WVS Financial Corp.
Annual Report 2023

Plain-text annual report

FFFIIINNNAAANNNCCCIIIAAALLL CORP. - THE HOLDING COMPANY OF WEST VIEW SAVINGS BANK - 2023 PROXY STATEMENT AND ANNUAL REPORT FINANCIAL C O R P O R A T I O N - THE HOLDING COMPANY OF WEST VIEW SAVINGS BANK - (412) 364-1911 September 15, 2023 Dear Stockholder: You are cordially invited to attend the annual meeting of stockholders of WVS Financial Corp. The meeting will be held at St. Brendan’s Episcopal Church, located at 2365 McAleer Road, Sewickley, Pennsylvania on Tuesday, October 31, 2023 at 10:00 a.m., Eastern time. The matters to be considered by stockholders at the annual meeting are described in the accompanying materials. Directions to St. Brendan’s Episcopal Church from West View Savings Bank’s main office at 9001 Perry Highway, Pittsburgh, Pennsylvania: • • • • Go north on Perry Highway for approximately 0.8 miles Turn left onto West Ingomar Road/Yellow Belt and go approximately 2.3 miles Turn right onto Rochester Road and go approximately 0.6 miles Turn left onto McAleer Road: St. Brendan’s Episcopal Church is approximately 0.1 miles on the right side at 2365 McAleer Road, Sewickley, Pennsylvania It is very important that your shares be voted at the annual meeting regardless of the number you own or whether you are able to attend the meeting in person. We urge you to mark, sign, and date your proxy card today and return it in the envelope provided, even if you plan to attend the annual meeting. This will not prevent you from voting in person, but will ensure that your vote is counted if you are unable to attend. You may also vote by telephone or over the internet by following the instructions on your proxy card. Your continued support of and interest in WVS Financial Corp. is sincerely appreciated. David J. Bursic President and Chief Executive Officer John A. Howard, Jr. Chairman of the Board Town of McCandless • 9001 Perry Highway, Pittsburgh, Pennsylvania 15237 WVS FINANCIAL CORP. 9001 Perry Highway Pittsburgh, Pennsylvania 15237 (412) 364-1911 __________________ NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held on October 31, 2023 __________________ NOTICE IS HEREBY GIVEN that an annual meeting of stockholders of WVS Financial Corp. (the “Company”) will be held at St. Brendan’s Episcopal Church, located at 2365 McAleer Road, Sewickley, Pennsylvania on Tuesday, October 31, 2023 at 10:00 a.m., Eastern time, for the following purposes, all of which are more completely set forth in the accompanying proxy statement: (1) (2) (3) To elect one director for a four-year term and until his successor is elected and qualified; To ratify the appointment of S.R. Snodgrass, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2024; and To transact such other business as may properly come before the meeting or any adjournment thereof. Management is not aware of any other such business. The board of directors has fixed August 25, 2023 as the voting record date for the determination of stockholders entitled to notice of and to vote at the annual meeting and at any adjournment thereof. Only those stockholders of record as of the close of business on that date will be entitled to vote at the annual meeting or at any such adjournment. By Order of the Board of Directors Michael R. Rutan Corporate Secretary Pittsburgh, Pennsylvania September 15, 2023 YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. YOU MAY VOTE BY TELEPHONE OR OVER THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON YOUR PROXY CARD. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF. WVS FINANCIAL CORP. __________________ PROXY STATEMENT __________________ ANNUAL MEETING OF STOCKHOLDERS OCTOBER 31, 2023 This proxy statement is furnished to holders of common stock of WVS Financial Corp. (the “Company”), the holding company of West View Savings Bank (the “Savings Bank”). Proxies are being solicited on behalf of the board of directors of the Company to be used at the annual meeting of stockholders to be held at St. Brendan’s Episcopal Church, located at 2365 McAleer Road, Sewickley, Pennsylvania on Tuesday, October 31, 2023 at 10:00 a.m., Eastern time, and at any adjournment thereof for the purposes set forth in the Notice of Annual Meeting of Stockholders. This proxy statement is first being mailed to stockholders on or about September 15, 2023. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on October 31, 2023. This proxy statement and the 2023 Annual Report to Stockholders are available at the website: www.proxyvote.com. The proxy solicited hereby, if properly signed and returned to the Company and not revoked prior to its use, will be voted in accordance with the instructions contained therein. You may also vote by telephone or over the internet by following the instructions on your proxy card. If no contrary instructions are given, each proxy received will be voted in the manner recommended by the board of directors as described below and, upon the transaction of such other business as may properly come before the meeting, in accordance with the best judgment of the persons appointed as proxies. Any stockholder giving a proxy has the power to revoke it at any time before it is exercised by (i) filing with the Secretary of the Company written notice thereof (Corporate Secretary, WVS Financial Corp., 9001 Perry Highway, Pittsburgh, Pennsylvania 15237); (ii) submitting a duly-executed proxy bearing a later date; or (iii) appearing at the annual meeting and giving the Secretary notice of his or her intention to vote in person. Proxies solicited hereby may be exercised only at the annual meeting and any adjournment thereof and will not be used for any other meeting. VOTING Only stockholders of record of the Company at the close of business on August 25, 2023 (the “record date”) are entitled to notice of and to vote at the annual meeting and at any adjournment thereof. On the record date, there were 1,732,788 shares of common stock of the Company issued and outstanding and the Company had no other class of equity securities outstanding. Each share of common stock is entitled to one vote at the annual meeting on all matters properly presented at the meeting. The presence in person or by proxy of at least a majority of the issued and outstanding shares of common stock entitled to vote is necessary to constitute a quorum at the annual meeting. Directors are elected by a plurality of the votes cast with a quorum present. The nominee for director receiving the most votes will be elected as a director. The affirmative vote of a majority of the total votes present, in person or by proxy, at the annual meeting is required for approval of the proposal to ratify the Company’s independent registered public accounting firm for fiscal 2024. If your shares are held in “street name,” your broker may not vote on certain matters if you do not furnish instructions for such proposals. You should use the voting instruction form provided by the institution that holds your shares to instruct your broker to vote your shares or else your shares may not be voted or may be considered “broker non-votes.” Broker non-votes are shares held by brokers or nominees as to which voting instructions have not been received from the beneficial owners or the persons entitled to vote those shares and the broker or nominee does not have the discretionary voting power under rules applicable to broker-dealers. Under these rules, the proposal to elect directors is not an item which brokerage firms may vote in their discretion on behalf of their clients if such clients 1 have not furnished voting instructions. Your broker may vote in his or her discretion on the ratification of the appointment of our independent registered public accounting firm for fiscal 2024 if you do not furnish instructions. Abstentions will be counted for purposes of determining the presence of a quorum at the annual meeting. Because of the required votes, abstentions and broker non-votes will have no effect on the voting for the election of directors. However, abstentions will have the same effect as a vote against the proposal to ratify the appointment of the Company’s independent registered public accounting firm for fiscal 2024. INFORMATION WITH RESPECT TO THE NOMINEE FOR DIRECTOR, DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS Election of Directors The articles of incorporation of the Company provide that the board of directors of the Company shall be divided into four classes which are as equal in number as possible, and that members of each class of directors are to be elected for a term of four years. The number of directors currently authorized under our bylaws is five. One class is to be elected annually. Stockholders of the Company are not permitted to cumulate their votes for the election of directors. At the annual meeting, stockholders of the Company will be asked to elect one director for a four-year term and until his successor is elected and qualified. The nominee was selected by the board of directors and approved by the independent members of the board. The nominee currently serves as a director. There are no arrangements or understandings between the person named and any other person pursuant to which such person was selected as a nominee for election as a director at the annual meeting. The nominee for director is not related to any other director or executive officer of the Company by blood, marriage or adoption. Unless otherwise directed, each proxy executed and returned by a stockholder will be voted for the election of the nominee for director listed below. If the person named as nominee should be unable or unwilling to stand for election at the time of the annual meeting, the proxy will nominate and vote for any replacement nominee recommended by the board of directors. At this time, the board of directors knows of no reason why the nominee listed below may not be able to serve as a director if elected. The person receiving the greatest number of votes of the holders of common stock represented in person or by proxy at the annual meeting will be elected as a director of the Company. The following tables present information concerning the nominee for director of the Company and each director whose term continues, including their tenure as a director of the Company. Nominee for Director For a Four-Year Term Expiring in 2027 Name Age(1) Principal Occupation During the Past Five Years Lawrence M. Lehman 71 Director; Retired Office Manager, Dinnin & Parker Associates, an insurance agency in Oakmont, Pennsylvania; former owner/sole proprietor of Newton-Lehman Agency, an insurance agency located in Pittsburgh, Pennsylvania. located Mr. Lehman’s background as a business owner in the Company’s market area positions him as well qualified to serve as a director. Director Since 2002 The Board of Directors recommends you vote FOR election of the nominee for Director. 2 Director Since 1998 Director Since 2015 2013 Members of the Board of Directors Continuing in Office Director Whose Term Expires in 2024 Name David J. Bursic Age(1) 61 Principal Occupation During the Past Five Years Director; President and Chief Executive Officer of the Company and the Savings Bank since June 1998; prior thereto served as Senior Vice President, Treasurer and Chief Financial Officer of the Company and the Savings Bank since 1992 and in various positions with the Company and the Savings Bank since 1985. Mr. Bursic serves as a special advisor to the board of North Hills Community Outreach, a non- profit organization. Mr. Bursic also serves as a member of the Superintendent’s Business Roundtable for the North Allegheny School District and as a participant on the Federal Reserve Bank of Atlanta’s Decision-Maker Panel. Mr. Bursic’s service as President and Chief Executive Officer, his prior positions with the Company, extensive experience in the local banking industry and involvement in business and civic organizations in the Savings Bank’s market area provide the board of directors valuable insight regarding the business and operations of the Company. Directors Whose Term Expires in 2025 Name Age(1) Principal Occupation During the Past Five Years Edward F. Twomey III 69 Joseph W. Unger 62 Senior Vice President – Institutional Sales at InspereX LLC, an underwriter and distributor of fixed income securities and risk management investment solutions located in Delray Beach, Florida. Previously, Mr. Twomey was Senior Vice President at Samuel A. Ramirez & Co., where he served as Senior Vice President for their Financial Institutions Group. Mr. Twomey’s broad financial experience provides valuable industry expertise and awareness to the Board of Directors. Director; Retired; Former President of White Heating, Inc., a heating, cooling and air products and services provider located in Pittsburgh, Pennsylvania, since 1978. In addition, Mr. Unger has served as an Advisory Board Member of the A.W. Beattie Career Center, a trade school located in Pittsburgh, Pennsylvania, since 1994 and formerly served in various positions, including President, for the Air Conditioning Contractors of America from 1989 to 1996. Mr. Unger also served as a member of the Builders Association of Metropolitan Pittsburgh, the North Suburban Builders Association, the Better Business Bureau and the North Pittsburgh Chamber of Commerce. Mr. Unger’s extensive business experience and service in the local market make him well qualified to serve as a director of the Company. 3 Name John A. Howard, Jr. Age(1) 69 Director Whose Term Expires in 2026 Principal Occupation During the Past Five Years Chairman of the Board; Retired. Formerly served as Senior Vice President, Chief Financial Officer, Secretary and Treasurer of Laurel Capital Group, Inc. and its wholly owned subsidiary, Laurel Savings Bank, Allison Park, Pennsylvania until September 2006. Mr. Howard brings valuable audit and public company reporting experience to the board from his prior service as Chief Financial Officer for two publicly traded holding companies of financial institutions in the greater Pittsburgh area. Director Since 2014 ______________ (1) As of June 30, 2023. Independence of the Company’s Board of Directors It is the policy of the board of directors of the Company that a substantial majority of its directors be independent of the Company within the meaning of applicable laws and regulations. Our board of directors has affirmatively determined that a majority of our directors are independent. The current independent directors are Messrs. Howard, Lehman, Twomey and Unger. Our board of directors also has affirmatively determined that each member of the audit committee and the compensation committee of the board of directors is independent within the meaning of applicable laws and regulations. Nominations Process The board of directors actively oversees the business and management of the Company through regular board and committee meetings. The board of directors has established certain committees to address recurring business matters such as audit, compensation and finance. Based upon the infrequent business need to add new directors, the Company’s board of directors chooses to address director nominations at the board level and does not have a standing nominating committee. The Company’s board of directors considers and evaluates nominees for the election of directors, subject to approval of a majority of the independent members of the board. As discussed above, each of the current independent members of the board is independent. During fiscal 2023, the board met once in connection with nominations for director. The board of directors considers candidates for director suggested by its members, as well as management and stockholders. A stockholder who desires to recommend a prospective nominee for the board should notify the Company’s Secretary or the Chairman of the Board in writing with whatever supporting material the stockholder considers appropriate. The board also considers whether to nominate any person nominated pursuant to the provision of the Company’s articles of incorporation relating to stockholder nominations, which is described under “Stockholder Nominations” below. The board of directors has the authority and ability to retain a search firm to identify or evaluate potential nominees if it so desires. Once the board of directors has identified a prospective nominee, the board makes an initial determination as to whether to conduct a full evaluation of the candidate. This initial determination is based on whatever information is provided to the board with the recommendation of the prospective candidate, as well as the board member’s own knowledge of the prospective candidate, which may be supplemented by inquiries to the person making the recommendation or others. 4 Stockholder Nominations Article 7.F of the Company’s articles of incorporation governs nominations for election to the board of directors and requires all such nominations, other than those made by the board, to be made at a meeting of stockholders called for the election of directors, and only by a stockholder who has complied with the notice provisions in that section. Stockholder nominations must be made pursuant to timely notice in writing to the Secretary of the Company. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Company not later than 60 days prior to the anniversary date of the immediately preceding annual meeting. Each written notice of a stockholder nomination shall set forth: (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director and as to the stockholder giving the notice (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of Company stock which are beneficially owned by such person on the date of such stockholder notice, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies with respect to nominees for election as directors, pursuant to Regulation 14A under the Securities Exchange Act of 1934, and would be required to be filed on Schedule 14B with the Securities and Exchange Commission, if the Company were subject to such regulations (or any successors of such items or schedules); and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Company’s books, of such stockholder and any other stockholders known by such stockholder to be supporting such nominees and (ii) the class and number of shares of Company stock which are beneficially owned by such stockholder on the date of such stockholder notice and, to the extent known, by any other stockholders known by such stockholder to be supporting such nominees on the date of such stockholder notice. The presiding officer of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedures. Committees and Meetings of the Board of the Company and the Savings Bank Regular meetings of the board of directors of the Company are held on at least a quarterly basis. The board of directors of the Company held a total of 4 regular meetings during the fiscal year ended June 30, 2023. Audit Committee. The board of directors of the Company has established an audit committee which consists of Messrs. Howard (Chairman), Lehman, Twomey and Unger, all of whom are independent outside directors. The audit committee meets with the Company’s internal auditor, engages the Company’s external independent registered public accounting firm and reviews their reports. The audit committee meets at least quarterly and met four times during fiscal 2023. The board of directors has adopted an audit committee charter. The audit committee charter is available online at www.wvsbank.com. Compensation Committee. The compensation committee of the board of directors determines compensation for executive officers. During the fiscal year ended June 30, 2023, the members of the committee were Messrs. Howard (Chairman), Lehman, Twomey and Unger. The compensation committee met once during fiscal 2023. The compensation committee has not adopted a written charter. Finance Committee. The finance committee of the Company consists of Messrs. Lehman (Chairman), Howard, Twomey and Unger and from management, Mr. Bursic. The finance committee, which approves all securities purchased by the Company and the Savings Bank, meets at least quarterly and met 12 times during fiscal 2023. The board of directors of the Company has also established an executive committee. The board of directors of the Savings Bank meets on a monthly basis and may have additional special meetings upon the request of the President or a majority of the directors. During the fiscal year ended June 30, 2023, the board of directors of the Savings Bank met 12 times. The board of directors of the Savings Bank has established various committees, some of which act jointly with the Company’s respective similar board committee. These committees include: an audit committee, a classification of assets review committee, a Community Reinvestment Act committee, a compensation committee, an executive committee, a finance committee, a loan committee and a nominating committee. 5 Loan Committee. The loan committee of the Savings Bank consists of Messrs. Bursic from management (Chairman), Howard, Lehman, Twomey and Unger. The loan committee, which approves all loans originated by the Savings Bank, meets monthly and met 12 times during fiscal 2023. BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the beneficial ownership of the common stock as of the record date, and certain other information with respect to (i) the Company’s Employee Stock Ownership Plan, (ii) each director and nominee for director of the Company, (iii) executive officers of the Company, and (iv) all directors, nominees for director and executive officers of the Company as a group. Name of Beneficial Owner or Number of Persons in Group WVS Financial Corp. Employee Stock Ownership Plan 9001 Perry Highway Pittsburgh, Pennsylvania 15237 Amount and Nature of Beneficial Ownership as of August 25, 2023(1)(2) 259,982(3) Percent of Common Stock 15.0% Directors and nominees: David J. Bursic John A. Howard, Jr. Lawrence M. Lehman Edward F. Twomey III Joseph W. Unger Executive officers: Michael R. Rutan M Robert B. Kastan Mary Magestro-Johnston All directors, nominee for director and executive officers as a group (8 persons) _________________ * Less than 1% of the outstanding common stock. 218,818(4) 7,849(5) 7,408(6) 13,167(7) 2,000 8,466(8) 0(9) 388(10) 258,096(11) 12.6 * * * * * -- * 14.9 (1) (2) (3) (4) Based upon records of the Company’s transfer agent and information furnished by the respective shareholder. Shares of common stock are deemed to be beneficially owned by a person if he or she directly or indirectly has or shares (i) voting power, which includes the power to vote or to direct the voting of the shares, or (ii) investment power, which includes the power to dispose or to direct the disposition of the shares. Unless otherwise indicated, the named beneficial owner has sole voting and dispositive power with respect to the shares. A person is deemed to have beneficial ownership of any shares of common stock which may be acquired within 60 days of the record date. Mr. Howard is the trustee of the trust created pursuant to the WVS Financial Corp. Employee Stock Ownership Plan (“ESOP”). The indicated holdings represent shares held in the ESOP, of which 133,617 shares have been allocated to participating employees and generally will be voted at the direction of the participants and 126,365 shares are unallocated and are generally voted by the trustee in his discretion. Includes 83,614 shares held jointly with Mr. Bursic’s wife, 41,646 shares held solely by Mr. Bursic, 9,738 shares held solely by Mr. Bursic’s wife, 200 shares held by Mr. Bursic’s children, 1,731 shares held in the Company’s deferred compensation plan for the account of Mr. Bursic, 11,798 shares held in an individual 6 (5) (6) (7) (8) (9) (10) (11) retirement account (“IRA”) for the account of Mr. Bursic and 70,091 shares held in the ESOP for the account of Mr. Bursic. The indicated shares are held jointly by Mr. Howard and his wife. Mr. Howard serves as trustee for the ESOP. Does not include the shares held in the ESOP, which Mr. Howard disclaims beneficial ownership of and have been allocated to participating employees and will generally be voted at the direction of the participant. Includes 2,613 shares held in an IRA for the account of Mr. Lehman’s wife’s IRA and 4,795 shares held in Mr. Lehman’s IRA. Includes 5,540 shares held in an IRA for the account of Mr. Twomey. The indicated shares are held in the ESOP for the account of Mr. Rutan. Mr. Kastan began service with the Company on June 20, 2023. Ms. Magestro-Johnston left the Company effective June 2, 2023. Shares owned are 20% vested. Includes on behalf of directors and executive officers as a group 76,670 shares held in the ESOP and 1,731 shares held in the Company’s deferred compensation plan. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The audit committee of the board of directors of the Company has appointed S.R. Snodgrass, P.C., independent certified public accountants, to perform the audit of the Company’s financial statements for the year ending June 30, 2024, and directed that the selection of the independent registered public accounting firm be submitted for ratification by the stockholders at the annual meeting. The Company has been advised by S.R. Snodgrass that neither that firm nor any of its associates has any relationship with the Company or its subsidiaries other than the usual relationship that exists between independent certified public accountants and clients. S.R. Snodgrass will have one or more representatives at the annual meeting who will have an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions. Relationship with Independent Public Accounting Firm The audit committee of the board of directors has appointed S.R. Snodgrass, P.C. as the independent registered public accounting firm to audit the Company’s financial statements for the year ending June 30, 2024. The audit committee considered the compatibility of the non-audit services provided to the Company by S.R. Snodgrass during fiscal 2023 on the independence of S.R. Snodgrass from the Company in evaluating whether to appoint S.R. Snodgrass to perform the audit of the Company’s financial statements for the year ending June 30, 2024. The audit committee selects the Company’s independent registered public accounting firm and pre-approves all audit services to be provided by it to the Company. The audit committee also reviews and pre-approves all audit- related, tax and all other services rendered by our independent registered public accounting firm in accordance with the audit committee’s charter and policy on pre-approval of audit-related, tax and other services. In its review of these services and related fees and terms, the audit committee considers, among other things, the possible effect of the performance of such services on the independence of our independent registered public accounting firm. Pursuant to its policy, the audit committee pre-approves certain audit-related services and certain tax services which are specifically described by the audit committee on an annual basis and separately approves other individual engagements as necessary. The pre-approval requirements do not apply to certain services if: (i) the aggregate amount of such services provided to the Company constitutes not more than five percent of the total amount of revenues paid by the Company to its independent registered public accounting firm during the year in which the services are provided; (ii) such services were not recognized by the Company at the time of the engagement to be other services; and (iii) such services are promptly brought to the attention of the committee and approved by the committee or by one or more members of the committee to whom authority to grant such approvals has been delegated by the committee prior to 7 the completion of the audit. The committee may delegate to one or more designated members of the committee the authority to grant required pre-approvals. The decisions of any member to whom authority is delegated to pre-approve an activity shall be presented to the full committee at its next scheduled meeting. The board of directors recommends that you vote FOR the ratification of the appointment of S.R. Snodgrass, P.C. as independent registered public accounting firm for the fiscal year ending June 30, 2024. STOCKHOLDER PROPOSALS Stockholder proposals may be brought before an annual meeting pursuant to Article 10D of the Company’s articles of incorporation, which provides that business at an annual meeting of stockholders must be (a) properly brought before the meeting by or at the direction of the board of directors, or (b) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Company not less than 60 days prior to the anniversary date of the immediately preceding annual meeting. A stockholder’s notice must set forth as to each matter the stockholder proposes to bring before an annual meeting (a) a brief description of the business desired to be brought before the annual meeting, (b) the name and address, as they appear on the Company’s books, of the stockholder proposing such business, (c) the class and number of shares of common stock of the Company which are beneficially owned by the stockholder and to the extent known, by any other stockholders known by such stockholder to be supporting such proposal, and (d) any financial interest of the stockholder in such proposal. Accordingly, stockholder proposals submitted under the Company’s articles of incorporation in connection with the next annual meeting of stockholders must be received by the Company no later than August 24, 2024. ANNUAL REPORTS A copy of the Company’s 2023 Annual Report to Stockholders, including the Company’s audited financial statements for the years ended June 30, 2023 and 2022 accompanies this proxy statement. Such annual report is not part of the proxy solicitation materials. OTHER MATTERS Management is not aware of any business to come before the annual meeting other than the matters described above in this proxy statement. However, if any other matters should properly come before the meeting, it is intended that the proxies solicited hereby will be voted with respect to those other matters in accordance with the judgment of the persons voting the proxies. The cost of the solicitation of proxies will be borne by the Company. The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending the proxy materials to the beneficial owners of the Company’s common stock. In addition to solicitations by mail, directors, officers and employees of the Company may solicit proxies personally or by telephone without additional compensation. 8 WVS FINANCIAL CORP. 2023 ANNUAL REPORT TABLE OF CONTENTS Page Number Shareholders' Letter Selected Consolidated Financial and Other Data Independent Auditors’ Report Consolidated Balance Sheet Consolidated Statement of Income Consolidated Statement of Comprehensive Income (Loss) Consolidated Statement of Changes in Stockholders' Equity Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements Corporate Information 1 3 5 7 8 9 10 11 12 [This page intentionally left blank] FINANCIAL C O R P O R A T I O N (412) 364-1911 - THE HOLDING COMPANY OF WEST VIEW SAVINGS BANK - To Our Shareholders: During fiscal 2023, West View Savings Bank (the “Bank”) and the banking industry faced two significant challenges:   Sustained increases in the targeted range for the federal funds rate with associated changes to market interest rates; and The failure of three large banks during March 2023 and May 2023 – Silicon Valley Bank, Signature Bank and First Republic Bank – which caused turmoil in the financial markets. During fiscal 2023, the Federal Reserve Open Market Committee (FOMC) increased its targeted range of the federal funds rate from 1.50% to 1.75% at June 30, 2022 to 5.00% - 5.25% at June 30, 2023. The FOMC further increased its targeted federal funds rate in July 2023 to a range of 5.25% - 5.50% - a 22 year high. The stated purpose of these increases is to reduce the rate of inflation being felt by all of us. The good news is that the rate of consumer price inflation (CPI) has been reduced from 9.1% in June 2022 to 3.0% in June 2023. However, the FOMC’s stated target for inflation is 2%. While the difference between 3% and 2% may not sound like much, the FOMC may continue with another ¼% rate hike between now and December 2023 and then hold the targeted federal funds rate for some period of time in order to reach its 2% inflation target. While higher market interest rates have been welcomed for savers and investors, increased mortgage rates have diminished the demand for mortgage loans. The combination of higher mortgage rates and the reduced supply of existing homes available for sale have reduced the Bank’s overall loan volumes in fiscal 2023. In response to the three large bank failures, the Bank significantly increased its level of liquid assets. This includes cash on hand, deposits with the Federal Reserve Bank and the Federal Home Loan Bank of Pittsburgh and insured deposits with other financial institutions in order to ensure that our customers’ liquidity needs were met. Since the Bank’s retail deposits over $250,000 are well under 3% of total deposits, we experienced no significant crisis related withdrawals. The Bank also had no “brokered” deposits during the liquidity crisis or at June 30, 2023. During fiscal 2023, Company net income increased 37.3% to $1.71 million or $1.02 share, as compared to $1.24 million or $0.72 per share in fiscal 2022. During fiscal 2023, we maintained our $0.40 per share cash dividend and repurchased 102,483 shares of our common stock. Most importantly, the Bank’s Board of Directors is committed to maintaining the “well-capitalized” status of West View Savings Bank. Town of McCandless • 9001 Perry Highway, Pittsburgh, Pennsylvania 15237 1Also during fiscal 2023, we completed our first full fiscal year of trading on the OTCQX Market under our original trading symbol of WVFC. We are very pleased with the move to the OTCQX Market in terms of liquidity, trading volume, the narrow bid / ask spread on our stock as well as the cost savings as a result of no longer having to comply with the SEC and NASDAQ reporting requirements. We thank our market logging onto makers www.otcmarkets.com to see bid / asks by market maker, trading volumes and other information about the Company. their diligence and attention listing. Please consider to our Company for We would also like to thank you for investing in WVS Financial Corp., our loyal customers for banking with West View Savings Bank and our employees for their continued dedication and hard work each and every day. David J. Bursic President and Chief Executive Officer John A. Howard, Jr. Chairman of the Board of Directors 2FIVE YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA Selected Financial Data: Total assets Net loans receivable Mortgage-backed securities Investment securities Deposit accounts FHLB advances – short-term fixed FHLB advances – short-term variable FHLB advances – long-term fixed FHLB advances – long-term variable Other borrowings Other short-term borrowings Stockholders' equity Non-performing assets, troubled debt restructurings and potential problem loans(1) Selected Operating Data: Interest income Interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Non-interest income Non-interest expense Income before income tax expense Income tax expense Net income Per Share Information: Basic earnings Diluted earnings Dividends per share Dividend payout ratio Book value per share at period end: Common Equity Tier I Equity Average shares outstanding: 2023 $362,839 73,138 186,426 65,076 137,707 10,664 107,000 - - 65,840 - 37,179 As of or For the Year Ended June 30, 2020 2021 2022 (Dollars in Thousands, except per share data) $362,777 76,487 127,559 139,718 151,174 167,208 - 5,000 - - - 36,759 $346,078 80,684 82,459 167,066 157,167 113,093 - 10,000 25,000 - - 38,389 $357,101 91,032 97,106 151,134 151,335 59,159 - 15,000 85,000 - 7,000 36,913 2019 $355,818 90,588 108,331 136,775 146,435 70,828 - 15,000 85,000 - - 36,049 - - - - 225 $13,063 7,532 5,531 $5,741 932 4,809 $5,754 891 4,863 $10,485 3,854 6,631 $12,054 4,872 7,182 (26) (69) (53) 70 80 5,555 365 3,642 2,278 570 $ 1,708 4,878 472 3,682 1,668 424 $ 1,244 4,916 475 3,650 1,741 445 $ 1,296 6,561 362 3,563 3,360 870 $ 2,490 7,102 415 3,790 3,727 932 $ 2,795 $ $ $ 1.02 1.02 0.40 39.17% $ $ $ 0.72 0.72 0.40 55.56% $ $ $ 0.74 0.74 0.40 54.05% $ $ $ 1.41 1.41 0.40 28.37% $ $ $ 1.57 1.57 0.44 28.03% $ $ 21.43 21.74 $ $ 20.01 20.63 $ $ 20.37 20.11 $ $ 19.36 19.65 $ $ 18.55 18.54 Basic Diluted 1,672,059 1,672,059 1,736,702 1,736,702 1,748,592 1,748,592 1,768,201 1,768,201 1,780,527 1,780,581 3FIVE YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA 2023 As of or For the Year Ended June 30, 2021 2022 2020 2019 Selected Operating Ratios(2): Average yield earned on interest- earning assets(3) Average rate paid on interest- bearing liabilities Average interest rate spread(4) Net interest margin(4) Ratio of interest-earning assets to interest-bearing liabilities Non-interest expense as a percent of average assets Return on average assets Return on average equity Ratio of average equity to average assets Branch offices at end of period Asset Quality Ratios(2): Non-performing and potential problem loans and troubled debt restructurings as a percent of net total loans(1) Non-performing assets as a percent of total assets(1) Non-performing assets, troubled debt restructurings and potential problem loans as a percent of total assets(1) Allowance for loan losses as a percent of total loans receivable Allowance for loan losses as a percent of non-performing loans(5) Charge-offs to average loans receivable outstanding during the period Capital Ratios(2): Common Equity Tier 1 risk-based capital ratio Tier 1 risk-based capital ratio Total risk-based capital ratio Tier 1 leverage capital ratio 3.69% 1.66% 1.82% 3.00% 3.53% 2.47 1.22 1.56 0.31 1.35 1.39 0.34 1.48 1.54 1.29 1.71 1.90 1.68 1.85 2.10 116.07 116.37 121.91 117.40 117.43 1.00 0.47 4.60 10.18 5 1.03 0.35 3.27 10.30 5 1.12 0.40 3.40 11.71 6 0.99 0.69 6.90 10.06 6 1.08 0.80 8.14 9.80 6 0.00% 0.00% 0.00% 0.00% 0.25% 0.00 0.00 0.00 0.00 0.06 0.00 0.64 0.00 0.64 0.00 0.70 0.00 0.68 0.06 0.60 NMF NMF NMF NMF 243.56 0.00 0.00 0.00 0.00 0.00 29.98% 29.98 30.35 10.35 18.94% 18.94 19.21 10.30 18.76% 18.76 19.06 11.71 18.55% 18.55 18.88 10.16 19.07% 19.07 19.38 10.20 ________________ (1) Non-performing assets consist of non-performing loans and real estate owned ("REO"). Non-performing loans consist of non-accrual loans and accruing loans greater than 90 days delinquent, while REO consists of real estate acquired through foreclosure and real estate acquired by acceptance of a deed in lieu of foreclosure. Potential problem loans include loans where management has some doubt as to the ability of the borrower to comply with present loan repayment terms. (2) Consolidated asset quality ratios and capital ratios are end of period ratios, except for charge-offs to average net loans. With the (3) (4) exception of end of period ratios, all ratios are based on average monthly balances during the indicated periods. Interest and yields on tax-exempt loans and securities (tax-exempt for federal income tax purposes) are shown on a fully taxable equivalent basis. Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted- average cost of interest-bearing liabilities, and net interest margin represents net interest income as a percent of average interest- earning assets. (5) NMF – No meaningful figure due to no non-performing loans. 4 INDEPENDENT AUDITOR’S REPORT Board of Directors and Stockholders WVS Financial Corp. Pittsburgh, Pennsylvania Opinion We have audited the accompanying consolidated financial statements of WVS Financial Corp. and subsidiary (the “Company”), which comprise the consolidated balance sheets as of June 30, 2023 and 2022; the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the years then ended; and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. 5 PITTSBURGH, PA PHILADELPHIA, PA WHEELING, WV STEUBENVILLE, OH 2009 Mackenzie Way • Suite 340 2100 Renaissance Blvd. • Suite 110 980 National Road 511 N. Fourth Street Cranberry Township, PA 16066 (724) 934-0344 King of Prussia, PA 19406 (610) 278-9800 Wheeling, WV 26003 (304) 233-5030 Steubenville, OH 43952 (304) 233-5030 S.R. Snodgrass, P.C. d/b/a S.R. Snodgrass, A.C. in West Virginia Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and, therefore, is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control- related matters that we identified during the audit. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Shareholders’ letter and Selected Consolidated Financial and Other Data, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or whether the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Cranberry Township, Pennsylvania September 8, 2023 6 WVS FINANCIAL CORP. CONSOLIDATED BALANCE SHEET (In thousands) ASSETS Cash and due from banks Interest-earning demand deposits Total cash and cash equivalents Certificates of deposit Investment securities available for sale (amortized cost of $47,551 and $131,164) Investment securities held to maturity (fair value of $16,923 and $9,345) Mortgage-backed securities available for sale (amortized cost of $1,962) Mortgage-backed securities held to maturity (fair value of $163,058 and $117,847) Net loans receivable (allowance for loan losses of $470 and $496) Accrued interest receivable Federal Home Loan Bank stock, at cost Premises and equipment (net) Bank owned life insurance Deferred tax assets (net) Other assets $ June 30, 2023 2022 2,690 $ 2,969 5,659 19,512 2,500 1,613 4,113 350 46,916 129,763 18,160 1,956 9,955 - 184,470 127,559 73,138 1,516 4,918 589 5,249 646 110 76,487 923 7,062 575 5,132 739 119 TOTAL ASSETS $ 362,839 $ 362,777 LIABILITIES Deposits Federal Home Loan Bank advances: short-term – fixed rate Federal Home Loan Bank advances: short-term – variable rate Federal Home Loan Bank advances: long-term – fixed rate Federal Reserve Bank: term funding Total advances and term funding Accrued interest payable Other liabilities TOTAL LIABILITIES STOCKHOLDERS' EQUITY Preferred stock, no par value; 5,000,000 shares authorized; none outstanding Common stock, par value $0.01; 10,000,000 shares authorized; 3,805,636 shares issued Additional paid-in capital Treasury stock (2,070,648 and 1,968,165 shares at cost) Retained earnings - substantially restricted Accumulated other comprehensive loss Unallocated Employee Stock Ownership Plan (“ESOP”) shares TOTAL STOCKHOLDERS' EQUITY $ 137,707 $ 10,664 107,000 - 65,840 183,504 1,739 2,710 325,660 151,174 167,208 - 5,000 - 172,208 314 2,322 326,018 - - 38 21,632 (31,171) 48,774 (541) 38 21,623 (29,815) 47,734 (1,143) (1,553) 37,179 (1,678) 36,759 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 362,839 $ 362,777 See accompanying notes to the consolidated financial statements. 7 WVS FINANCIAL CORP. CONSOLIDATED STATEMENT OF INCOME (In thousands, except share and per share data) 2023 Year Ended June 30, 2022 2021 INTEREST AND DIVIDEND INCOME Loans, including fees Investment securities Mortgage-backed securities Certificates of deposit Interest-earning demand deposits Federal Home Loan Bank stock Total interest and dividend income $ 2,671 $ 3,193 6,355 233 76 535 13,063 INTEREST EXPENSE Deposits Federal Home Loan Bank advances – short-term Federal Home Loan Bank advances – long-term – variable rate Federal Home Loan Bank advances – long-term – fixed rate Federal Reserve Bank – term funding Other short-term borrowings Total interest expense 322 6,455 - 40 715 - 7,532 2,796 $ 1,540 1,114 6 6 279 5,741 143 580 35 174 - - 932 3,148 1,582 782 15 - 227 5,754 298 119 129 344 - 1 891 NET INTEREST INCOME (CREDIT) PROVISION FOR LOAN LOSSES NET INTEREST INCOME AFTER (CREDIT) PROVISION FOR LOAN LOSSES 5,531 (26) 4,809 (69) 4,863 (53) 5,555 4,878 4,916 NONINTEREST INCOME Service charges on deposits Earnings on bank owned life insurance Investment securities (loss) gains Other than temporary impairment losses Net impairment losses recognized in earnings ATM fee income Other Total noninterest income NONINTEREST EXPENSE Salaries and employee benefits Occupancy and equipment Data processing Correspondent bank charges Federal deposit insurance premium ATM network expense Other Total noninterest expense INCOME BEFORE INCOME TAXES INCOME TAX EXPENSE NET INCOME EARNINGS PER SHARE: Basic Diluted AVERAGE SHARES OUTSTANDING: Basic Diluted See accompanying notes to the consolidated financial statements. 91 117 (4) - - 127 34 365 2,339 237 240 43 130 88 565 3,642 2,278 570 97 112 79 85 114 101 - - 142 42 472 2,316 282 240 39 96 82 627 3,682 1,668 424 (13) (13) 149 39 475 2,395 274 239 39 85 59 559 3,650 1,741 445 $ $ 1,708 $ 1,244 $ 1,296 1.02 $ 1.02 0.72 $ 0.72 0.74 0.74 1,672,059 1,672,059 1,736,702 1,736,702 1,748,592 1,748,592 8 WVS FINANCIAL CORP. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In thousands) 2023 Year Ended June 30, 2022 2021 NET INCOME $ 1,708 $ 1,244 $ 1,296 OTHER COMPREHENSIVE INCOME (LOSS) Investment securities available for sale not other-than- temporarily impaired: Gains (losses) arising during the year LESS: Income tax effect Losses (gains) recognized in earnings LESS: Income tax effect Unrealized holding gains (losses) on investment securities available for sale not other-than-temporarily impaired, net of tax Investment securities held to maturity other-than- temporarily impaired: Total losses Losses recognized in earnings Gains recognized in comprehensive income LESS: Income tax effect Accretion of other comprehensive gain on other- than-temporarily impaired securities held to maturity LESS: Income tax effect 756 (159) 597 (2,013) 423 (1,590) 1,424 (299) 1,125 4 (1) (101) 3 (79) 17 (101) (62) (101) 21 (80) 600 (1,652) 1,045 - - - - - - - - - - 13 13 - - - 3 (1) 9 (2) 16 (3) Unrealized holding gains on other-than-temporarily impaired securities held to maturity, net of tax 2 7 13 Other comprehensive income (loss) 602 (1,645) 1,058 COMPREHENSIVE INCOME (LOSS) $ 2,310 $ (401) $ 2,354 See accompanying notes to the consolidated financial statements. 9 WVS FINANCIAL CORP. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (In thousands, except share and per share data) Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings – Substantially Restricted Accumulated Other Comprehensive Income (loss) Unallocated ESOP Shares Total Balance June 30, 2020 $ 38 $ 21,577 $ (28,775) $ 46,590 $ (556) $ (1,961) $ 36,913 Net Income Other comprehensive income Purchase of treasury stock (22,590 shares) Amortization of unallocated ESOP shares Cash dividends declared ($0.40 per share) Balance June 30, 2021 Net income Other comprehensive loss Purchase of treasury stock (46,643 shares) Amortization of unallocated ESOP shares Cash dividends declared ($0.40 per share) Balance June 30, 2022 Net income Other comprehensive income Purchase of treasury stock (102,483 shares) Amortization of unallocated ESOP shares Cash dividends declared ($0.40 per share) Balance June 30, 2023 1,296 1,058 (344) 1,296 1,058 (344) 19 147 166 38 21,596 (29,119) (696) (700) 47,186 1,244 502 (1,814) (1,645) (700) 38,389 1,244 (1,645) (696) 27 136 163 38 21,623 (29,815) (1,356) 9 (696) 47,734 1,708 (1,143) (1,678) 602 (696) 36,759 1,708 602 (1,356) 125 134 $ 38 $ 21,632 $ (31,171) $ (668) 48,774 $ (541) $ (1,553) $ (668) 37,179 See accompanying notes to the consolidated financial statements. 10 WVS FINANCIAL CORP. CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands) OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: (Credit) Provision for loan losses Depreciation Investment securities losses (gains) Net impairment loss recognized in earnings Amortization of discounts, premiums, and deferred loan fees, net Amortization of unallocated ESOP shares Deferred income taxes Increase (decrease) in accrued taxes Earnings on bank owned life insurance Increase in accrued employee benefits (Increase) in accrued interest receivable Increase (decrease) in accrued interest payable Increase in deferred director compensation payable Other, net Net cash provided by operating activities I NVESTING ACTIVITIES Available for sale: Purchase of investment securities Proceeds from repayments of investment securities Proceeds from sales and calls of investment securities Purchase of mortgage-backed securities Held to maturity: Purchase of investment securities Purchase of mortgage-backed securities Proceeds from repayments of investment securities Proceeds from repayments of mortgage-backed securities Purchases of certificates of deposit Maturities/redemptions of certificates of deposit Purchases of loans Net decrease in net loans receivable Purchase of Federal Home Loan Bank stock Redemption of Federal Home Loan Bank stock Acquisition of premises and equipment Net cash provided by (used for) investing activities F INANCING ACTIVITIES Net (decrease) increase in deposits Repayments of Federal Home Loan Bank long-term advances Net increase (decrease) in Federal Home Loan Bank short-term advances Net proceeds from other short-term borrowings Purchase of treasury stock Cash dividends paid Net cash provided by (used for) financing activities In C 2023 Year Ended June 30, 2022 2021 $ 1,708 $ 1,244 $ 1,296 (25) 67 4 - 4 134 (59) 45 (117) 207 (593) 1,425 83 (8) 2,875 (102,741) 186,260 - (1,957) (9,389) (61,539) 1,185 4,702 (19,162) - - 3,444 (7,651) 9,795 (81) 2,866 (13,467) (5,000) (49,544) 65,840 (1,356) (668) (4,195) (69) 88 (79) - 1,206 163 (60) 216 (112) 201 (174) 159 74 (305) 2,552 (8,393) 66,266 10,786 - - (83,448) 5,540 38,388 (100) 100 (3,722) 7,887 (13,839) 12,821 (6) (17,720) (5,993) (30,000) 54,115 - (696) (696) 16,730 (53) 71 (101) 13 677 166 22 (371) (114) 190 (5) (332) 73 76 1,608 (90,285) 80,801 6,398 - (12,744) (9,420) 750 64,093 (100) 1,590 (7,950) 18,222 (18,117) 18,637 (154) 11,721 5,832 (65,000) 53,934 (7,000) (344) (700) (13,278) 6,398 crease in cash and cash equivalents 1,546 1,562 51 ASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,113 2,551 2,500 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,659 $ 4,113 $ 2,551 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the year for: Interest Taxes See accompanying notes to the consolidated financial statements. $ 6,107 592 $ 773 385 $ 1,223 829 11 WVS FINANCIAL CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization WVS Financial Corp. (“WVS” or the “Company”) is a Pennsylvania-chartered unitary bank holding company which owns 100 percent of the common stock of West View Savings Bank (“West View” or the “Savings Bank”). The operating results of the Company depend primarily upon the operating results of the Savings Bank and, to a lesser extent, income from interest-earning assets such as investment securities. West View is a Pennsylvania-chartered, FDIC-insured stock savings bank conducting business from five offices in the North Hills suburbs of Pittsburgh. The Savings Bank’s principal sources of revenue originate from its portfolio of residential real estate and commercial mortgage loans as well as income from investment and mortgage-backed securities. The Company is supervised by the Board of Governors of the Federal Reserve System (“Federal Reserve”), while the Savings Bank is subject to regulation and supervision by the Federal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking and Securities. Basis of Presentation The consolidated financial statements include the accounts of WVS and its wholly owned subsidiary, West View. All intercompany transactions have been eliminated in consolidation. The accounting and reporting policies of WVS and West View conform to U.S. generally accepted accounting principles. The Company’s fiscal year-end for financial reporting is June 30. For regulatory and income tax reporting purposes, WVS reports on a December 31 calendar year basis. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the Consolidated Balance Sheet date and revenues and expenses for that period. Actual results could differ significantly from those estimates. Investment and Mortgage-Backed Securities Investment and mortgage-backed securities are classified at the time of purchase as securities held to maturity or securities available for sale based on management’s ability and intent. Investment and mortgage-backed securities acquired with the ability and intent to hold to maturity are stated at cost adjusted for amortization of premium and accretion of discount, which are computed using the level-yield method and recognized as adjustments of interest income. Amortization rates for mortgage-backed securities are periodically adjusted to reflect changes in the prepayment speeds of the underlying mortgages. Certain other investment securities have been classified as available for sale to serve principally as a source of liquidity. Unrealized holding gains and losses for available-for-sale securities are reported as a separate component of stockholders’ equity, net of tax, until realized. Realized securities gains and losses are computed using the specific identification method. Interest and dividends on investment and mortgage-backed securities are recognized as income when earned. Common stock of the Federal Home Loan Bank (the “FHLB”) represents ownership in an institution which is wholly owned by other financial institutions. This equity security is accounted for at cost and reported separately on the accompanying Consolidated Balance Sheet. 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Management systematically evaluates investment securities for other-than-temporary declines in fair value on at least a quarterly basis. This analysis requires management to consider various factors, which include: (1) duration and magnitude of the decline in value; (2) the credit rating of the issuer or issuers; (3) structure of the security; and (4) the Company’s intent to sell the security or whether it’s more likely than not that the Company would be required to sell the security before its anticipated recovery in market value. The Company retains an independent third party to assist it in the determination of fair values for its private- label collateralized mortgage obligations (“CMOs”). This valuation is meant to be a “Level Three” valuation as defined by ASC Topic 820, Fair Value Measurements and Disclosures. The valuation does not represent the actual terms or prices at which any party could purchase the securities. There is currently no active secondary market for private-label CMOs and there can be no assurance that any secondary market for private-label CMOs will develop. The Company believes that the private-label CMO portfolio had three other than temporary impairments at June 30, 2023. The Company believes that the data and assumptions used to determine the fair values are reasonable. The fair value calculations reflect relevant facts and market conditions. Events and conditions occurring after the valuation date could have a material effect on the private-label CMO segment’s fair value. The Company believes that the data and assumptions used to determine the fair values are reasonable. The fair value calculations reflect relevant facts and market conditions. Events and conditions occurring after the valuation date could have a material effect on the private-label CMO segment’s fair value. Net Loans Receivable Net loans receivable are reported at their principal amount, net of the allowance for loan losses and deferred loan fees. Interest on mortgage, consumer, and commercial loans is recognized on the accrual method. The Company’s general policy is to stop accruing interest on loans when, based upon relevant factors, the collection of principal or interest is doubtful, regardless of the contractual status. Interest received on nonaccrual loans is recorded as income or applied against principal according to management’s judgment as to the collectability of such principal. Loan origination and commitment fees, and all incremental direct loan origination costs, are deferred and recognized over the contractual remaining lives of the related loans on a level-yield basis. Allowance for Loan Losses The allowance for loan losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses charged to operations. The provision for loan losses is based on management’s periodic evaluation of individual loans, economic factors, past loan loss experience, changes in the composition and volume of the portfolio, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses, including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to changes in the near term. 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Allowance for Loan Losses (Continued) Impaired loans are commercial and commercial real estate loans for which it is probable the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The Company individually evaluates such loans for impairment and does not aggregate loans by major risk classifications. The definition of “impaired loans” is not the same as the definition of “nonaccrual loans,” although the two categories overlap. The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectability, while not classifying the loan as impaired if the loan is not a commercial or commercial real estate loan. Factors considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of impaired loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral. Mortgage loans on one-to-four family properties and all consumer loans are large groups of smaller- balance homogeneous loans and are measured for impairment collectively. Loans that experience insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis taking into consideration all circumstances surrounding the loan and the borrower, including the length of the delay, the borrower’s prior payment record, and the amount of shortfall in relation to the principal and interest owed. Real Estate Owned Real estate owned acquired through foreclosure is carried at the lower of cost or fair value minus estimated costs to sell. Costs relating to development and improvement of the property are capitalized, whereas costs of holding such real estate are expensed as incurred. Premises and Equipment Land is carried at cost, while premises and equipment are stated at cost, less accumulated depreciation. Depreciation is principally computed on the straight-line method over the estimated useful lives of the related assets, which range from 3 to 25 years for furniture and equipment and 7 to 50 years for building premises. Leasehold improvements are amortized over the shorter of their estimated useful lives or their respective lease terms, which range from 5 to 40 years. Expenditures for maintenance and repairs are charged against income as incurred. Costs of major additions and improvements are capitalized. Income Taxes Deferred tax assets and liabilities are computed based on the difference between the financial statement and the income tax basis of assets and liabilities using the enacted marginal tax rates. Deferred income taxes or benefits are based on the changes in the deferred tax asset or liability from period to period. The Company files a consolidated federal income tax return. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which such items are expected to be realized or settled. As changes in tax rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Earnings Per Share The Company provides dual presentation of basic and diluted earnings per share. Basic earnings per share are calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share are calculated by dividing net income available to common stockholders, adjusted for the effects of any dilutive securities, by the weighted-average number of common shares outstanding, adjusted for the effects of any dilutive securities. Comprehensive Income (Loss) The Company is required to present comprehensive income (loss) and its components in a full set of general-purpose financial statements for all periods presented. Other comprehensive income is composed exclusively of net unrealized holding gains (losses) on its available-for-sale securities portfolio, and the net non-credit component of other-than-temporary impairment on its held-to-maturity private-label CMO portfolio. Cash Flow Information Cash and cash equivalents include cash and due from banks and interest-earning demand deposits with original maturities of 90 days or less. Cash flow from loans, deposits, and short-term borrowings are reported net. Reclassification of Comparative Figures Certain comparative amounts for prior years have been reclassified to conform to current-year presentations. Such reclassifications did not affect net income or stockholders’ equity. 2. REVENUE RECOGNITION-NON INTEREST INCOME The main types of noninterest income are as follows: service charges on deposit accounts - the Company has contracts with its deposit customers where fees are charged if certain parameters are not met. These agreements can be cancelled at any time by either the Company or the deposit customer. Revenue from these transactions is recognized on a monthly basis as the Company has an unconditional right to the fee consideration. The Company also has transaction fees related to specific transactions or activities resulting from a customer request or activity that include overdraft fees, online banking fees, interchange fees, ATM fees and other transaction fees. All of these fees are attributable to specific performance obligations of the Company where the revenue is recognized at a defined point in time upon the completion of the requested service/transaction. 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. EARNINGS PER SHARE The following table sets forth the computation of the weighted-average common shares used to calculate basic and diluted earnings per share for the fiscal years ended June 30. 2023 2022 2021 Weighted-average common shares issued 3,805,636 3,805,636 3,805,636 Average treasury stock shares (2,001,290) (1,926,746) (1,904,948) Average unallocated ESOP shares (132,287) (142,188) (152,096) Weighted-average common shares and common stock equivalents used to calculate basic earnings per share Additional common stock equivalents (stock options) used to calculate diluted earnings per share Weighted-average common shares and common stock equivalents used to calculate diluted earnings per share 1,672,059 1,736,702 1,748,592 - - - 1,672,059 1,736,702 1,748,592 There are no convertible securities that would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as presented on the Consolidated Statement of Income is used. The unallocated shares controlled by the ESOP are not considered in the weighted-average shares outstanding until the shares are committed for allocation to an employee’s individual account. 4. CERTIFICATES OF DEPOSIT The investment in interest-earning certificates of deposit as of June 30, 2023 and 2022, by contractual maturity, is as follows: (Dollars in Thousands) 2023 2022 Due in 1 year or less Due after 1 year through 5 years $ $ 12,247 7,265 19,512 $ $ 350 - 350 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. INVESTMENT SECURITIES The amortized cost, gross unrealized gains and losses, and fair values of investments are as follows: 2023 AVAILABLE FOR SALE U.S. government agency securities Corporate debt securities Foreign debt securities 1 Obligations of states and political subdivisions Amortized Cost Gross Gross Unrealized Unrealized Gains Losses (Dollars in Thousands) Fair Value $ 3,195 $ - $ 34,912 8,910 534 33 7 - (296) $ (290) (35) 2,899 34,655 8,882 (54) 480 Total $ 47,551 $ 40 $ (675) $ 46,916 Amortized Cost Gross Gross Unrealized Unrealized Gains Losses (Dollars in Thousands) Fair Value 2023 HELD TO MATURITY U.S. government agency securities Obligations of states and political subdivisions $ 17,140 $ - $ (1,227) $ 15,913 1,020 - (10) 1,010 Total $ 18,160 $ - $ (1,237) $ 16,923 Amortized Cost Gross Gross Unrealized Unrealized Losses Gains (Dollars in Thousands) Fair Value 2022 AVAILABLE FOR SALE U.S. government agency securities Corporate debt securities Foreign debt securities 1 Obligations of states and political subdivisions $ 3,195 $ - $ 100,246 27,005 718 7 1 - (197) $ (900) (262) 2,998 99,353 26,744 (50) 668 Total $ 131,164 $ 8 $ (1,409) $ 129,763 __________________________ 1 U.S. dollar-denominated investment-grade corporate bonds of large foreign corporate issuers. 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. INVESTMENT SECURITIES (Continued) Amortized Cost Gross Gross Unrealized Unrealized Gains Losses (Dollars in Thousands) Fair Value 2022 HELD TO MATURITY U.S. government agency securities Obligations of states and political subdivisions Total $ $ 7,750 $ - $ (616) $ 7,134 2,205 6 - 2,211 9,955 $ 6 $ (616) $ 9,345 There were no sales of investments during the fiscal year 2023. During fiscal year 2022, the Company recorded gross realized investment securities gains of $79 thousand and received proceeds from sales of investment securities of $10.8 million. During fiscal year 2021, the Company recorded gross realized investment securities gains of $101 thousand and received proceeds from sales of investment securities of $6.4 million. The amortized cost and fair values of investment securities at June 30, 2023, by contractual maturity, are shown below. Expected maturities may differ from the contractual maturities because issuers may have the right to call securities prior to their final maturities. Due in one year or less Due after Due after one through five through five years ten years Due after ten years Total (Dollars in Thousands) AVAILABLE FOR SALE Amortized cost Fair value Weighted-average yield HELD TO MATURITY Amortized cost Fair value Weighted-average yield $ $ $ $ 39,786 39,498 4.00% 1,020 1,010 3.52% $ $ 7,765 7,418 3.58% 10,390 10,016 3.75% $ $ - - - 6,750 5,897 1.50% $ $ - - - - - - 47,551 46,916 3.93% 18,160 16,923 2.90% At June 30, 2023, investment securities with amortized costs of $16.4 million and $123.6 million, and fair values of $15.0 million and $111.4 million, were pledged to secure borrowings with the Federal Home Loan Bank of Pittsburgh (“FHLB”) and the Federal Reserve Bank of Cleveland (“FRB”), respectively. At June 30, 2022, investment securities with amortized costs of $13.2 million and $18.3 million, and fair values of $12.3 million and $18.3 million, were pledged to secure borrowings with the FHLB and the FRB, respectively. 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 6. MORTGAGE-BACKED SECURITIES Mortgage-backed securities ("MBS") include mortgage pass-through certificates ("PCs") and collateralized mortgage obligations ("CMOs"). With a pass-through security, investors own an undivided interest in the pool of mortgages that collateralize the PCs. Principal and interest are passed through to the investor as they are generated by the mortgages underlying the pool. PCs and CMOs may be insured or guaranteed by Freddie Mac ("FHLMC"), Fannie Mae ("FNMA"), and the Government National Mortgage Association ("GNMA"). CMOs may also be privately issued with varying degrees of credit enhancements. A CMO reallocates mortgage pool cash flow to a series of bonds with varying stated maturities, estimated average lives, coupon rates, and prepayment characteristics. The Company’s CMO portfolio is comprised of two segments: CMOs backed by U.S. Government Agencies (“Agency CMOs”) and CMOs backed by single-family whole loans not guaranteed by a U.S. Government Agency (“Private-Label CMOs”). At June 30, 2023, the Company’s Agency CMOs totaled $184.2 million as compared to $127.2 million at June 30, 2022. The Company’s private-label CMOs totaled $290 thousand at June 30, 2023 as compared to $328 thousand at June 30, 2022. The $57.0 million net increase in the CMO segment of our portfolio was due to purchases of U.S. Government Agency CMOs totaling $61.5 million, which were partially offset by repayments on U.S. Government Agency securities totaling $4.7 million, and $36 thousand in repayments on the private-label CMOs. At June 30, 2023 and 2022, the Company’s entire MBS portfolio, including CMOs, was comprised of adjustable or floating rate investments. The Company has no investment in multi-family or commercial real estate based MBS. Due to prepayments of the underlying loans, and the prepayment characteristics of the CMO tranches, the actual maturities of the Company’s MBS are expected to be substantially less than the scheduled maturities. The Company retains an independent third party to assist it in the determination of a fair value for three of its private-label CMOs. This valuation is meant to be a “Level Three” valuation as defined by ASC Topic 820, Fair Value Measurements and Disclosures. The valuation does not represent the actual terms or prices at which any party could purchase the securities. There is currently no active secondary market for private-label CMOs and there can be no assurance that any secondary market for private-label CMOs will develop. The private-label CMO portfolio had three previously recorded other-than-temporary impairments (“OTTI”) at June 30, 2023. During the twelve months ended June 30, 2023, the Company had no additional credit impairment charges on its private-label CMO portfolio. The Company believes that the data and assumptions used to determine the fair values are reasonable. The fair value calculations reflect relevant facts and market conditions. Events and conditions occurring after the valuation date could have a material effect on the private-label CMO segment’s fair value. 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 6. MORTGAGE-BACKED SECURITIES (Continued) The amortized cost, unrealized gains and losses, and fair values of mortgage-backed securities are as follows: 2023 AVAILABLE FOR SALE Collateralized mortgage obligations: Agency Total 2023 HELD TO MATURITY Collateralized mortgage obligations: Agency Private-label Total 2022 HELD TO MATURITY Collateralized mortgage obligations: Agency Private-label Total Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (Dollars in Thousands) Fair Value $ $ 1,962 $ 1,962 $ - - $ $ (6) (6) $ $ 1,956 1,956 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (Dollars in Thousands) Fair Value $ 184,180 $ 290 12 $ 178 (21,602) $ 162,590 468 - $ 184,470 $ 190 $ (21,602) $ 163,058 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (Dollars in Thousands) Fair Value $ 127,231 $ 328 10 $ 74 (9,796) $ 117,445 402 - $ 127,559 $ 84 $ (9,796) $ 117,847 20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) MORTGAGE-BACKED SECURITIES (Continued) The amortized cost and fair value of mortgage-backed securities at June 30, 2023, by contractual maturity, are shown below. Expected maturities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Due in one year or less Due after one through five years Due after five through ten years (Dollars in Thousands) Due after ten years Total AVAILABLE FOR SALE Amortized cost Fair value $ Weighted average yield HELD TO MATURITY Amortized cost Fair value $ - $ - - 1,962 $ 1,956 5.29% - $ - - - $ - - 1,962 1,956 5.29% 3 $ 3 5.58% - $ - - 1,566 $ 1,552 4.84% 182,901 $ 161,503 4.62% 184,470 163,058 4.52% At June 30, 2023, mortgage-backed securities with amortized costs of $101.0 million and fair values of $91.2 million were pledged to secure borrowings with the FHLB and FRB. Of the securities pledged, $35.9 million of fair value was excess collateral. Excess collateral is maintained to support future borrowings and may be withdrawn by the Company at any time. At June 30, 2022, mortgage-backed securities with an amortized cost of $127.2 million and fair values of $117.5 million, were pledged to secure borrowings with the FHLB and public deposits. Of the securities pledged, $8.3 million of fair value was excess collateral. 21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following tables present the changes in accumulated other comprehensive income (loss) by component for the three years ended June 30, 2023, 2022, and 2021. Unrealized Gains and Losses on Available- for-sale Securities Unrealized Gains and Losses on Held-to- maturity Securities (Dollars in Thousands – net of tax) Total Balance – June 30, 2020 $ (499) $ (57) $ (556) Other comprehensive income (loss) before reclassifications Amounts reclassified from accumulated other comprehensive income (loss) Net current-period other comprehensive income (loss) 1,125 - 1,125 (80) 13 (67) 1,045 13 1,058 Balance – June 30, 2021 546 (44) 502 Other comprehensive income (loss), before reclassifications Amounts reclassified from accumulated other comprehensive income (loss) Net current-period other comprehensive income (loss) (1,590) - (1,590) (62) 7 (55) (1,652) 7 (1,645) Balance – June 30, 2022 (1,106) (37) (1,143) Other comprehensive income (loss), before reclassifications Amounts reclassified from accumulated other comprehensive (loss) income Net current-period other comprehensive income (loss) 597 - 597 3 2 5 600 2 602 Balance – June 30, 2023 $ (506) $ (35) $ (541) 22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Continued) The following table presents the amounts reclassified out of accumulated other comprehensive income (loss). Details About Accumulated Other Comprehensive Income (loss) Components: Unrealized (loss) gains on available-for-sale securities Accretion of other than temporary impairment losses on held to maturity securities Tax effect Total reclassifications for the period $ Amount Reclassified from Accumulated Other Comprehensive Income (Loss) 2 2023 2022 (Dollars in Thousands) 2021 Affected Line Item in the Statement Where Net Income is Presented $ (4) $ 79 $ 101 Investment securities (loss) gains (3) 2 (5) (9) (15) (16) Net impairment gain (loss) recognized in earnings (18) Income tax expense $ 55 $ 67 ______________________________ 2 Amounts in parenthesis indicate expenses and other amounts indicate income. 8. UNREALIZED LOSSES ON SECURITIES The following tables show the Company’s gross unrealized losses and fair value, aggregated by category and length of time that the individual securities have been in a continuous unrealized loss position, at June 30, 2023 and 2022. Less Than Twelve Months Gross Unrealized Losses Fair Value June 30, 2023 Twelve Months or Greater Gross Unrealized Fair Value Losses (Dollars in Thousands) $ 9,117 $ (273) $ 9,695 $ (1,250) $ (33) - (10) 15,929 2,125 480 (257) (35) (54) Total Fair Value Gross Unrealized Losses 18,812 $ 43,537 2,125 1,490 (1,523) (290) (35) (64) (276) 97,587 (20,271) 108,524 (20,547) (1,104) - - 56,490 (1,104) U.S. government agency securities Corporate debt securities Foreign debt securities3 Obligations of states and political subdivisions Collateralized mortgage obligations Mortgage-backed securities 27,608 - 1,010 10,937 56,490 Total $ 105,162 $ (1,696) $ 125,816 $ (21,867) $ 230,978 $ (23,563) __________________________ 3 U.S. dollar-denominated investment-grade corporate bonds of large foreign corporate issuers. 23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. UNREALIZED LOSSES ON SECURITIES (Continued) Less Than Twelve Months Gross Unrealized Losses Fair Value June 30, 2022 Twelve Months or Greater Gross Unrealized Fair Value Losses (Dollars in Thousands) Total Fair Value Gross Unrealized Losses U.S. government agency securities Corporate debt securities Foreign debt securities Obligations of states and political subdivisions Collateralized mortgage obligations 4 $ 10,132 $ 68,508 (813) $ (784) 12,489 (119) 425 (42) - $ - $ 4,293 6,855 242 (116) (143) (8) 10,132 $ 72,801 19,344 667 (813) (900) (262) (50) 96,148 (8,269) 19,776 (1,527) 115,924 (9,796) Total $ 187,702 $ (10,027) $ 31,166 $ (1,794) $ 218,868 $ (11,821) For debt securities, impairment is considered to be other than temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its amortized cost basis, or (3) does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell the security). In addition, impairment is considered to be other than temporary if the present value of cash flows expected to be collected from the debt security is less than the amortized cost basis of the security (any such shortfall is referred to as a credit loss). The Company evaluates outstanding available-for-sale and held-to-maturity securities in an unrealized loss position (i.e., impaired securities) for other than temporary impairment (“OTTI”) on a quarterly basis. In doing so, the Company considers many factors including, but not limited to: the credit ratings assigned to the securities by the Nationally Recognized Statistical Rating Organizations (“NRSROs”); other indicators of the credit quality of the issuer; the strength of the provider of any guarantees; the length of time and extent that fair value has been less than amortized cost; and whether the Company has the intent to sell the security or more likely than not will be required to sell the security before its anticipated recovery. In the case of its private-label residential MBS, the Company also considers prepayment speeds, the historical and projected performance of the underlying loans and the credit support provided by the subordinate securities. These evaluations are inherently subjective and consider a number of quantitative and qualitative factors. The following table presents a roll-forward of the credit loss component of the amortized cost of mortgage-backed securities that we have written down for OTTI and the credit component of the loss that is recognized in earnings. OTTI recognized in earnings for credit impaired mortgage-backed securities is presented as additions in two components based upon whether the current period is the first time the mortgage-backed security was credit-impaired (initial credit impairment) or is not the first time the mortgage-backed security was credit impaired (subsequent credit impairments). The credit loss component is reduced if we sell, intend to sell or believe that we will be required to sell previously credit- impaired mortgage-backed securities. Additionally, the credit loss component is reduced if we receive cash flows in excess of what we expected to receive over the remaining life of the credit impaired mortgage-backed securities, the security matures or is fully written down. __________________________ 4 U.S. dollar-denominated investment-grade corporate bonds of large foreign corporate issuers. 24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. UNREALIZED LOSSES ON SECURITIES (Continued) Changes in the credit loss component of credit impaired mortgage-backed securities were as follows for the twelve month periods ended June 30, 2023 and 2022: Beginning balance Initial credit impairment Subsequent credit impairment Reductions for amounts recognized in earnings due to intent or requirement to sell Reductions for securities sold Reduction for actual realized losses Reduction for increase in cash flows expected to be collected Ending balance Twelve Months Ended June 30, 2023 2022 (Dollars in Thousands) $ 322 - - $ 322 - - - - - 1 $ 323 - - - - $ 322 During the twelve months ended June 30, 2023, the Company did not record a subsequent credit impairment charge, and there were no non-credit unrealized holding losses to accumulated other comprehensive loss. The Company was able to accrete back into other comprehensive income $3 thousand (net of income tax effect of $1 thousand), based on principal repayments on private-label CMOs previously identified with OTTI. In the case of its private-label residential CMOs that exhibit adverse risk characteristics, the Company employs models to determine the cash flows that it is likely to collect from the securities. These models consider borrower characteristics and the particular attributes of the loans underlying the securities, in conjunction with assumptions about future changes in home prices and interest rates, to predict the likelihood a loan will default and the impact on default frequency, loss severity and remaining credit enhancement. A significant input to these models is the forecast of future housing price changes for the relevant states and metropolitan statistical areas, which are based upon an assessment of the various housing markets. In general, since the ultimate receipt of contractual payments on these securities will depend upon the credit and prepayment performance of the underlying loans and, if needed, the credit enhancements for the senior securities owned by the Company, the Company uses these models to assess whether the credit enhancement associated with each security is sufficient to protect against likely losses of principal and interest on the underlying mortgage loans. The development of the modeling assumptions requires significant judgment. In conjunction with our adoption of ASC Topic 820 effective June 30, 2009, the Company retained an independent third party to assist it with assessing its investments within the private-label CMO portfolio. The independent third party utilized certain assumptions for producing the cash flow analyses used in the OTTI assessment. Key assumptions would include interest rates, expected market participant spreads and discount rates, housing prices, projected future delinquency levels and assumed loss rates on any liquidated collateral. The Company reviewed the independent third party’s assumptions used in the June 30, 2023 OTTI process. Based on the results of this review, the Company deemed the independent third party’s assumptions to be reasonable and adopted them. However, different assumptions could produce materially different results, which could impact the Company’s conclusions as to whether an impairment is 25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. UNREALIZED LOSSES ON SECURITIES (Continued) considered other-than-temporary and the magnitude of the credit loss. The Company had three private- label CMOs with OTTI at June 30, 2023. If the Company intends to sell an impaired debt security, or more likely than not will be required to sell the security before recovery of its amortized cost basis, the impairment is other-than-temporary and is recognized currently in earnings in an amount equal to the entire difference between fair value and amortized cost. The Company does not anticipate selling its private-label CMOs, nor does Management believe that the Company will be required to sell these securities before recovery of this amortized cost basis. In instances in which the Company determines that a credit loss exists but the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before the anticipated recovery of its remaining amortized cost basis, the OTTI is separated into (1) the amount of the total impairment related to the credit loss and (2) the amount of the total impairment related to all other factors (i.e., the noncredit portion). The amount of the total OTTI related to the credit loss is recognized in earnings and the amount of the total OTTI related to all other factors is recognized in accumulated other comprehensive loss. The total OTTI is presented in the Consolidated Statement of Income with an offset for the amount of the total OTTI that is recognized in accumulated other comprehensive loss. Absent the intent or requirement to sell a security, if a credit loss does not exist, any impairment is considered to be temporary. Regardless of whether an OTTI is recognized in its entirety in earnings or if the credit portion is recognized in earnings and the noncredit portion is recognized in other comprehensive income (loss), the estimation of fair values has a significant impact on the amount(s) of any impairment that is recorded. The noncredit portion of any OTTI losses on securities classified as available-for-sale is adjusted to fair value with an offsetting adjustment to the carrying value of the security. The fair value adjustment could increase or decrease the carrying value of the security. All of the Company’s private-label CMOs were originally, and continue to be classified, as held to maturity. In periods subsequent to the recognition of an OTTI loss, the other-than-temporarily impaired debt security is accounted for as if it had been purchased on the measurement date of the OTTI at an amount equal to the previous amortized cost basis less the credit-related OTTI recognized in earnings. For debt securities for which credit-related OTTI is recognized in earnings, the difference between the new cost basis and the cash flows expected to be collected is accreted into interest income over the remaining life of the security in a prospective manner based on the amount and timing of future estimated cash flows. The Company had investments in 102 positions that were temporarily impaired at June 30, 2023. Based on its analysis, management has concluded that three private-label CMOs were other-than-temporarily impaired, while the remaining securities portfolio has experienced unrealized losses and a decrease in fair value due to interest rate volatility, illiquidity in the marketplace, or credit deterioration in the U.S. mortgage markets. 9. NET LOANS RECEIVABLE The Company’s primary business activity is with customers located within its local market area of Northern Allegheny and Southern Butler counties within the state of Pennsylvania. The Company has concentrated its lending efforts by granting residential and construction mortgage loans to customers throughout its immediate trade area. The Company also selectively funds and participates in commercial 26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. NET LOANS RECEIVABLE (Continued) and residential mortgage loans outside of its immediate trade area, provided such loans meet the Company’s credit policy guidelines. At June 30, 2023 and 2022, the Company had approximately $4.8 million and $2.1 million, respectively, of outstanding loans for construction and land development in the local trade area. Although the Company had a diversified loan portfolio at June 30, 2023 and 2022, loans outstanding to individuals and businesses are dependent upon the local economic conditions in its immediate trade area. Certain officers, directors, and their associates were customers of, and had transactions with, the Company in the ordinary course of business. There were no loans to those directors, executive officers, or their associates during the fiscal years ended June 30, 2023 and 2022. The following table summarizes the primary segments of the loan portfolio as of June 30, 2023 and June 30, 2022. June 30, 2023 Individually evaluated for impairment Collectively evaluated for impairment Total Loans June 30, 2022 Individually evaluated for impairment Total Loans Collectively evaluated for impairment (Dollars in Thousands) First mortgage loans: 1 – 4 family dwellings Construction Land acquisition & development Multi-family dwellings Commercial Consumer Loans Home equity Home equity lines of Credit Other Commercial Loans 5 $ 56,483 $ 4,809 - 2,764 5,512 2,274 1,341 43 276 Deferred loan costs Allowance for loan losses Total $ $ 73,502 $ 106 (470) 73,138 - $ - 56,483 4,809 - - - - - - - - 2,764 5,512 2,274 1,341 43 276 $ 61,954 $ 1,954 112 3,030 5,917 2,424 1,328 60 26 - $ - - - - - - - - 61,954 1,954 112 3,030 5,917 2,424 1,328 60 26 - $ 73,502 $ 76,805 $ 178 - $ 76,805 (496) 76,487 $ Impaired loans are loans for which it is probable the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The following loan categories are collectively evaluated for impairment. First mortgage loans: 1 – 4 family dwellings and all consumer loan categories (home equity, home equity lines of credit, and other). The following loan categories are individually evaluated for impairment. First mortgage loans: construction, land acquisition and development, multi- family dwellings, and commercial. The Company evaluates commercial loans not secured by real property individually for impairment. At June 30, 2023 and 2022, there were no loans considered to be impaired. ___________________________ 5 Not secured by real estate. 27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. NET LOANS RECEIVABLE (Continued) The Company’s loan portfolio may include troubled debt restructurings (TDRs), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. During fiscal 2023 and 2022, there were no loans modified and considered a trouble debt restructuring. At June 30, 2023 and 2022, there were no previously modified TDRs in default. When the Company modifies a loan, management evaluates any possible impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or a charge-off to the allowance. Segment and class status is determined by the loan’s classification at origination. The allowance for loan losses is established through provisions for loan losses charged against income. Loans deemed to be uncollectible are charged against the allowance account. Subsequent recoveries, if any, are credited to the allowance. The allowance is maintained at a level believed adequate by management to absorb estimated potential loan losses. Management's determination of the adequacy of the allowance is based on periodic evaluations of the loan portfolio considering past experience, current economic conditions, composition of the loan portfolio and other relevant factors. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant change. Effective December 13, 2006, the FDIC, in conjunction with the other federal banking agencies adopted a Revised Interagency Policy Statement on the Allowance for Loan and Lease Losses (“ALLL”). The revised policy statement revised and replaced the banking agencies’ 1993 policy statement on the ALLL. The revised policy statement provides that an institution must maintain an ALLL at a level that is appropriate to cover estimated credit losses on individually evaluated loans determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan and lease portfolio. The banking agencies also revised the policy to ensure consistency with generally accepted accounting principles (“GAAP”). The revised policy statement updates the previous guidance that describes the responsibilities of the board of directors, management, and bank examiners regarding the ALLL, factors to be considered in the estimation of the ALLL, and the objectives and elements of an effective loan review system. 28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. NET LOANS RECEIVABLE (Continued) Federal regulations require that each insured savings institution classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, federal examiners have authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: "substandard", "doubtful" and "loss". Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified as loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. Another category designated "asset watch" is also utilized by the Bank for assets which do not currently expose an insured institution to a sufficient degree of risk to warrant classification as substandard, doubtful or loss. Assets classified as substandard or doubtful require the institution to establish general allowances for loan losses. If an asset or portion thereof is classified as loss, the insured institution must either establish specific allowances for loan losses in the amount of 100% of the portion of the asset classified loss, or charge-off such amount. General loss allowances established to cover possible losses related to assets classified substandard or doubtful may be included in determining an institution's regulatory capital, while specific valuation allowances for loan losses do not qualify as regulatory capital. The Company's general policy is to internally classify its assets on a regular basis and establish prudent general valuation allowances that are adequate to absorb losses that have not been identified but that are inherent in the loan portfolio. The Company maintains general valuation allowances that it believes are adequate to absorb losses in its loan portfolio that are not clearly attributable to specific loans. The Company's general valuation allowances are within the following general ranges: (1) 0% to 5% of assets subject to special mention; (2) 5.00% to 100% of assets classified substandard; and (3) 50% to 100% of assets classified doubtful. Any loan classified as loss is charged-off. To further monitor and assess the risk characteristics of the loan portfolio, loan delinquencies are reviewed to consider any developing problem loans. Based upon the procedures in place, considering the Company's past charge-offs and recoveries and assessing the current risk elements in the portfolio, management believes the allowance for loan losses at June 30, 2023 is adequate. 29NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. NET LOANS RECEIVABLE (Continued) The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of June 30, 2023 and 2022: Current 30 – 59 Days Past Due 60 – 89 Days Past Due 90 Days + Past Due Accruing 90 Days + Past Due Non-accrual Total Past Due Total Loans (Dollars in Thousands) June 30, 2023 First mortgage loans: 1 – 4 family dwellings Construction Land acquisition & development Multi-family dwellings Commercial Consumer Loans Home equity Home equity lines of credit Other Commercial Loans 5 Deferred loan costs Allowance for loan losses Net Loans Receivable $ 56,483 $ 4,809 - 2,764 5,512 2,274 1,341 43 276 - $ - - $ - - $ - - $ - - $ - 56,483 4,809 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ - 2,764 5,512 2,274 1,341 43 276 73,502 106 (470) 73,138 $ 73,502 $ - $ - $ - $ - $ ___________________ 5 Not secured by real estate. 30 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. NET LOANS RECEIVABLE (Continued) Current 30 – 59 Days Past Due 60 – 89 Days Past Due 90 Days + Past Due Accruing 90 Days + Past Due Non-accrual Total Past Due Total Loans (Dollars in Thousands) June 30, 2022 First mortgage loans: 1 – 4 family dwellings Construction Land acquisition & development Multi-family dwellings Commercial Consumer Loans Home equity Home equity lines of credit Other Commercial Loans5 Deferred loan costs Allowance for loan losses Net Loans Receivable $ 61,954 $ 1,954 112 3,030 5,917 2,424 1,328 60 26 - $ - - $ - - $ - - $ - - $ - 61,954 1,954 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ 112 3,030 5,917 2,424 1,328 60 26 76,805 178 (496) 76,487 $ 76,805 $ - $ - $ - $ - $ Credit Quality Information The following tables represent credit exposure by internally assigned grades for the fiscal years ended June 30, 2023 and 2022. The grading system analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or not at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans. The Company’s internally assigned grades are as follows: Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected. Substandard – loans that have a well-defined weakness based on objective evidence and can be characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard loan. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances. Loss – loans classified as loss are considered uncollectible, or of such value that continuance as a loan is not warranted. _____________________ 5 Not secured by real estate. 31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. NET LOANS RECEIVABLE (Continued) Credit Quality Information (Continued) The primary credit quality indicator used by management in the 1 – 4 family and consumer loan portfolios is the performance status of the loans. Payment activity is reviewed by Management on a monthly basis to determine how loans are performing. Loans are considered to be non-performing when they become 90 days delinquent, have a history of delinquency, or have other inherent characteristics which Management deems to be weaknesses. The following tables present the Company’s internally classified construction, land acquisition and development, multi-family residential, commercial real estate and commercial (not secured by real estate) loans at June 30, 2023 and 2022. Land Acquisition & Development Loans Construction Pass Special Mention Substandard Doubtful Ending Balance $ $ 4,809 $ - - - 4,809 $ June 30, 2023 Multi-family Residential Commercial Real Estate Commercial5 (Dollars in Thousands) - $ - - - - $ 2,764 $ - - - 2,764 $ 5,512 $ - - - 5,512 $ 276 - - - 276 June 30, 2022 Land Acquisition & Development Loans Construction Multi-family Residential Commercial Real Estate Commercial5 Pass Special Mention Substandard Doubtful Ending Balance $ $ 1,954 $ - - - 1,954 $ (Dollars in Thousands) 112 $ - - - 112 $ 3,030 $ - - - 3,030 $ 5,917 $ - - - 5,917 $ 26 - - - 26 ___________________________ 5 Not secured by real estate. 32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. NET LOANS RECEIVABLE (Continued) Credit Quality Information (Continued) The following table presents performing and non-performing 1 – 4 family residential and consumer loans based on payment activity for the periods ended June 30, 2023 and June 30, 2022. June 30, 2023 1 – 4 Family Consumer (Dollars in Thousands) $ $ $ $ 56,483 $ - 56,483 $ 3,658 - 3,658 June 30, 2022 1 – 4 Family Consumer (Dollars in Thousands) 61,954 $ - 61,954 $ 3,812 - 3,812 Performing Non-performing Total Performing Non-performing Total 10. ALLOWANCE FOR LOAN LOSSES The Company determines its allowance for loan losses in accordance with generally accepted accounting principles. The Company uses a systematic methodology as required by Financial Reporting Release No. 28 and the various Federal Financial Institutions Examination Council guidelines. The Company also endeavors to adhere to SEC Staff Accounting Bulletin No. 102 in connection with loan loss allowance methodology and documentation issues. Our methodology used to determine the allocated portion of the allowance is as follows. For groups of homogenous loans, we apply a loss rate to the groups’ aggregate balance. Our group loss rate reflects our historical loss experience. We may adjust these group rates to compensate for changes in environmental factors; but our adjustments have not been frequent due to a relatively stable charge-off experience. The Company also monitors industry loss experience on similar loan portfolio segments. We then identify loans for individual evaluation under ASC Topic 310. If the individually identified loans are performing, we apply a segment specific loss rate adjusted for relevant environmental factors, if necessary, for those loans reviewed individually and considered individually impaired, we use one of the three methods for measuring impairment mandated by ASC Topic 310. Generally, the fair value of collateral is used since our impaired loans are generally real estate based. In connection with the fair value of collateral measurement, the Company generally uses an independent appraisal and determines costs to sell. The Company’s appraisals for commercial income based loans, such as multi-family and commercial real estate loans, assess value based upon the operating cash flows of the business as opposed to merely “as built” values. The Company then validates the reasonableness of our calculated allowances by: (1) reviewing trends in loan volume, delinquencies, restructurings and concentrations; (2) reviewing prior period (historical) charge-offs and recoveries; and (3) presenting the results of this process, quarterly, to the Asset Classification Committee and the Savings Bank’s Board of Directors. We then tabulate, format and summarize the current loan loss allowance balance for financial and regulatory reporting purposes. 33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 10. ALLOWANCE FOR LOAN LOSSES (Continued) The Company had no unallocated loss allowance balance at June 30, 2023 and 2022. The allowance for loan losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses charged to operations. The provision for loan losses is based on management’s periodic evaluation of individual loans, economic factors, past loan loss experience, changes in the composition and volume of the portfolio, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses, including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to changes in the near term. The following is a summary of the changes in the allowance for loan losses: Balance, July 1 Add: (Credit) provision for loan losses Less: Loans charged off Balance, June 30 2023 2022 (Dollars in Thousands) 2021 $ 496 $ 565 $ 618 (26) - (69) (53) - - $ 470 $ 496 $ 565 34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 10. ALLOWANCE FOR LOAN LOSSES (Continued) The following tables summarize the primary segments of the allowance for loan losses (“ALLL”), segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2023, June 30, 2022 and June 30, 2021. Activity in the allowance is presented for the fiscal years ended June 30, 2023, 2022 and 2021. 1 – 4 Family Construction First Mortgage Loans Land Acquisition & Development As of June 30, 2023 Multi- family Commercial (Dollars in Thousands) Consumer Loans Commercial Loans5 Total $ 311 $ - - (29) 60 $ - - 7 9 $ - - (9) 16 $ 61 $ 37 $ - - (1) - - (4) - - (1) 2 - - 12 $ 496 - - (26) $ 282 $ 67 $ - $ 15 $ 57 $ 36 $ 14 $ 470 $ $ $ - $ - $ - $ - $ - $ - $ - $ - 282 282 $ 67 67 $ - - $ 15 15 $ 57 57 $ 36 36 $ 14 14 $ 470 470 1 – 4 Family Construction First Mortgage Loans Land Acquisition & Development As of June 30, 2022 Multi- family Commercial (Dollars in Thousands) Consumer Loans Commercial Loans5 Total 389 $ - - (78) 50 $ 11 $ 24 $ 59 $ 32 $ - - 10 - - (2) - - (8) - - 2 - - 5 $ - - - 2 565 - - (69) $ 311 $ 60 $ 9 $ 16 $ 61 $ 37 $ 2 $ 496 $ $ - $ - $ - $ - $ - $ - $ - $ - 311 311 $ 60 60 $ 9 9 $ 16 16 $ 61 61 $ 37 37 $ 2 2 $ 496 496 Beginning ALLL Balance at June 30, 2022 Charge-offs Recoveries Provisions Ending ALLL Balance at June 30, 2023 Individually evaluated for impairment Collectively evaluated for impairment Beginning ALLL Balance at June 30, 2021 Charge-offs Recoveries Provisions Ending ALLL Balance at June 30, 2022 Individually evaluated for impairment Collectively evaluated for impairment ____________________________ 5 Not secured by real estate. 35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 10. ALLOWANCE FOR LOAN LOSSES (Continued) 1 – 4 Family Construction First Mortgage Loans Land Acquisition & Development As of June 30, 2021 Multi- family Commercial (Dollars in Thousands) Consumer Loans Commercial Loans5 Total $ 449 $ - - (60) 38 $ - - 12 6 $ - - 5 26 $ 66 $ 32 $ - - (2) - - (7) - - - 1 $ - - (1) 618 - - (53) $ 389 $ 50 $ 11 $ 24 $ 59 $ 32 $ - $ 565 $ $ - $ - $ - $ - $ - $ - $ - $ - 389 389 $ 50 50 $ 11 11 $ 24 24 $ 59 59 $ 32 32 $ - - $ 565 565 Beginning ALLL Balance at June 30, 2020 Charge-offs Recoveries Provisions Ending ALLL Balance at June 30, 2021 Individually evaluated for impairment Collectively evaluated for impairment During the fiscal year ended June 30, 2023, the significant changes to the ALLL were a $29 thousand decrease associated with the 1-4 family loan segment and a $7 thousand increase associated with construction loans. The primary reason for the changes in the ALLL balance during fiscal 2023 is a decrease in the Company’s loan portfolio. During the fiscal year ended June 30, 2022, the significant changes to the ALLL were a $79 thousand decrease associated with the 1-4 family loan segment and a $10 thousand increase associated with construction loans. The primary reason for the changes in the ALLL balance during fiscal 2022 is a decrease in the Company’s loan portfolio. During the fiscal year ended June 30, 2021, the significant changes to the ALLL were a $61 thousand decrease associated with the 1-4 family loan segment and a $12 thousand increase associated with construction loans. The primary reason for the changes in the ALLL balance during fiscal 2021 is a decrease in the Company’s loan portfolio. During the fiscal years ended June 30, 2022 and 2021, respectively, the Company decreased its ALLL reserve factors due to the reversal of the COVID-19 reserve for the following loan segments: Loan Segment 1-4 Family Permanent 1-4 Family – Construction Land Acquisition & Dev Multi-family Commercial Real Estate Consumer Commercial5 ____________________________ 5 Not secured by real estate. 06/30/2023 Factor 0.500% 0.750% 1.000% 0.550% 1.000% 1.000% 5.000% 06/30/2022 Factor 0.500% 0.750% 1.000% 0.550% 1.000% 1.000% 5.000% 06/30/2021 Factor 0.575% 0.825% 1.250% 0.700% 1.500% 1.100% 6.000% 36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 11. FEDERAL HOME LOAN BANK STOCK We are a member of the Federal Home Loan Bank of Pittsburgh. The FHLB requires members to purchase and hold a specified minimum level of FHLB stock based upon their level of borrowings, collateral balances and participation in other programs offered by the FHLB. Stock in the FHLB is non- marketable and is redeemable at the discretion of the FHLB. Both cash and stock dividends on FHLB stock are reported as income. FHLB stock can only be purchased, redeemed and transferred at par value. At June 30, 2023 and 2022, our FHLB stock totaled $4.9 million and $7.1 million, respectively, as shown on the consolidated balance sheets. We account for the stock in accordance with ASC 325, which requires the investment to be carried at cost and evaluated for impairment based on the ultimate recoverability of the par value. Due to the continued improvement of the FHLB’s financial performance and stability over the past several years, combined with regular quarterly dividends in 2023 and 2022, we believe our holdings in FHLB stock are ultimately recoverable at par value and, therefore, determined that the stock was not other-than-temporarily impaired. 12. PREMISES AND EQUIPMENT Major classifications of premises and equipment are summarized as follows: Land and improvements Buildings and improvements Furniture, fixtures, and equipment Less accumulated depreciation Total 2023 2022 (Dollars in Thousands) $ 231 $ 2,174 631 3,036 2,448 $ 589 $ 246 2,159 551 2,956 2,381 575 Depreciation charged to operations was $68 thousand, $88 thousand, and $71 thousand for the years ended June 30, 2023, 2022, and 2021, respectively. 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13. DEPOSITS Deposit accounts are summarized as follows: 2023 2022 Amount Percent of Portfolio Amount Percent of Portfolio (Dollars in Thousands) Non-interest earning checking Interest-earning checking Savings accounts Money market accounts Savings certificates Advance payments by borrowers for taxes and insurance Total $ 24,667 25,060 44,011 21,398 20,847 17.9% $ 18.2 32.0 15.5 15.1 25,061 27,277 49,605 25,867 21,504 16.6% 18.1 32.8 17.1 14.2 1,724 137,707 1.3 100.0% $ 1,860 151,174 1.2 100.0% $ The maturities of savings certificates at June 30, 2023, are summarized as follows: Within one year Beyond one year but within two years Beyond two years but within three years Beyond three years but within four years Beyond four years but within five years Beyond five years Total $ (Dollars in Thousands) 16,375 3,461 579 330 42 60 $ 20,847 There were three retail savings certificates with a balance of $250 thousand or more on June 30, 2023 totaling $1.0 million. At June 30, 2022, the Company had brokered CDs totaling $1.4 million. At June 30, 2023, the Company had no brokered CDs. 38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. FEDERAL HOME LOAN BANK (FHLB) ADVANCES The following table presents contractual maturities of FHLB long-term advances as of June 30: Description from to Maturity range Weighted- average interest rate6 Stated interest rate range from to June 30, 2023 (Dollars in Thousands) June 30, 2022 Fixed 10/03/22 10/03/22 3.09% 3.09% 3.09% $ - $ 5,000 Total $ - $ 5,000 The Company also utilized revolving and short-term FHLB advances. Short-term FHLB advances generally mature within 90 days, while revolving FHLB advances may be repaid by the Company without penalty. The following table presents information regarding such advances as of June 30, 2023 and June 30, 2022: June 30, 2023 (Dollars in Thousands) June 30, 2022 $ 117,664 140,606 186,365 4.59% 5.35% $ 167,208 122,486 170,726 0.47% 1.58% FHLB revolving and short-term advances: Ending balance Average balance Maximum month-end balance Average interest rate Weighted-average rate at period end __________________________ 6As of June 30, 2022 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. FEDERAL HOME LOAN BANK ADVANCES (Continued) At June 30, 2023, the Company had remaining borrowing capacity with the FHLB of approximately $34.1 million. The FHLB advances are secured by the Company’s FHLB stock, loans, mortgage-backed and investment securities. FHLB advances are subject to substantial prepayment penalties. 15. OTHER SHORT-TERM BORROWINGS The Company also utilized other short-term borrowings comprised of Federal Reserve Bank of Cleveland (“FRB”) discount window borrowings. FRB discount window borrowings mature within 90 days and may be repaid prior to maturity without penalty, in whole or in part, plus accrued interest. The following table presents information regarding the FRB borrowings as of June 30, 2023 and June 30, 2022: FRB Discount Window Borrowings: Ending balance Average balance Maximum month-end balance Average interest rate Weighted-average rate at period end June 30, 2023 (Dollars in Thousands) June 30, 2022 $ 65,840 $ 15,945 65,840 4.48% 4.51% - - - -% -% At June 30, 2023 the Company had an estimated borrowing capacity with the FRB of approximately $54.0 million based on securities pledged. 16. COMMITMENTS AND CONTINGENT LIABILITIES Loan Commitments In the normal course of business, there are various commitments that are not reflected in the Company’s financial statements. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheet. The Company’s exposure to credit loss in the event of nonperformance by the other parties to the financial instruments is represented by the contractual amounts as disclosed. Losses, if any, are charged to the allowance for losses on off- balance sheet items. Management minimizes its exposure to credit loss under these commitments by subjecting them to credit approval, review procedures, and collateral requirements, as deemed necessary. Various loan commitments totaling $10.1 million and $12.7 million at June 30, 2023 and 2022, respectively, represent financial instruments with on and off-balance sheet risk. The commitments outstanding at June 30, 2023 contractually mature in less than one year. Loan commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheet. The same credit policies are used in making commitments and conditional obligations as for on-balance sheet instruments. Generally, collateral, usually in the form of real estate, is required to support financial instruments with credit risk. 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 16. COMMITMENTS AND CONTINGENT LIABILITIES (Continued) Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the loan agreement. These commitments are composed primarily of the undisbursed portion of construction and land development loans (Note 8), residential, commercial real estate, and consumer loan originations. The exposure to loss under these commitments is limited by subjecting them to credit approval and monitoring procedures. Substantially all commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of the loan funding. Management assesses the credit risk associated with certain commitments to extend credit in determining the level of the allowance for loan losses. Litigation The Company is involved with various legal actions arising in the ordinary course of business. Management believes the outcome of these matters will have no material effect on the consolidated operations or financial condition of WVS. 17. REGULATORY CAPITAL Federal regulations require the Savings Bank to maintain minimum amounts of capital. Specifically, the Savings Bank is required to maintain certain minimum dollar amounts and ratios of Total and Tier 1 Capital to Risk-Weighted Assets and of Tier 1 Capital to Average Total Assets. In addition to the capital requirements, the Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) established five capital categories ranging from well capitalized to critically undercapitalized. Should any institution fail to meet the requirements to be considered adequately capitalized, it would become subject to a series of increasingly restrictive regulatory actions. In July of 2013 the respective U.S. federal banking agencies issued final rules implementing Basel III and the Dodd-Frank Act capital requirements were fully-phased in on a global basis as of January 1, 2019. The new regulations establish a new tangible common equity capital requirement, increase the minimum requirement for the current Tier 1 risk-weighted asset (“RWA”) ratio, phase out certain kinds of intangibles treated as capital and certain types of instruments and change the risk weightings of certain assets used to determine required capital ratios. Provisions of the Dodd-Frank Act generally require these capital rules to apply to bank holding companies and their subsidiaries. The new common equity Tier 1 capital component requires capital of the highest quality – predominantly composed of retained earnings and common stock instruments. For community banks, such as West View Savings Bank, a common equity Tier 1 capital ratio of 4.5% became effective on January 1, 2015. The new capital rules also increased the current minimum Tier 1 capital ratio from 4.0% to 6.0% beginning on January 1, 2015. In addition, in order to make capital distributions and pay discretionary bonuses to executive officers without restriction, an institution must also maintain greater than 2.5% in common equity attributable to a capital conservation buffer which was phased in from January 1, 2016 to January 1, 2019. The new rules also increase the risk weights for several categories of assets, including an increase from 100% to 150% for certain acquisition, development and construction loans and more than 90-day past due exposures. The new capital rules maintain the general structure of the prompt corrective action rules, but incorporate the new common equity Tier 1 capital requirement and the increased Tier 1 RWA requirement into the prompt corrective action framework. 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 17. REGULATORY CAPITAL (Continued) Bank holding companies are generally subject to statutory capital requirements, which were implemented by certain of the new capital regulations described above that became effective on January 1, 2015. However, the Small Banking Holding Company Policy Statement exempts certain small bank holding companies like the Company from those requirements provided that they meet certain conditions. As of June 30, 2023 and 2022, the FDIC categorized the Savings Bank as well capitalized under the regulatory framework for prompt corrective action. To be classified as a well capitalized financial institution, Common Equity Tier 1 Capital, Tier 1 Risk-Based, Total Risk-Based, and Tier 1 Leverage Capital Ratios must be at least 6.5 percent, 8 percent, 10 percent, and 5 percent, respectively. The Company’s and Savings Bank’s actual capital ratios for fiscal 2023 are presented in the following table, which show that the Company and Savings Bank met all regulatory capital requirements. June 30, 2023 WVS Amount West View Savings Bank Amount Ratio Ratio (Dollars in Thousands) Common Equity Tier 1 Capital (to Risk-Weighted Assets) Actual To Be Well Capitalized For Capital Adequacy Purposes Tier 1 Capital (to Risk-Weighted Assets) Actual To Be Well Capitalized For Capital Adequacy Purposes Total Capital (to Risk-Weighted Assets) Actual To Be Well Capitalized For Capital Adequacy Purposes Tier 1 Capital (to Average Total Assets) Actual To Be Well Capitalized For Capital Adequacy Purposes $ $ $ $ 37,720 8,179 5,663 37,720 10,067 7,550 38,190 12,583 10,067 37,720 18,221 14,577 29.98% $ 6.50 4.50 33,339 8,171 5,657 29.98% $ 8.00 6.00 33,339 10,056 7,542 30.35% $ 10.00 8.00 33,839 12,571 10,056 10.35% $ 5.00 4.00 33,339 18,348 14,678 26.52% 6.50 4.50 26.52% 8.00 6.00 26.92% 10.00 8.00 9.09% 5.00 4.00 42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 17. REGULATORY CAPITAL (Continued) The Company’s and Savings Bank’s actual capital ratios for fiscal 2022 are presented in the following table, which show that the Company and Savings Bank met all regulatory capital requirements. June 30, 2022 WVS Amount Common Equity Tier 1 Capital (to Risk-Weighted Assets) Actual To Be Well Capitalized For Capital Adequacy Purposes Tier 1 Capital (to Risk-Weighted Assets) Actual To Be Well Capitalized For Capital Adequacy Purposes Total Capital (to Risk-Weighted Assets) Actual To Be Well Capitalized For Capital Adequacy Purposes Tier 1 Capital (to Average Total Assets) Actual To Be Well Capitalized For Capital Adequacy Purposes $ $ $ $ 37,902 13,005 9,003 37,902 16,006 12,005 38,426 20,008 16,006 37,902 18,407 14,725 18. STOCK BENEFIT PLANS Employee Stock Ownership Plan (“ESOP”) West View Savings Bank Amount Ratio Ratio (Dollars in Thousands) 18.94% $ 6.50 4.50 33,070 12,863 8,905 18.94% $ 8.00 6.00 33,070 15,831 11,873 19.21% $ 10.00 8.00 33,594 19,789 15,831 10.30% $ 5.00 4.00 33,070 18,282 14,626 16.71% 6.50 4.50 16.71% 8.00 6.00 16.98% 10.00 8.00 9.04% 5.00 4.00 WVS maintains an ESOP for the benefit of officers and Savings Bank employees who have met certain eligibility requirements related to age and length of service. Compensation expense for the ESOP was $87 thousand, $145 thousand, and $122 thousand for the years ended June 30, 2023, 2022, and 2021, respectively. Total ESOP shares as of June 30, 2023 and 2022 were 259,982 and 267,170, respectively. 43NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 18. STOCK BENEFIT PLANS (Continued) The following table presents the components of the ESOP shares as of June 30, 2023 and 2022. Allocated shares Unallocated shares Total ESOP shares 2023 133,617 126,365 259,982 2022 130,911 136,259 267,170 Fair value of unallocated ESOP shares $1,555,553 $2,039,797 The purchase of shares of the Company’s stock by the ESOP is funded by three term loans, and contributions from the Company, through the Savings Bank. Unreleased ESOP shares collateralize the loans payable and the cost of these shares is recorded as a contra-equity account in stockholders’ equity of the Company. The ESOP’s term loans bear a weighted-average interest rate of 3.25%, which rate is subject to adjustment based on annual changes in the prime rate and will mature on March 31, 2035, 2037 and 2038, respectively. Shares are released as payments are made by the ESOP on the loans. The ESOP’s sources of repayment on the loans can include dividends, if any, on the unallocated stock held by the ESOP and discretionary contributions from the Savings Bank to the ESOP and other earnings. Compensation is recognized under the shares released method and compensation expense is equal to the fair value of the shares committed to be released, and unallocated ESOP shares are excluded from outstanding shares for the purpose of computing EPS. 19. DIRECTOR, OFFICER, AND EMPLOYEE BENEFITS Profit Sharing Plan The Company maintains a non-contributory profit sharing 401(k) plan (the “401(k) Plan”) for its officers and employees who have met the age and length of service requirements. The Plan is a defined contribution plan with the contributions based on a percentage of salaries of the 401(k) Plan participants. The Company made no contributions to the 401(k) Plan for the three years ended June 30, 2023, 2022, and 2021. Directors’ Deferred Compensation Plan The Company maintains a deferred compensation plan for directors who elect to defer all or a portion of their directors’ fees. Deferred fees are paid to the participants in installments commencing in the year following the year the individual is no longer a member of the Board of Directors. The deferred compensation plan allows for the deferred amounts to be paid in shares of common stock at the prevailing market price on the date of distribution. For fiscal years ended June 30, 2023, 2022, and 2021, there were 1,731 shares held by the deferred compensation plan. 44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 19. DIRECTOR, OFFICER, AND EMPLOYEE BENEFITS (Continued) Amounts deferred are included in other noninterest expense and totaled $51 thousand, $36 thousand, and $35 thousand for the fiscal years 2023, 2022, and 2021, respectively. The aggregate liability for the deferred compensation arrangement at June 30, 2023 and 2022, was $646 thousand and $563 thousand, respectively, and is included in with “other liabilities” in the Consolidated Balance Sheet. Bank-Owned Life Insurance (“BOLI”) The Company has purchased single premium BOLI policies on certain executives. The policies are recorded at their cash surrender values. Increases in cash surrender values are included in noninterest income in the accompanying Consolidated Statement of Income. The Company recorded $117 thousand, $112 thousand and $114 thousand of income in fiscal 2023, 2022, and 2021, respectively, and the policies’ cash surrender values totaling $5.2 million and $5.1 million at June 30, 2023 and 2022, respectively, are reflected as an asset on the Consolidated Balance Sheet. Executive Life Insurance The Company has split dollar life insurance arrangements (“Split Dollar Life Insurance Agreements”) with certain executives. This plan provides each executive a specified death benefit should the executive die while in the Company’s employ. The Company owns the policies and all cash values thereunder. Upon death of the covered employee, the agreed-upon amount of death proceeds from the policies will be paid directly to the insured’s beneficiary. As of June 30, 2023, the policies had total death benefits of $10.88 million of which $2.60 million would have been paid to the executive’s beneficiaries and the remaining $8.28 million would have been paid to the Company. A portion of the death benefit coverage may continue to the Company’s CEO in the event of a change in control or other termination of his employment. In the event the other executives terminate employment with the Company, their split dollar interests in the policies cease. The Company accrued a benefit expense of $66 thousand, $63 thousand, and $57 thousand in fiscal 2023, 2022, and 2021, respectively, for the split dollar benefit. Supplemental Executive Retirement Plan (“SERP”) On September 1, 2013, the Company entered into a supplemental executive retirement plan (SERP) agreement with its CEO. The plan was targeted to provide him with an annual retirement benefit commencing at age 65. The Company accrued expenses of $141 thousand, $137 thousand, and $133 thousand for fiscal years 2023, 2022, and 2021, respectively, in connection with the SERP. 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 20. INCOME TAXES The provision for income taxes consists of: Currently payable: Federal State Deferred Total 2023 2022 (Dollars in Thousands) 2021 $ 461 $ 168 629 (59) 358 $ 126 484 (60) $ 570 $ 424 $ 286 137 423 22 445 In addition to income taxes applicable to income before taxes in the Consolidated Statement of Income, the following income tax amounts were recorded to stockholders’ equity during the years ended June 30: 2023 2022 (Dollars in Thousands) 2021 $ Net unrealized loss (gain) on securities available for sale Net non-credit gain on securities with OTTI (159) $ 423 $ (299) (1) (2) (3) Net loss (gain) recorded to stockholders’ equity $ (160) $ 421 $ (302) The following temporary differences gave rise to the net deferred tax assets at June 30: 2022 2023 (Dollars in Thousands) Deferred tax assets: $ Allowance for loan losses Deferred compensation Retirement Plan Reserve for off-balance sheet commitments OTTI other impairment OTTI credit impairment Net unrealized loss on securities available for sale Other Total gross deferred tax assets Deferred tax liabilities: Deferred origination fees, net Total gross deferred tax liabilities 102 $ 142 257 6 9 53 135 114 818 177 177 Net deferred tax assets $ 641 $ 107 124 227 6 10 53 291 100 918 179 179 739 No valuation allowance was established at June 30, 2023 and 2022, in view of the Company’s ability to carryback to taxes paid in previous years, future anticipated taxable income, which is evidenced by the Company’s earnings potential, and deferred tax liabilities at June 30, 2023 and 2022. 46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 20. INCOME TAXES (Continued) The Company and its subsidiary file a consolidated federal income tax return. Prior to 1996, the Savings Bank was permitted under the Internal Revenue Code to establish a tax reserve for bad debts, and to make annual additions within specified limitations which may have been deducted in arriving at its taxable income. Subsequent to 1995, the Savings Bank’s bad debt deduction may be computed using an amount based on its actual loss experience (the “experience method”). U.S. generally accepted accounting principles prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Consolidated Statement of Income. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2020. The following is a reconciliation between the actual provision for income taxes and the amount of income taxes which would have been provided at federal statutory rates for the years ended June 30: 2023 2022 2021 % of Pretax Income % of Pretax Income (Dollars in Thousands) Amount % of Pretax Income Amount Amount $ 487 21.0% $ 350 21.0% $ 366 21.0% 133 (25) (25) 5.7 (1.1) (1.1) 100 (23) (3) 6.0 (1.4) (0.1) 108 (24) (5) 6.2 (1.4) (0.2) $ 570 24.5% $ 424 25.4% $ 445 25.6% Provision at statutory rate State income tax, net of federal tax benefit Bank Owned Life Insurance Other, net Actual tax expense and effective rate The Savings Bank is subject to the Pennsylvania Mutual Thrift Institutions Tax, which is calculated at 11.5 percent of earnings. 47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 20. INCOME TAXES (Continued) Prior to the enactment of the Small Business Job Protection Act, the Company accumulated approximately $3.9 million of retained earnings, which represent allocations of income to bad debt deductions for tax purposes only. Since there is no amount that represents the accumulated bad debt reserves subsequent to 1987, no provision for federal income tax has been made for such amount. If any portion of this amount is used other than to absorb loan losses (which is not anticipated), the amount will be subject to federal income tax at the current corporate rate. 21. REGULATORY MATTERS Cash and Due From Banks The Federal Reserve requires the Savings Bank to maintain certain reserve balances. The required reserves are computed by applying prescribed ratios to the Savings Bank’s average deposit transaction account balances. In response to the COVID 19 Pandemic, effective March 26, 2020, the Federal Reserve reduced the reserve requirement to zero percent. As of June 30, 2023 and 2022, the Savings Bank had no required reserves. The required reserves would be held in the form of vault cash and an interest-bearing depository balance maintained directly with the Federal Reserve. Loans Federal law prohibits the Company from borrowing from the Savings Bank unless the loans are secured by specific obligations. Further, such secured loans are limited in amount to 15 percent of the Savings Bank’s capital surplus. Dividend Restrictions The Savings Bank is subject to the Pennsylvania Banking Code, which restricts the availability of surplus for dividend purposes. At June 30, 2023, surplus funds of $3.4 million were not available for dividends from the Savings Bank to the Company. 22. FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. GAAP established a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels: Level I: Level II: Quoted prices are available in active markets for identical assets or liabilities as of the reported date. Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed. Level III: Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. 48 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 22. FAIR VALUE MEASUREMENTS (Continued) Assets Measured at Fair Value on a Recurring Basis Investment Securities Available-for-Sale Fair values for securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities. The Company has no Level I or Level III investment securities. Level II investment securities were primarily comprised of investment-grade corporate bonds and U.S. dollar-denominated investment-grade corporate bonds of large foreign issuers. The following tables present the assets reported on a recurring basis on the Consolidated Balance Sheet at their fair value as of June 30, 2023 and June 30, 2022, by level within the fair value hierarchy. As required by GAAP, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Assets measured on a recurring basis: Investment securities – available for sale: U.S. government agency securities Corporate debt securities Foreign debt securities 7 Obligations of states and political subdivisions Collateralized mortgage obligations Assets measured on a recurring basis: Investment securities – available for sale: U.S. government agency securities Corporate debt securities Foreign debt securities 7 Obligations of states and political subdivisions Level I June 30, 2023 Level II Level III (Dollars in Thousands) Total - $ - - - - 2,899 $ 34,655 8,882 480 - 1,956 - $ 48,872 $ - $ - - - - - - $ 2,899 34,655 8,882 480 - 1,956 48,872 Level I June 30, 2022 Level II Level III (Dollars in Thousands) Total - $ - - - - $ 2,998 $ 99,353 26,744 668 129,763 $ - $ - - - - $ 2,998 99,353 26,744 668 129,763 $ $ $ $ 7U.S. dollar-denominated investment-grade corporate bonds of large foreign issuers. 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 22. FAIR VALUE OF FINANCIAL INSTRUMENTS The estimated fair value of the Company’s financial instruments not measured at fair value on a recurring basis are as follows: June 30, 2023 Carrying Amount Fair Value Level I (Dollars in Thousands) Level II Level III FINANCIAL ASSETS Certificates of deposit Investment securities – held to maturity Mortgage-backed securities – held to maturity: Agency Private-label Net loans receivable 19,512 18,160 184,180 290 73,138 19,512 16,923 162,640 418 67,964 - - - - - 19,512 16,923 162,640 - - FINANCIAL LIABILITIES Deposits: Certificates of deposit FHLB short-term fixed rate FHLB short-term variable rate FRB term funding 20,847 10,644 107,000 65,840 20,553 10,644 107,000 65,394 - 10,644 107,000 65,394 - - - - - - - 418 67,964 20,553 - - June 30, 2022 Carrying Amount Fair Value Level I (Dollars in Thousands) Level II Level III FINANCIAL ASSETS Certificates of deposit Investment securities – held to maturity Mortgage-backed securities – held to maturity: Agency Private-label Net loans receivable 350 9,955 127,231 328 76,487 350 9,345 114,540 402 72,715 - - - - - 350 9,345 114,540 - - - - - 402 72,715 FINANCIAL LIABILITIES Deposits: Certificates of deposit FHLB short-term fixed rate FHLB long-term fixed rate 21,504 167,208 5,000 19,849 167,208 4,999 - 167,208 - - - 19,849 - 4,999 All financial instruments included in the above tables, with the exception of net loans receivable, certificates of deposit liabilities, and FHLB advances – fixed rate, are carried at cost, which approximates the fair value of the instruments. 50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 23. PARENT COMPANY Condensed financial information of WVS Financial Corp. is as follows: CONDENSED BALANCE SHEET ASSETS Interest-earning deposits with subsidiary bank Investment securities available for sale Investment in subsidiary bank Other assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Other liabilities Stockholders' equity June 30, 2022 2023 (Dollars in Thousands) $ 4,316 $ - 32,798 108 2,690 1,998 31,938 176 $ 37,222 $ 36,802 $ 43 $ 37,179 43 36,759 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 37,222 $ 36,802 CONDENSED STATEMENT OF INCOME INCOME Interest on loans Interest on certificates of deposit Interest on investment securities available for sale Dividend from subsidiary Interest-earning deposits with subsidiary bank Total income 2023 Year Ended June 30, 2022 (Dollars in Thousands) 2021 $ 103 $ 19 33 1,125 - 66 - 19 975 - $ 86 8 21 1,075 2 1,280 1,060 1,192 OTHER OPERATING EXPENSE 65 172 129 Income before equity in undistributed earnings of subsidiary Equity in undistributed earnings of subsidiary Income before income taxes Income tax (benefit) expense 1,214 518 1,732 24 888 332 1,063 229 1,220 (24) 1,292 (4) NET INCOME $ 1,708 $ 1,244 $ 1,296 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 23. PARENT COMPANY (Continued) STATEMENT OF CASH FLOWS OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed earnings of subsidiary Amortization of unallocated ESOP shares Other, net Net cash provided by operating activities INVESTING ACTIVITIES Available for sale: 2023 Year Ended June 30, 2022 (Dollars in Thousands) 2021 $ 1,708 $ 1,244 $ 1,296 (518) 134 548 1,872 (332) 163 (217) 858 (229) 166 397 1,630 Purchases of investment securities available for sale Proceeds from repayments of investment securities available for sale Purchase of certificates of deposit Maturities/redemptions of certificates of deposit Net cash provided by (used for) investing activities (5,314) (9,271) (16,067) 7,340 (248) - 1,778 10,807 - - 1,536 3,500 - 993 (1,574) FINANCING ACTIVITIES Cash dividends paid Purchase of treasury stock Net cash used for financing activities (668) 1,356) (2,024) (696) (696) (1,392) (700) 344) (1,044) Increase (decrease) in cash and cash equivalents 1,626 1,002 (988) CASH AND CASH EQUIVALENTS BEGINNING OF YEAR CASH AND CASH EQUIVALENTS END OF YEAR 24. SUBSEQUENT EVENTS 2,690 1,688 2,676 $ 4,316 $ 2,690 $ 1,688 Management has reviewed events occurring through September 8, 2023, the date the financial statements were issued, and no subsequent events occurred requiring accrual or disclosure. 52 WVS FINANCIAL CORP. CORPORATE INFORMATION CORPORATE OFFICES WVS FINANCIAL CORP. • WEST VIEW SAVINGS BANK 9001 Perry Highway Pittsburgh, PA 15237 412-364-1911 COMMON STOCK The common stock of WVS Financial Corp. is traded on the OTCQX market under the symbol "WVFC". TRANSFER AGENT & REGISTRAR Computershare P.O. Box 43006 Providence, RI 02940-3006 1-800-368-5948 INVESTOR RELATIONS David J. Bursic 412-364-1911 SPECIAL COUNSEL Silver, Freedman, Taff & Tiernan LLP Washington, DC WEST VIEW SAVINGS BANK 9001 Perry Highway Pittsburgh, PA 15237 412-364-1911 WEST VIEW OFFICE 456 Perry Highway 412-931-2171 CRANBERRY OFFICE 20531 Perry Highway 724-776-3480 FRANKLIN PARK OFFICE 2566 Brandt School Road 724-935-7100 SHERWOOD OAKS OFFICE Serving Sherwood Oaks Cranberry Twp. LENDING DIVISION 2566 Brandt School Road 724-935-7400 BOARD OF DIRECTORS John A. Howard, Jr. Former Senior Vice President and Chief Financial Officer Laurel Capital Corp. David J. Bursic President and Chief Executive Officer WVS Financial Corp. and West View Savings Bank Lawrence M. Lehman Former Office Manager Dinnin & Parkins Associates Edward F. Twomey, III Senior Vice President Financial Institutions Group InspereX LLC Joseph W. Unger Former President White Heating, Inc. John W. Grace – Ex Officio Former President G & R Investment Consultants, Inc. EXECUTIVE OFFICERS John A. Howard, Jr. Chairman David J. Bursic Vice Chairman, President and Chief Executive Officer Michael R. Rutan Senior Vice President - Operations Corporate Secretary Robert B. Kastan, CPA Controller The members of the Board of Directors serve in that capacity for both the Company and the Savings Bank. BR929358-0923-COMBO

Continue reading text version or see original annual report in PDF format above