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.
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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
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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