 30, 2021.

Total nonperforming loans consisted of 37 loans to 36 unrelated borrowers as of
June 30, 2022, as compared to 38 loans to 37 unrelated borrowers at June 30,
2021. Interest income on non-performing loans would have increased by
approximately $275 thousand and $136 thousand during the years ended June 30,
2022 and 2021, respectively, if these loans had performed in accordance with
their terms during the respective periods. There were no loans greater than 90
days delinquent that remained on accrual status as of June 30, 2022 and 2021.

There are circumstances when foreclosure and liquidations are the remedy
pursued. However, from time to time, as part of our loss mitigation strategy, we
may renegotiate the loan terms (i.e., interest rate, structure, repayment term,
etc.) based on the economic or legal reasons related to the borrower's financial
difficulties. We had no new troubled debt restructurings ("TDRs") during the
year ended June 30, 2022 and 2021. TDRs are initially considered to be
nonperforming and are placed on non-accrual, except for those that have
established a sufficient performance history (generally a minimum of six
consecutive months of performance) under the terms of the restructured loan.

During the quarter ended June 30, 2020, we began providing customer relief
programs, such as payment deferrals or interest only payments on loans. In
accordance with guidance from the federal banking agencies, we do not consider a
modification to be a TDR if it occurred as a result of the loan forbearance
program under the CARES Act. The CARES Act indicates that a loan term
modification does not automatically result in TDR status if the modification is
short-term in nature (e.g., six months) and made on a good-faith basis in
response to COVID-19 to borrowers who were classified as current as of December
31, 2019. During the quarter ended June 30, 2020, we modified loans with an
aggregate principal balance of approximately $49.8 million to provide our
customers this monetary relief. Generally, these modifications included the
deferral of principal and interest payments for a period of three months,
although interest income continued to accrue. The three-month deferral period
has ended on the loans on deferral and, as of June 30, 2022, there are no loans
on deferral under the CARES Act.

Impaired loans at June 30, 2022 and 2021 included $593 thousand and $935
thousand of performing loans whose terms have been modified in troubled debt
restructurings, respectively. The amount of TDR loans included in impaired loans
decreased as a result principal payments and pay-offs. These restructured loans
are being monitored by management and are performing in accordance with their
restructured terms.

At June 30, 2022, none of our 38 substandard loans with an aggregate balance of
$6.5 million were considered TDRs and were included in nonperforming assets. At
June 30, 2021, none of our 38 substandard loans with an aggregate balance of
$5.3 million were considered TDRs and were included in nonperforming assets.

The following table provides information about delinquencies in our loan
portfolio at the dates indicated:

                                                                  At June 30,
                                                   2022                                  2021
                                              Days Past Due                         Days Past Due
(Dollars in thousands)               30-59      60-89      90 or more      30-59      60-89      90 or more
Residential real estate loans:
One- to four-family                 $ 1,528    $   622    $      2,392    $ 1,658    $   561    $        989
Home equity and HELOCs                   19          -             183         58        150              80
Residential construction                  -          -               -          -          -               -
Commercial real estate loans:
One- to four-family investor              -          -               -         81          -             271
Multi-family                              -          -               -          -        344             176
Commercial non-residential              275        494             418         92        491               -
Commercial construction and land          -          -               -     
    -          -               -
Commercial loans                          -          -               -          -          -               -
Consumer loans                           27          -               -         64          -               -
Total                               $ 1,849    $ 1,116    $      2,993    $ 1,953    $ 1,546    $      1,516


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The following table summarizes classified and criticized assets of all portfolio
types at the dates indicated:

                                At June 30,
(Dollars in thousands)        2022       2021
Classified loans:
Substandard                  $ 6,549    $ 5,301
Doubtful                           -          -
Loss                               -          -
Total classified loans         6,549      5,301
Special mention                1,773      2,410
Total criticized loans(1)    $ 8,322    $ 7,711

Criticized residential real estate and consumer loans include all residential
(1) real estate and consumer loans that were on non-accrual status and all

residential and consumer loans that were greater than 90 days delinquent on

the dates presented.


On the basis of management's review of its assets, at June 30, 2022 and 2021, we
classified $1.8 million and $2.4 million, respectively, of our assets as special
mention and $6.5 million and $5.3 million, respectively, of our assets as
substandard. We classified none of our assets as doubtful or loss at June 30,
2022 or at June 30, 2021. The loan portfolio is reviewed on a regular basis to
determine whether any loans require classification in accordance with applicable
regulations. Not all classified assets constitute nonperforming assets.

Allowance for Loan Losses

Our allowance for loan losses is maintained at a level necessary to absorb loan
losses which are both probable and reasonably estimable. Management, in
determining the allowance for loan losses, considers the losses inherent in its
loan portfolio and changes in the nature and volume of loan activities, along
with the general economic and real estate market conditions. We utilize a
two-tier approach: (1) identification of impaired loans and establishment of
specific loss allowances on such loans; and (2) establishment of general
valuation allowances on the remainder of our loan portfolio. We maintain a loan
review system, which provides for periodic reviews of our loan portfolio, which
increases the probability that we will be able to obtain the early
identification of potential impaired loans. Such system takes into
consideration, among other things, delinquency status, size of loans, type and
market value of collateral and financial condition of the borrowers. Specific
loan loss allowances are established for identified losses based on a review of
such information. A loan evaluated for impairment is considered to be impaired
when, based on current information and events, it is probable that we will be
unable to collect all amounts due according to the contractual terms of the loan
agreement. All loans identified as impaired are evaluated independently. We do
not aggregate such loans for evaluation purposes. Loan impairment is measured
based on the present value of expected future cash flows discounted at the
loan's effective interest rate or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if the loan is
collateral dependent. The interest on these impaired loans is accounted for on
the cash-basis or cost-recovery method, until qualifying for return to accrual
status. Should full collection of principle be expected, cash collected on
nonaccrual loans can be recognized as interest income.

The general component consists of quantitative and qualitative factors and
covers non-impaired loans. The quantitative factors are based on historical loss
experience adjusted for qualitative factors. For all loans other than performing
credits acquired in a business combination, the historical loss experience is
determined by portfolio segment and is based on the actual loss history
experienced by us or industry loss history experienced by peer banks in our
market area using the most recent twelve quarters.

This actual and industry loss experience is supplemented with other qualitative
factors based on the risks present for each portfolio segment. These qualitative
factors include consideration of the following:

? levels of trends in delinquencies and impaired loans;

? levels of trends in charge-offs and recoveries;

? trends in volume and terms of loans;

? effects of any changes in risk selection and underwriting standards;

? other changes in lending policies, procedures and practices;

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? experience, ability and depth of lending management and other relevant staff;

? national and local economic trends and conditions;

? industry conditions; and

? effects of changes in credit concentrations.


The allowance is increased through provisions charged against current earnings
and offset by recoveries of previously charged-off loans. Loans which are
determined to be uncollectible are charged against the allowance. Management
uses available information to recognize probable and reasonably estimable loan
losses, but future loss provisions may be necessary based on changing economic
conditions and other factors. The allowance for loan losses as of June 30, 2022
and 2021 was maintained at a level that represents management's best estimate of
losses inherent in the loan portfolio at such dates, and such losses were both
probable and reasonably estimable. In addition, the Federal Deposit Insurance
Corporation and the Pennsylvania Department of Banking and Securities, as an
integral part of their examination process, periodically review our allowance
for loan losses.

Each quarter, management evaluates the total balance of the allowance for loan
losses based on several factors that are not loan specific but are reflective of
the inherent losses in the loan portfolio. This process includes, but is not
limited to, a periodic review of loan collectability in light of historical
experience, the nature and volume of loan activity, conditions that may affect
the ability of the borrower to repay, underlying value of collateral, if
applicable, and economic conditions in our market areas. First, we group loans
by delinquency status. All loans 90 days or more delinquent and all loans
classified as substandard or doubtful are evaluated individually, based
primarily on the value of the collateral securing the loan. Specific loss
allowances are established as required by this analysis. All loans for which a
specific loss allowance has not been assigned are segregated by type and
delinquency status and a loss allowance is established by using loss experience
data and management's judgment concerning other matters it considers relevant.
The allowance is allocated to each category of loan based on the results of the
above analysis.

This analysis process is inherently subjective, as it requires us to make
estimates that are susceptible to revisions as more information becomes
available. Although we believe that we have established the allowance at a level
to absorb probable and estimable losses, additions may be necessary if economic
or other conditions in the future differ from the current environment.

The following table sets forth the breakdown of the allowance for loan losses by
loan category at the dates indicated:

                                                           At June 30,
                                           2022                                    2021
                                         % of                                    % of
                                       Allowance       % of                    Allowance       % of
                                       Amount to     Allowance                 Amount to     Allowance
                                         Total      to Loans in                  Total      to Loans in
(Dollars in thousands)       Amount    Allowance     Category       Amount     Allowance     Category
Residential real estate
loans:
One- to four-family        $    506        14.84 %         0.34 %  $    709        19.62 %         0.41 %
Home equity and HELOCs          113         3.32           0.35         133         3.68           0.36

Residential

construction                    386        11.32           2.60         487        13.48           3.76
Commercial real estate
loans:
One- to four-family
investor                        527        15.46           0.54         843        23.33           0.70
Multi-family                    110         3.23           0.84         159         4.40           1.29
Commercial
non-residential               1,451        42.56           0.91         854        23.64           0.88
Commercial construction
and land                        166         4.87           3.35         362        10.02           5.68
Commercial loans                100         2.93           1.06          51         1.41           0.99
Consumer loans                   50         1.47           2.23          15         0.42           0.46
Total allowance for
loan losses                $  3,409       100.00 %         0.71 %  $  3,613       100.00 %         0.78 %


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The following table sets forth an analysis of the activity in the allowance for
loan losses for the periods indicated:

                                                           At or For the Year Ended June 30,
(Dollars in thousands)                                        2022         

2021

Allowance at beginning of period                        $           3,613      $           3,519
(Recovery) provision for loan losses                                 (20)                    133

Charge-offs:

Residential real estate loans:
One- to four-family                                                 (154)                   (17)
Home equity and HELOCs                                                  -                   (30)
Residential construction                                                -                      -
Total residential real estate loans                                 (154)                   (47)
Commercial real estate loans:
One- to four-family investor                                         (55)                      -
Multi-family                                                            -                      -
Commercial non-residential                                              -                      -
Commercial construction and land                                        -                      -
Total commercial real estate loans                                   (55)  
                   -
Commercial loans                                                        -                      -
Consumer loans                                                       (29)                   (30)
Total charge-offs                                                   (238)                   (77)
Recoveries:
Residential real estate loans:
One- to four-family                                                     -                      -
Home equity and HELOCs                                                  8                      -
Residential construction                                                -                      -
Total residential real estate loans                                     8                      -
Commercial real estate loans:
One- to four-family investor                                           42                      3
Multi-family                                                            -                      -
Commercial non-residential                                              -                     35
Commercial construction and land                                        -                      -
Total commercial real estate loans                                     42  
                  38
Commercial loans                                                        -                      -
Consumer loans                                                          4                      -
Total recoveries                                                       54                     38
Net (charge-offs) recoveries                                        (184)                   (39)
Allowance at end of period                              $           3,409      $           3,613
Total loans(1)                                          $         478,920      $         464,809
Average loans outstanding                                         461,160                492,070
Ratio of allowance to non-accruing loans                            52.36 %                68.16 %
Ratio of allowance to total loans                                    0.71 %                 0.78 %
Ratio of net (charge-offs) recoveries to average
loans
One- to four-family                                                (0.10) %               (0.01) %
Home equity and HELOCs                                               0.02 %               (0.07) %
Residential construction                                                - %                    - %
One- to four-family investor                                       (0.01) %                    - %
Multi-family                                                            - %                    - %
Commercial non-residential                                              - %                 0.04 %
Commercial construction and land                                        - %
                   - %
Commercial loans                                                        - %                    - %
Consumer loans                                                     (0.91) %               (0.84) %
Total ratio of net (charge-offs) recoveries to
average loans                                                      (0.04) %               (0.01) %


(1) Net of unearned loan origination fees.


The allowance for loan losses decreased $204 thousand to $3.4 million at June
30, 2022 from $3.6 million at June 30, 2021. During the year ended June 30,
2022, the changes in the provision for loan losses for each category of loan
type were primarily due to fluctuations in the outstanding balance of each
category of loans collectively evaluated for impairment. The overall decrease in
the allowance can be primarily attributed to stable asset quality metrics,
including continued low levels of net charge-offs and non-performing assets, as
well as a reduction of the adjustments to qualitative factors related to the
COVID-19 pandemic.

The allowance for loan losses increased $94 thousand to $3.6 million at June 30,
2021 from $3.5 million at June 30, 2020.  During the year ended June 30, 2021,
the changes in the provision for loan losses for each category of loan type were
primarily due to fluctuations in the outstanding balance of each category of
loans collectively evaluated for impairment.  The overall increase in the
allowance can primarily be attributed to an increase in non-accrual and
delinquent loans and the corresponding qualitative adjustment.

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Impaired loans were $5.3 million and $4.0 million with no specific valuation
allowance necessary at June 30, 2022 and 2021, respectively. The $5.3 million
and $4.0 million of impaired loans at June 30, 2022 and 2021, respectively, do
not include $156 thousand and $161 thousand, respectively, of loans acquired
with deteriorated credit quality, which have been recorded at their fair value
at acquisition under FASB ASC 310-30.

Interest Rate Risk Management

Interest rate risk is defined as the exposure to current and future earnings and
capital that arises from adverse movements in interest rates. Depending on a
bank's asset/liability structure, adverse movements in interest rates could be
either rising or falling interest rates. For example, a bank with predominantly
long-term fixed-rate assets and short-term liabilities could have an adverse
earnings exposure to a rising rate environment. Conversely, a short-term or
variable-rate asset base funded by longer term liabilities could be negatively
affected by falling rates. This is referred to as re-pricing or maturity
mismatch risk.

Interest rate risk also arises from changes in the slope of the yield curve
(yield curve risk), from imperfect correlations in the adjustment of rates
earned and paid on different instruments with otherwise similar re-pricing
characteristics (basis risk), and from interest rate related options embedded in
our assets and liabilities (option risk).

Our objective is to manage our interest rate risk by determining whether a given
movement in interest rates affects our net interest income and the market value
of our portfolio equity in a positive or negative way and to execute strategies
to maintain interest rate risk within established limits. The results at June
30, 2022 indicate a level of risk within the parameters of our model. Our
management believes that the June 30, 2022 results indicate a profile that
reflects interest rate risk exposures in both rising and declining rate
environments for both net interest income and economic value.

Model Simulation Analysis. We view interest rate risk from two different
perspectives. The traditional accounting perspective, which defines and measures
interest rate risk as the change in net interest income and earnings caused by a
change in interest rates, provides the best view of short-term interest rate
risk exposure. We also view interest rate risk from an economic perspective,
which defines and measures interest rate risk as the change in the market value
of portfolio equity caused by changes in the values of assets and liabilities,
which fluctuate due to changes in interest rates. The market value of portfolio
equity, also referred to as the economic value of equity, is defined as the
present value of future cash flows from existing assets, minus the present value
of future cash flows from existing liabilities.

These two perspectives give rise to income simulation and economic value
simulation, each of which presents a unique picture of our risk of any movement
in interest rates. Income simulation identifies the timing and magnitude of
changes in income resulting from changes in prevailing interest rates over a
short-term time horizon (usually one or two years). Economic value simulation
reflects the interest rate sensitivity of assets and liabilities in a more
comprehensive fashion, reflecting all future time periods. It can identify the
quantity of interest rate risk as a function of the changes in the economic
values of assets and liabilities, and the corresponding change in the economic
value of equity of the Bank. Both types of simulation assist in identifying,
measuring, monitoring and controlling interest rate risk and are employed by
management to ensure that variations in interest rate risk exposure will be
maintained within policy guidelines.

We produce these simulation reports and discuss them with our management Asset
and Liability Committee and Director Risk Committee on at least a quarterly
basis. The simulation reports compare baseline (no interest rate change) to the
results of an interest rate shock, to illustrate the specific impact of the
interest rate scenario tested on income and equity. The model, which
incorporates all asset and liability rate information, simulates the effect of
various interest rate movements on income and equity value. The reports identify
and measure our interest rate risk exposure present in our current
asset/liability structure. Management considers both a static (current position)
and dynamic (forecast changes in volume) analysis as well as non-parallel and
gradual changes in interest rates and the yield curve in assessing interest rate
exposures.

If the results produce quantifiable interest rate risk exposure beyond our
limits, then the testing will have served as a monitoring mechanism to allow us
to initiate asset/liability strategies designed to reduce and therefore mitigate
interest rate risk. The table below sets forth an approximation of our interest
rate risk exposure. The simulation uses projected repricing of assets and
liabilities at June 30, 2022. The income simulation analysis presented
represents a one-year impact of the interest scenario assuming a static balance
sheet. Various assumptions are made regarding the prepayment speed and
optionality of loans, investment securities and deposits, which are based on
analysis and market information. The assumptions regarding optionality, such as
prepayments of loans and the effective lives and repricing of non-maturity
deposit products, are documented periodically through evaluation of current
market conditions and historical correlations to our specific asset and
liability products under varying interest rate scenarios. Because the
prospective effects

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  Table of Contents
of hypothetical interest rate changes are based on a number of assumptions,
these computations should not be relied upon as indicative of actual results.
While we believe such assumptions to be reasonable, assumed prepayment rates may
not approximate actual future prepayment activity on mortgage-backed securities
or agency issued collateralized obligations (secured by one- to four-family
loans and multifamily loans). Further, the computation does not reflect any
actions that management may undertake in response to changes in interest rates
and assumes a constant asset base. Management periodically reviews the rate
assumptions based on existing and projected economic conditions and consults
with industry experts to validate our model and simulation results.

The table below sets forth, as of June 30, 2022, the Company's net portfolio
value, the estimated changes in our net portfolio value and net interest income
that would result from the designated instantaneous parallel changes in market
interest rates.

                                           Twelve Month
                                           Net Interest         Net Portfolio
                                              Income                 Value
                                             Percent        Estimated      Percent
Change in Interest Rates (Basis Points)     of Change          NPV        of Change
+200                                             (1.23) %   $  240,523       (7.63) %
+100                                             (0.55)        250,402       (3.84)
0                                                     -        260,401            -
-100                                               0.93        269,926         3.66
-200                                             (3.81)        274,861         5.55


As of June 30, 2022, based on the scenarios above, net interest income would
decrease by approximately 0.55% to 1.23% in a rising interest rate environment.
One-year net interest income would increase by approximately 0.93% in a 100
basis points declining interest rate environment and decrease 3.81% in a 200
basis points declining interest rate environment.

Economic value at risk would be negatively impacted by a rise in interest rates
and positively impacted by a decline in interest rates. We have established an
interest rate floor of zero percent for measuring interest rate risk.

Overall, our June 30, 2022 results indicate that we are adequately positioned
with an acceptable net interest income and economic value at risk and that all
interest rate risk results continue to be within our policy guidelines.

Liquidity and Capital Resources

We maintain liquid assets at levels we believe are adequate to meet our
liquidity needs. The Bank's liquidity ratio was 44.1% as of June 30, 2022
compared to 44.3% as of June 30, 2021. We adjust our liquidity levels to fund
deposit outflows, pay real estate taxes on mortgage loans, repay our borrowings,
and to fund loan commitments. We also adjust liquidity as appropriate to meet
asset and liability management objectives. Our liquidity ratio is calculated as
the sum of total cash and cash equivalents and unencumbered investments
securities divided by the sum of total deposits and advances from the FHLB of
Pittsburgh and other liabilities. The Bank maintains a liquidity ratio policy
that requires this metric to be above 10.0% to provide for the effective
management of extension risk and other interest rate risks.

Our primary sources of liquidity are deposits, amortization and prepayment of
loans and mortgage-backed securities, maturities of investment securities, other
short-term investments, earnings, and funds provided from operations. While
scheduled principal repayments on loans and mortgage-backed securities are a
relatively predictable source of funds, deposit flows and loan prepayments are
greatly influenced by market interest rates, economic conditions, and rates
offered by our competition. We set the interest rates on our deposits to
maintain a desired level of total deposits. In addition, we invest excess funds
in short-term interest-earning assets, which provide liquidity to meet lending
requirements.

Our cash flows are derived from operating activities, investing activities and
financing activities as reported in our Consolidated Statements of Cash Flows
included with the Consolidated Financial Statements.

Our primary investing activities are the origination of one- to four-family,
non-residential and multi-family real estate and other loans, including loans
originated for sale, and the purchase of investment securities. For the year
ended June 30, 2022, our net increase in loans (originations in excess of
principal payments and payoffs) totaled $14.3 million compared to $49.3 million
of net loan run-off (principal payments and payoffs in excess of originations)
for the year ended June 30, 2021. For the years ended June 30, 2022 and 2021, we
did not purchase any loans. We sold two loans for $274 thousand during the year
ended June 30, 2022 and we sold one loan for $150 thousand during the year ended
June 30, 2021. Cash received from the sales, calls, maturities and pay-downs on
securities totaled $23.0

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million and $61.5 million for the years ended June 30, 2022 and 2021,
respectively. We purchased $207.4 million and $96.3 million of securities during
the years ended June 30, 2022 and 2021, respectively.

Deposit flows are generally affected by the level of interest rates we offer,
the interest rates and products offered by local competitors, and other factors.
Total deposits increased $53.5 million during the year ended June 30, 2022
primarily due to an $82.5 million increase in core deposits primarily due to
branch expansion, partially offset by a $29.0 million decrease in non-core time
deposits.  The decrease in time deposits was consistent with the planned run-off
associated with our re-pricing of higher-cost, non-relationship-based deposit
accounts.  Total deposits decreased $6.7 million during the year ended June 30,
2021 primarily due to the intentional runoff of high-cost non-relationship based
certificates of deposit, partially offset by organic core deposit growth.

Liquidity management is both a daily and long-term function of business
management. If we require funds beyond our ability to generate them internally,
borrowing agreements exist with the FHLB of Pittsburgh to provide advances. As a
member of the FHLB of Pittsburgh, we are required to own capital stock in the
FHLB of Pittsburgh and are authorized to apply for advances on the security of
such stock and certain of our mortgage loans and other assets (principally
securities which are obligations of, or guaranteed by, the United States),
provided certain standards related to credit-worthiness have been met. We had an
available borrowing limit of $292.7 million and $280.8 million from the FHLB of
Pittsburgh as of June 30, 2022 and 2021, respectively. There were $65.0 million
and $41.0 million, respectively, of FHLB advances outstanding at June 30, 2022
and 2021, respectively.

At June 30, 2022, we had outstanding commitments to originate loans of $16.9
million, unfunded commitments under lines of credit of $72.0 million and $30
thousand of standby letters of credit. At June 30, 2022, certificates of deposit
scheduled to mature in less than one year totaled $79.5 million. Based on prior
experience, management believes that a significant portion of such deposits will
remain with us, although there can be no assurance that this will be the case.
In the event a significant portion of our deposits are not retained by us, we
will have to utilize other funding sources, such as FHLB advances, in order to
maintain our level of assets. Alternatively, we could reduce our level of liquid
assets, such as our cash and cash equivalents. In addition, the cost of such
deposits may be significantly higher if market interest rates are higher at the
time of renewal.

The Company is a separate legal entity from the Bank and must provide for its
own liquidity. In addition to its operating expenses, the Company is responsible
for paying any dividends declared to its stockholders, and interest and
principal on outstanding debt, if any. The Company's primary source of income is
dividends received from the Bank. At June 30, 2022, the Company had liquid
assets of $41.3 million.

Off-Balance Sheet Arrangements

For the years ended June 30, 2022 and 2021, we did not engage in any off-balance
sheet transactions reasonably likely to have a material adverse effect on our
financial condition, results of operations or cash-flows.

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 2
to the notes to the Consolidated Financial Statements of the Company.

Impact of Inflation and Changing Prices

The consolidated financial statements and related notes of the Company have been
prepared in accordance with GAAP, which generally requires the measurement of
financial position and operating results in terms of historical dollars without
consideration for changes in the relative purchasing power of money over time
due to inflation. The impact of inflation is reflected in the increased cost of
our operations. Unlike industrial companies, our assets and liabilities are
primarily monetary in nature. As a result, changes in market interest rates have
a greater impact on performance than the effects of inflation.

Non-GAAP Financial Information

We prepare our financial statements in accordance with U.S. GAAP. To supplement
our financial information presented in accordance with U.S. GAAP, we provide the
non-GAAP financial measures discussed below which are used to evaluate our
performance and exclude the effects of certain transactions and one-time events
that we believe are unrelated to our core business and not necessarily
indicative of our current performance or financial position. Management believes
excluding these items facilitates greater visibility into our core businesses
and underlying trends that may, to some extent, be obscured by inclusion of
such
items.

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  Table of Contents

Core Net Income, Core Return on Average Assets, and Core Return on Average
Equity

Core net income excludes certain pre-tax adjustments and the tax impact of such
adjustments, and income tax benefits. Core return on average assets and core
return on average equity represent our core net income divided by average assets
and average equity, respectively. Management believes that the presentation of
these non-GAAP measures assist investors in understanding the impact of
non-recurring items on our net income and return on average assets and our
return on average equity ratios. The following table provides a reconciliation
of our core net income and our core return on average assets and core return on
average equity ratios for each of the periods where these non-GAAP measures
are
presented:

                                                           For the Year Ended June 30,
                                                             2022                2021
Calculation of core net income, core return on
average assets, and core return on average equity
Net income (GAAP)                                      $        4,237       $      3,779
Less pre-tax adjustments:
Net gain on sale of other real estate owned                      (18)      

(206)

Net loss (gain) on disposition of premises and
equipment                                                           7      

(495)

Unrealized loss on equity securities                              242                  -
(Gain) loss on lease abandonment                                (117)      
         162
Prepayment penalties                                              460                161
Real estate tax adjustment                                      (192)                  -
Tax impact of pre-tax adjustments                                (88)      
          85
Income tax benefit adjustment                                   (288)                  -
Core net income (non-GAAP)                             $        4,243       $      3,486
Basic average common shares outstanding                    14,255,901      

14,541,136

Diluted average common shares outstanding                  14,259,369      

14,541,136

Basic and diluted earnings per share (GAAP)            $         0.30       $       0.26
Basic and diluted core earnings per share
(non-GAAP)                                             $         0.30       $       0.24
Average assets                                         $      837,964       $    772,846
Return on average assets (GAAP)                                  0.51 %             0.49 %
Core return on average assets (non-GAAP)                         0.51 %             0.45 %
Average equity                                         $      212,291       $    128,912
Return on average equity (GAAP)                                  2.00 %             2.93 %
Core return on average equity (non-GAAP)                         2.00 %    

2.70 %

Allowance for Loan Losses to Total Loans (Excluding Acquired Loans)

Allowance for loan losses to total loans (excluding acquired loans) represents
our allowance for loan losses divided by our adjusted loan balance (adjusted by
the exclusion of acquired loans). Management believes that the presentation of
this non-GAAP measure assists investors in understanding the impact of acquired
loans on our allowance for loan losses to total loans ratio. The following table
provides a reconciliation of our allowance for loan losses to total loans ratio
(excluding acquired loans) for each of the periods where this non-GAAP measure
is presented:

                                                              For the Year Ended June 30,
                                                             2022                       2021

Calculation of the ratio of the allowance for loan
losses to total loans, excluding acquired loans:
Gross loans receivable

                                 $      479,669               $  465,629
Less: Loans acquired in a business combination                118,111                  161,260
Gross loans receivable, excluding acquired loans
(non-GAAP)                                             $      361,558               $  304,369
Allowance for loan losses                              $        3,409               $    3,613
Allowance for loan losses to total loans (GAAP)                  0.71 %                   0.78 %
Allowance for loan losses to total loans, excluding
acquired loans (non-GAAP)                                        0.94 %                   1.19 %


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