Fifth District Bancorp, Inc.

Previous wording

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

Current wording

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

Previous wording

Total Assets. Total assets were $532.1 million at June 30, 2026, a decrease of $2.3 million, or 0.4%, compared to $534.4 million at December 31, 2025. This decrease is primarily due to a $14.7 million decrease in cash and cash equivalents, a $4.9 million decrease in investment securities available-for-sale, offset by a $17.0 million increase in loans receivable, net.

Current wording

Total Assets. Total assets were $537.1 million at September 30, 2026, an increase of $2.7 million, or 0.5%, compared to $534.4 million at December 31, 2025. This increase is primarily due to a $28.3 million increase in loans receivable, net, offset by a $18.6 million decrease in cash and cash equivalents and a $9.3 million decrease in investment securities available-for-sale.

Previous wording

Cash and Cash Equivalents. Cash and cash equivalents decreased by $14.7 million, or 43.4%, to $19.2 million at June 30, 2026 from $33.9 million at December 31, 2025. This decrease is primarily due to the origination of loans, primarily construction and commercial loans.

Current wording

Cash and Cash Equivalents. Cash and cash equivalents decreased by $18.6 million, or 55.0%, to $15.2 million at September 30, 2026 from $33.9 million at December 31, 2025. This decrease is primarily due to the origination of loans, primarily construction and commercial loans.

Previous wording

Investment Securities Available-for-Sale. Investment securities available-for-sale decreased $4.9 million, or 4.9%, to $94.2 million at June 30, 2026 from $99.1 million at December 31, 2025. Securities purchased totaled $3.9 million during the six months ended June 30, 2026, and calls, maturities, and repayments totaled $8.4 million. Adding to the decrease was a fair market value downward adjustment of $391,000.

Current wording

Investment Securities Available-for-Sale. Investment securities available-for-sale decreased $9.3 million, or 9.4%, to $89.7 million at September 30, 2026 from $99.1 million at December 31, 2025. Securities purchased totaled $4.9 million during the nine months ended September 30, 2026, and calls, maturities, and repayments totaled $11.5 million. Adding to the decrease was a fair market value downward adjustment of $2.7 million.

Previous wording

Loans Receivable, Net. Loans receivable, net, increased by $17.0 million, or 4.5%, to $393.4 million at June 30, 2026 from $376.4 million at December 31, 2025. During the six months ended June 30, 2026, loan originations were $37.2 million and loan repayments totaled $20.2 million. During the six months ended June 30, 2026, commercial loans increased by $8.2 million, primarily from the origination of commercial real estate loans, and commercial and industrial loans, home equity loans increased by $403,000, consumer loans increased by $2.8 million, construction and land loans increased by $10.1 million, and 1-4 single family mortgages decreased by $4.4 million.

Current wording

Loans Receivable, Net. Loans receivable, net, increased by $28.3 million, or 7.5%, to $404.7 million at September 30, 2026 from $376.4 million at December 31, 2025. During the nine months ended September 30, 2026, loan originations were $59.4 million and loan repayments totaled $31.1 million. During the nine months ended September 30, 2026, commercial loans increased by $17.3 million, primarily from the origination of commercial real estate loans, and commercial and industrial loans, home equity loans increased by $838,000, consumer loans increased by $2.7 million, construction and land loans increased by $13.2 million, and 1-4 single family mortgages decreased by $5.8 million.

Previous wording

Deposits. Deposits decreased by $1.6 million, or 0.4%, to $391.6 million at June 30, 2026, from $393.2 million at December 31, 2025. Certificates of deposit decreased $1.7 million, or 0.7%, to $238.1 million at June 30, 2026, from

Current wording

Deposits. Deposits increased by $3.6 million, or 0.9%, to $396.7 million at September 30, 2026, from $393.2 million at December 31, 2025. Certificates of deposit increased $6.2 million, or 2.6%, to $246.0 million at September 30,

Previous wording

$239.7 million at December 31, 2025. Demand deposit accounts increased $1.6 million, or 2.9%, to $57.9 million at June 30, 2026, from $56.3 million at December 31, 2025. MMDA accounts decreased $1.1 million, or 5.1%, to $19.7 million at June 30, 2026, from $20.7 million at December 31, 2025. Savings accounts decreased $463,000, or 0.6%, to $76.0 million at June 30, 2026, from $76.4 million at December 31, 2025.

Current wording

2026, from $239.7 million at December 31, 2025. Demand deposit accounts increased $999,000, or 1.8%, to $57.3 million at September 30, 2026, from $56.3 million at December 31, 2025. MMDA accounts decreased $1.6 million, or 7.9%, to $19.1 million at September 30, 2026, from $20.7 million at December 31, 2025. Savings accounts decreased $2.0 million, or 2.7%, to $74.4 million at September 30, 2026, from $76.4 million at December 31, 2025.

Previous wording

Total Stockholders’ Equity. Total stockholders’ equity decreased by $753,000, or 0.6%, to $129.0 million at June 30, 2026, from $129.8 million at December 31, 2025. The decrease resulted primarily from the accumulated other comprehensive loss (as a result of a downward market value adjustment of investment securities available-for-sale due to the rise in market interest rates during the period) increasing $293,000 and additional paid-in-capital decreasing $765,000 due to the repurchase of 53,690 shares of common stock.

Current wording

Total Stockholders’ Equity. Total stockholders’ equity decreased by $2.4 million, or 1.8%, to $127.4 million at September 30, 2026, from $129.8 million at December 31, 2025. The decrease resulted primarily from the accumulated other comprehensive loss (as a result of a downward market value adjustment of investment securities available-for-sale due to the rise in market interest rates during the period) increasing $2.1 million and additional paid-in-capital decreasing $765,000 due to the repurchase of 135,772 shares of common stock.

Previous wording

Interest and Dividend Income. Interest and dividend income increased by $316,000, or 5.8%, to $5.8 million for the three months ended June 30, 2026, compared to $5.5 million for the three months ended June 30, 2025. The increase is attributed to a $414,000, or 9.9%, increase in interest on loans, a $8,000, or 0.8%, increase in interest on investment securities available-for-sale offset by a $106,000, or 41.3%, decrease in interest on other interest-earning assets.

Current wording

Interest and Dividend Income. Interest and dividend income increased by $183,000, or 3.2%, to $5.9 million for the three months ended September 30, 2026, compared to $5.7 million for the three months ended September 30, 2025. The increase is attributed to a $453,000, or 10.5%, increase in interest on loans, offset by a $102,000, or 9.2%, decrease in interest on investment securities available-for-sale and a $168,000, or 59.4%, decrease in interest on other interest-earning assets.

Previous wording

During the three months ended June 30, 2026, average loans receivable, net, increased by $10.9 million, or 2.9%, from the three months ended June 30, 2025. The average yield on loans increased to 4.81% for the three months ended June 30, 2026, from 4.50% for the three months ended June 30, 2025, mainly due to the higher yielding loans that were originated during the period.

Current wording

During the three months ended September 30, 2026, average loans receivable, net, increased by $18.2 million, or 4.8%, from the three months ended September 30, 2025. The average yield on loans increased to 4.73% for the three months ended September 30, 2026, from 4.42% for the three months ended September 30, 2025, primarily due to the higher yielding loans that were originated during the period.

Previous wording

The average balance of investment securities available-for-sale increased $814,000, or 0.8%, to $97.3 million for the six months ended June 30, 2026, from $96.5 million for the six months ended June 30, 2025. The average yield on available-for-sale investment securities increased to 4.28% for the six months ended June 30, 2026, from 4.01% for the six months ended June 30, 2025. The increase in the average yield on available-for-sale investment securities was primarily due to reinvesting in higher yielding bonds.

Current wording

The average balance of investment securities available-for-sale decreased $8.7 million, or 8.7%, to $92.3 million for the three months ended September 30, 2026, from $101.1 million for the three months ended September 30, 2025. The average yield on available-for-sale investment securities decreased to 4.31% for the three months ended September 30, 2026, from 4.34% for the three months ended September 30, 2025. The decrease in the average yield on available-for-sale investment securities was primarily due to adjustable bonds repricing downward, and prepayment speeds on bonds increasing.

Previous wording

Interest income on cash and cash equivalents, comprised primarily of overnight deposits, decreased by $98,000, or 40.2%, for the three months ended June 30, 2026, primarily due to an decrease in the average yield to 3.20% for the three months ended June 30, 2026, from 4.09% for the three months ended June 30, 2025. The decrease in average yield was due to the decline in market interest rates. The average balance of cash and cash equivalents decreased by $5.7 million to $18.5 million for the three months ended June 30, 2026, from $24.2 million for the three months ended June 30, 2025.

Current wording

Interest income on cash and cash equivalents, comprised primarily of overnight deposits, decreased by $167,000, or 62.1%, for the three months ended September 30, 2026, primarily due to a decrease in the average yield to 3.16% for the three months ended September 30, 2026, from 4.01% for the three months ended September 30, 2025. The decrease in average yield was due to the decline in market interest rates. The average balance of cash and cash equivalents decreased by $13.9 million to $12.8 million for the three months ended September 30, 2026, from $26.6 million for the three months ended September 30, 2025.

Previous wording

Interest Expense*.* Total interest expense decreased $252,000 or 10.8%, to $2.1 million for the three months ended June 30, 2026, from $2.3 million for the three months ended June 30, 2025. The average balance of interest-bearing deposits decreased by $2.9 million, or 0.7%, to $394.1 million for the three months ended June 30, 2026, from $397.0 million for the three months ended June 30, 2025.

Current wording

Interest Expense*.* Total interest expense decreased $229,000 or 9.8%, to $2.1 million for the three months ended September 30, 2026, from $2.3 million for the three months ended September 30, 2025. The average balance of interest-bearing deposits decreased by $2.6 million, or 0.6%, to $393.5 million for the three months ended September 30, 2026, from $396.1 million for the three months ended September 30, 2025.

Previous wording

Net Interest Income*.* Net interest income increased $568,000, or 18.0%, to $3.7 million for the three months ended June 30, 2026, compared to $3.1 million for the three months ended June 30, 2025. The increase reflects the increase in the interest rate spread to 2.51% for the three months ended June 30, 2026, from 2.04% for the three months ended June 30, 2025, while average net interest-earning assets increased $5.7 million period-to-period. The net interest margin increased to 2.98% for the three months ended June 30, 2026, from 2.54% for the three months ended June 30, 2025. The average yield on interest-earning assets increased from 4.42% for the three months ended June 30, 2025, to 4.65% for the three months ended June 30, 2026. The average rate paid on interest-bearing liabilities decreased from 2.38% for the three months ended June 30, 2025, to 2.14% for the three months ended June 30, 2026. The average rate on certificates of deposits decreased from 3.80% for the three months ended June 30, 2025, to 3.45% for the three months ended June 30, 2026. The decrease in the average rate paid on certificates of deposit primarily resulted from a decrease in market interest rates. The average balance of certificates of deposit decreased from $243.6 million as of June 30, 2025, to $239.1 million as of June 30, 2026, while over the same period the average balance of savings accounts decreased from $77.8 million to $77.0 million, and the average balance of money market accounts decreased from $21.1 million to $20.0 million.

Current wording

Net Interest Income*.* Net interest income increased $412,000, or 12.3%, to $3.8 million for the three months ended September 30, 2026, compared to $3.3 million for the three months ended September 30, 2025. The increase reflects the increase in the interest rate spread to 2.48% for the three months ended September 30, 2026, from 2.09% for the three months ended September 30, 2025, while average net interest-earning assets decreased $1.8 million period-to-period. The net interest margin increased to 2.95% for the three months ended September 30, 2026, from 2.61% for the three months ended September 30, 2025. The average yield on interest-earning assets increased from 4.44% for the three months ended September 30, 2025, to 4.62% for the three months ended September 30, 2026. The average rate paid on interest-bearing liabilities decreased from 2.35% for the three months ended September 30, 2025, to 2.14% for the three months ended September 30, 2026. The average rate on certificates of deposits decreased from 3.74% for the three months ended September 30, 2025, to 3.39% for the three months ended September 30, 2026. The decrease in the average rate paid on certificates of deposit primarily resulted from a decrease in market interest rates. The average balance of certificates of deposit decreased from $244.3 million as of September 30, 2025, to $242.8 million as of September 30, 2026, while over the same period the average balance of savings accounts decreased from $77.2 million to $74.7 million, and the average balance of money market accounts decreased from $20.9 million to $19.3 million.

Previous wording

Provision for Credit Losses*.*The provision for credit losses on loans was $-0- for the three months ended June 30, 2026 and 2025. The allowance for credit losses on loans represented 0.43% of total loans at June 30, 2026 and 0.45% of total loans at June 30, 2025.

Current wording

Provision for Credit Losses*.*The provision for credit losses on loans was $-0- for the three months ended September 30, 2026 and 2025. The allowance for credit losses on loans represented 0.42% of total loans at September 30, 2026 and 0.45% of total loans at September 30, 2025.

Previous wording

Total non-performing loans were $343,000 at June 30, 2026, compared to $1.3 million at June 30, 2025. We had $343,000 of loans over 90 days delinquent at June 30, 2026, compared to $1.3 million at June 30, 2025. Classified loans totaled $1.1 million at June 30, 2026, compared to $915,000 at June 30, 2025. As a percentage of nonperforming loans, the allowance for credit losses on loans was 495.3% at June 30, 2026, and 130.7% at June 30, 2025.

Current wording

Total non-performing loans were $1.0 million at September 30, 2026, compared to $198,000 at September 30, 2025. We had $1.0 million of loans over 90 days delinquent at September 30, 2026, compared to $199,000 at September 30, 2025. Substandard loans totaled $1.1 million at September 30, 2026, compared to $1.3 million at September 30, 2025. As a percentage of nonperforming loans, the allowance for credit losses on loans was 169.9% at September 30, 2026, and 858.1% at September 30, 2025.

Previous wording

Noninterest Income*.* Noninterest income totaled $239,000 for the three months ended June 30, 2026, a decrease of $3.5 million, or 93.6%, from $3.7 million for the three months ended June 30, 2025. The majority of the decrease was due to a gain on bank owned life insurance proceeds for the three months ended June 30, 2025.

Current wording

Noninterest Income*.* Noninterest income totaled $239,000 for the three months ended September 30, 2026, an increase of $11,000, or 4.8%, from $228,000 for the three months ended September 30, 2025. The majority of the increase was due to an increase in the value of bank owned life insurance.

Previous wording

Noninterest Expense*.*Noninterest expense decreased $170,000, or 2.5%, to $6.8 million for the six months ended June 30, 2026, compared to $6.9 million for the six months ended June 30, 2025. The decrease was primarily due to a decrease in salaries and employee benefits of $380,000, or 8.7%, partially offset by an increase in occupancy and equipment expense of $42,000, or 4.4%, an increase in professional and legal fees of $50,000, or 36.8%, an increase in data processing expense of $61,000, or 9.6%, an increase in advertising of $41,000, or 93.2%, and an increase in other expenses of $34,000, or 9.0%. The decrease in salaries and employee benefits is mainly from a death benefit paid out in 2025 to the intended beneficiaries of the late President and Chief Executive Officer from the proceeds of the bank owned life insurance.

Current wording

Noninterest Expense*.*Noninterest expense increased $449,000, or 14.3%, to $3.6 million for the three months ended September 30, 2026, compared to $3.1 million for the three months ended September 30, 2025. The increase was primarily due to an increase in salaries and employee benefits of $341,000 or 19.1%, an increase in occupancy and equipment expense of $41,000, or 8.9%, an increase in directors fees of $12,000, or 18.8%, an increase in data processing expense of $59,000, or 18.0%, an increase in advertising of $33,000, or 126.9%, partially offset by a decrease in professional and legal fees of $31,000, or 27.2%.

Previous wording

Provision (Benefit) for Income Taxes. The provision (benefit) for income taxes increased by $192,000, or 211.0%, to $101,000 for the three months ended June 30, 2026, compared to ($91,000) for the three months ended June 30, 2025. While pretax income decreased by $2.6 million, or 84.0%, for the three months ended June 30, 2026, $3.5 million of the pretax income for the three months ended June 30, 2025, was from the non-taxable proceeds of the bank owned life insurance. The effective tax rate was 21% for both periods.

Current wording

Provision (Benefit) for Income Taxes. The provision for income taxes decreased by $5,000, or 5.5%, to $86,000 for the three months ended September 30, 2026, compared to $91,000 for the three months ended September 30, 2025. Pretax income decreased by $26,000, or 6.0%, to $408,000 for the three months ended September 30, 2026, from $434,000 for the three months ended September 30, 2025. The effective tax rate was 21% for both periods.

Previous wording

Comparison of Operating Results for the Six Months Ended June 30, 2026 and 2025

Current wording

Comparison of Operating Results for the Nine Months Ended September 30, 2026 and 2025

Previous wording

General*.* Net income for the three months ended June 30, 2026, was $384,000, a decrease of $2.7 million, or 87.7%, compared to $3.1 million for the three months ended June 30, 2025. The decrease in net income was primarily from a $3.5 million decrease in non-interest income mainly due to a gain on insurance proceeds (in relation to the payout of bank owned life insurance) paid out in 2025, a $192,000 increase in provision for income taxes, partially offset by a $316,000 increase in interest and dividend income, a decrease in interest expense of $252,000, and a $362,000 decrease in non-interest expense.

Current wording

General*.* Net income for the nine months ended September 30, 2026, was $1.1 million a decrease of $2.5 million or 69.2%, compared to $3.5 million for the nine months ended September 30, 2025. The decrease in net income was primarily from a $3.5 million decrease in non-interest income mainly due to a gain on insurance proceeds (in relation to the payout of bank owned life insurance) paid out in 2025, a $269,000 increase in provision for income taxe,s a $280,000 increase in non-interest expense, partially offset by a $946,000 increase in interest and dividend income, and a decrease in interest expense of $651,000.

Previous wording

Interest and Dividend Income. Interest and dividend income increased by $762,000, or 7.1%, to $11.5 million for the six months ended June 30, 2026, compared to $10.7 million for the six months ended June 30, 2025. The increase is attributed to a $832,000, or 10.1%, increase in interest on loans, a $148,000, or 7.7%, increase in interest on investment securities available-for-sale, offset by a $218,000, or 39.6% decrease in interest on other interest-earning assets.

Current wording

Interest and Dividend Income. Interest and dividend income increased by $946,000, or 5.8%, to $17.3 million for the nine months ended September 30, 2026, compared to $16.4 million for the nine months ended September 30, 2025. The increase is attributed to a $1.3 million, or 10.3%, increase in interest on loans, a $46,000, or 1.5%, increase in interest on investment securities available-for-sale, offset by a $386,000, or 46.3% decrease in interest on other interest-earning assets.

Previous wording

During the six months ended June 30, 2026, average loans receivable, net, increased by $12.1 million, or 3.2%, from the six months ended June 30, 2025. The average yield on loans increased to 4.72% for the six months ended June 30, 2026, from 4.42% for the six months ended June 30, 2025, mainly due to higher yielding loans originated during the period.

Current wording

During the nine months ended September 30, 2026, average loans receivable, net, increased by $14.2 million, or 3.8%, from the nine months ended September 30, 2025. The average yield on loans increased to 4.72% for the nine months ended September 30, 2026, from 4.45% for the nine months ended September 30, 2025, primarily due to higher yielding loans originated during the period.

Previous wording

The average balance of investment securities available-for-sale decreased $2.5 million, or 2.5%, to $96.4 million for the three months ended June 30, 2026, from $98.9 million for the three months ended June 30, 2025. The average yield on available-for-sale investment securities increased to 4.32% for the three months ended June 30, 2026, from 4.18% for the three months ended June 30, 2025. The increase in the average yield on available-for-sale investment securities was primarily due to reinvesting in higher yielding bonds.

Current wording

The average balance of investment securities available-for-sale decreased $2.6 million, or 2.6%, to $95.6 million for the nine months ended September 30, 2026, from $98.2 million for the nine months ended September 30, 2025. The average yield on available-for-sale investment securities increased to 4.29% for the nine months ended September 30, 2026, from 4.12% for the nine months ended September 30, 2025. The increase in the average yield on available-for-sale investment securities was primarily due to reinvesting in higher yielding bonds.

Previous wording

Interest income on cash and cash equivalents, comprised primarily of overnight deposits, decreased by $216,000, or 40.2%, for the six months ended June 30, 2026, primarily due to an decrease in the average balance of cash and cash equivalents by $5.9 million to $20.5 million for the six months ended June 30, 2026, from $26.5 million for the six months ended June 30, 2025. The average yield decreased to 3.15% for the six months ended June 30, 2026, from 4.09% for the six months ended June 30, 2025. The decrease in average yield was due to the decrease in market interest rates.

Current wording

Interest income on cash and cash equivalents, comprised primarily of overnight deposits, decreased by $384,000, or 47.6%, for the nine months ended September 30, 2026, primarily due to a decrease in the average balance of cash and cash equivalents by $8.6 million to $17.9 million for the nine months ended September 30, 2026, from $26.6 million for the nine months ended September 30, 2025. The average yield decreased to 3.21% for the nine months ended September 30, 2026, from 4.06% for the nine months ended September 30, 2025. The decrease in average yield was due to the decrease in market interest rates.

Previous wording

Interest Expense*.* Total interest expense decreased $421,000 or 9.1%, to $4.2 million for the six months ended June 30, 2026, from $4.6 million for the six months ended June 30, 2025. The average cost of deposits decreased from 2.36% for the six months ended June 30 2025, to 2.15% for the six months ended June 30, 2026. The average balance of interest-bearing deposits decreased by $450,000, or 0.1%, to $392.9 million for the six months ended June 30, 2026, from $393.4 million for the six months ended June 30, 2025.

Current wording

Interest Expense*.* Total interest expense decreased $651,000 or 9.4%, to $6.3 million for the nine months ended September 30, 2026, from $7.0 million for the nine months ended September 30, 2025. The average cost of deposits decreased from 2.36% for the nine months ended September 30 2025, to 2.14% for the nine months ended September 30, 2026. The average balance of interest-bearing deposits decreased by $1.2 million, or 0.3%, to $393.1 million for the nine months ended September 30, 2026, from $394.3 million for the nine months ended September 30, 2025.

Previous wording

Net Interest Income*.* Net interest income increased $1.2 million, or 19.4%, to $7.3 million for the six months ended June 30, 2026, compared to $6.1 million for the six months ended June 30, 2025. The increase reflects the increase in the interest rate spread to 2.42% for the six months ended June 30, 2026, from 1.96% for the six months ended June 30, 2025, while average net interest-earning assets increased $7.4 million period-to-period. The net interest margin increased to 2.90% for the six months ended June 30, 2026, from 2.46% for the six months ended June 30, 2025. The average yield on interest-earning assets increased from 4.32% for the six months ended June 30, 2025, to 4.57% for the six months ended June 30, 2026. The average rate paid on interest-bearing liabilities decreased from 2.36% for the six months ended June 30, 2025, to 2.15% for the six months ended June 30, 2026, primarily due to a decrease in the average balance of certificates of deposit from $240.9 million for the six months ended June 30, 2025, to $238.9 million for the six months ended June 30, 2026. Over the same period, the average balance of savings accounts decreased from $77.4 million to $77.1 million, and the average balance of money market accounts decreased from $21.4 million to $20.4 million.

Current wording

Net Interest Income*.* Net interest income increased $1.6 million, or 16.9%, to $11.0 million for the nine months ended September 30, 2026, compared to $9.4 million for the nine months ended September 30, 2025. The increase reflects the increase in the interest rate spread to 2.44% for the nine months ended September 30, 2026, from 2.00% for the nine months ended September 30, 2025, while average net interest-earning assets increased $4.2 million period-to-period. The net interest margin increased to 2.92% for the nine months ended September 30, 2026, from 2.51% for the nine months ended September 30, 2025. The average yield on interest-earning assets increased from 4.36% for the nine months ended September 30, 2025, to 4.58% for the nine months ended September 30, 2026. The average rate paid on interest-bearing liabilities decreased from 2.36% for the nine months ended September 30, 2025, to 2.14% for the nine months ended September 30, 2026, primarily due to a decrease in the average balance of certificates of deposit from $242.1 million for the nine months ended September 30, 2025, to $240.2 million for the nine months ended September 30, 2026. Over the same period, the average balance of savings accounts decreased from $77.4 million to $76.3 million, and the average balance of money market accounts decreased from $21.2 million to $20.0 million.

Previous wording

Provision for Credit Losses*.*The provision for credit losses on loans was $-0- for the six months ended June 30, 2026 and 2025. The allowance for credit losses on loans represented 0.43% of total loans at June 30, 2026 and 0.45% of total loans at June 30, 2025.

Current wording

Provision for Credit Losses*.*The provision for credit losses on loans was $-0- for the nine months ended September 30, 2026 and 2025. The allowance for credit losses on loans represented 0.42% of total loans at September 30, 2026 and 0.45% of total loans at September 30, 2025.

Previous wording

Noninterest Income*.* Noninterest income totaled $470,000 for the six months ended June 30, 2026, a decrease of $3.5 million, or 88.2%, from $4.0 million for the six months ended June 30, 2025. A $3.5 million gain on bank owned life insurance proceeds was recorded during the six months ended June 30, 2025, while no such gain was recorded during the six months ended June 30, 2026 resulting in the majority of the decrease.

Current wording

Noninterest Income*.* Noninterest income totaled $707,000 for the nine months ended September 30, 2026, a decrease of $3.5 million, or 83.2%, from $4.2 million for the nine months ended September 30, 2025. A $3.5 million gain on bank owned life insurance proceeds was recorded during the nine months ended September 30, 2025, while no such gain was recorded during the nine months ended September 30, 2026 resulting in the majority of the decrease.

Previous wording

Noninterest Expense*.*Noninterest expense decreased $362,000, or 9.5%, to $3.5 million for the three months ended June 30, 2026, compared to $3.8 million for the three months ended June 30, 2025. The decrease was primarily due to a decrease in salaries and employee benefits of $471,000 or 18.6%, partially offset by an increase in occupancy and equipment expense of $19,000, or 4.0%, an increase in professional and legal fees of $6,000, or 7.9%, an increase in data processing expense of $36,000, or 11.3%, an increase advertising of $22,000, or 88.0%, and an increase in other expenses of $30,000, or 15.6%. The decrease in salaries and employee benefits is mainly from a death benefit paid out in 2025 to the intended beneficiaries of the late President and Chief Executive Officer from the proceeds of the bank owned life insurance.

Current wording

Noninterest Expense*.*Noninterest expense increased $280,000, or 2.8%, to $10.4 million for the nine months ended September 30, 2026, compared to $10.1 million for the nine months ended September 30, 2025. The increase was primarily due to an increase in occupancy and equipment of $83,000, or 5.9%, an increase in professional and legal fees of $18,000, or 7.2%, an increase in data processing of $119,000, or 12.3%, an increase in advertising of $73,000, or 104.3%, an increase in other expenses of $33,000, or 5.6%, partially offset by a decrease in salaries and employee benefits of $39,000, or 0.6%, and a decrease in charitable contributions of $12,000, or 52.2%.

Previous wording

Provision (Benefit) for Income Taxes*.*The provision (benefit) for income taxes increased by $275,000, or 387.3%, to $204,000 for the six months ended June 30, 2026, compared to ($71,000) for the six months ended June 30, 2025. While pretax income decreased by $2.2 million, or 68.9%, for the six months ended June 30, 2026, $3.5 million of the pretax income for the six months ended June 30, 2025, was from the non-taxable proceeds of the bank owned life insurance. The effective tax rate was 21% for both periods.

Current wording

Provision (Benefit) for Income Taxes*.*The provision for income taxes increased by $269,000, or 1281%, to $290,000 for the nine months ended September 30, 2026, compared to $21,000 for the nine months ended September 30, 2025. While pretax income decreased by $2.2 million, or 61.2%, for the nine months ended September 30, 2026, $3.5 million of the pretax income for the nine months ended September 30, 2025, was from the non-taxable proceeds of the bank owned life insurance. The effective tax rate was 21% for both periods.

Previous wording

Time deposits that meet or exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit of $250,000 at June 30, 2026 and December 31, 2025 were $50.1 million and $50.2 million, respectively. At June 30, 2026, certificates of deposit that are scheduled to mature on or before June 30, 2027 totaled $222.1 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may raise interest rates on deposits to attract new accounts or utilize Federal Home Loan Bank of Dallas advances, which may result in higher levels of interest expense.

Current wording

Time deposits that meet or exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit of $250,000 at September 30, 2026 and December 31, 2025 were $53.6 million and $50.2 million, respectively. At September 30, 2026, certificates of deposit that are scheduled to mature on or before September 30, 2027 totaled $231.3 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may raise interest rates on deposits to attract new accounts or utilize Federal Home Loan Bank of Dallas advances, which may result in higher levels of interest expense.

Previous wording

Based on collateral pledged, consisting of all shares of FHLB stock owned and the blanket pledge of approximately $218.5 million of its qualifying mortgage loans as of June 30, 2026, the Bank was eligible to borrow up to an additional $187.4 million as of June 30, 2026.

Current wording

Based on collateral pledged, consisting of all shares of FHLB stock owned and the blanket pledge of approximately $218.7 million of its qualifying mortgage loans as of September 30, 2026, the Bank was eligible to borrow up to an additional $186.1 million as of September 30, 2026.

Previous wording

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

Current wording

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our

Previous wording

Fifth District Bancorp, Inc. is a separate legal entity from Fifth District Savings Bank and must provide for its own liquidity to pay its operating expenses and other financial obligations. Its primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to the Company is governed by applicable bank regulations. At June 30, 2026, the Company (on an unconsolidated basis) had liquid assets of $17.3 million.

Current wording

Fifth District Bancorp, Inc. is a separate legal entity from Fifth District Savings Bank and must provide for its own liquidity to pay its operating expenses and other financial obligations. Its primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to the Company is governed by applicable bank regulations. At September 30, 2026, the Company (on an unconsolidated basis) had liquid assets of $16.8 million.

Previous wording

At June 30, 2026, we had $44.9 million of outstanding commitments to originate loans, which primarily consists of $17.2 million of remaining funds to be disbursed on construction loans in process and $18.7 million of unused balances of home equity lines of credit.

Current wording

At September 30, 2026, we had $33.3 million of outstanding commitments to originate loans, which primarily consists of $14.1 million of remaining funds to be disbursed on construction loans in process and $18.6 million of unused balances of home equity lines of credit.

Previous wording

The table above indicates that at June 30, 2026, we would have experienced a 24.02% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 15.82% increase in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.

Current wording

The table above indicates that at September 30, 2026, we would have experienced a 24.47% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 18.44% increase in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.

Previous wording

The table above indicates that as of June 30, 2026, we would have experienced a 16.96% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 8.59% increase in net interest income in the event of an instantaneous 200 basis point decrease in market interest rates.

Current wording

The table above indicates that as of September 30, 2026, we would have experienced a 17.44% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 9.28% increase in net interest income in the event of an instantaneous 200 basis point decrease in market interest rates.