UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-38491

Mid-Southern Bancorp, Inc.

(Exact name of registrant as specified in its charter)


Indiana	82-4821705
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

300 North Water Street, Salem, Indiana 47167 812-883-2639
(Address of principal executive offices, zip code, telephone number)

Not applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	MSVB	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer,” "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ◻	Accelerated Filer ◻	Non-Accelerated Filer ⌧

	Smaller Reporting Company ☒	Emerging Growth Company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of ~~November~~May 045, ~~2022~~2023, there were 2,~~869~~885,~~586~~039 shares of the registrant’s common stock outstanding.

Table of Contents

MID-SOUTHERN BANCORP, INC.

INDEX


		Page
Part I	Financial Information

	Item 1. Consolidated Financial Statements

	Consolidated Balance Sheets (unaudited)	3

	Consolidated Statements of Income (unaudited)	45

	Consolidated Statements of Comprehensive Income (Loss) (unaudited)	56

	Consolidated Statements of Changes in Stockholders’ Equity (unaudited)	67

	Consolidated Statements of Cash Flows (unaudited)	78

	Notes to Consolidated Financial Statements (unaudited)	89-3336

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3437-4347

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	4448

	Item 4. Controls and Procedures	4448

Part II	Other Information

	Item 1. Legal Proceedings	4549

	Item 1A. Risk Factors	4549

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4650

	Item 3. Defaults Upon Senior Securities	4650

	Item 4. Mine Safety Disclosures	4650

	Item 5. Other Information	4650

	Item 6. Exhibits	4751

Signatures		4852

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Table of Contents

Item 1. Consolidated Financial Statements

MID-SOUTHERN BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information) (Unaudited)


	~~September~~March 3031,		December 31,
	~~2022~~2023		~~2021~~2022
ASSETS
Cash and due from banks	$	1,~~690~~249	$	~~1,378~~979
Interest-bearing deposits with banks		23,~~320~~222		154,~~001~~705
Cash and cash equivalents		4,~~010~~471		165,~~379~~684

Securities available for sale, at fair value		~~103~~101,~~684~~559		~~107~~105,~~293~~351
Securities held to maturity		1813		2117

Loans, net of allowance for loan losses of $1,653 and $1,523, respectively		142,473		122,568
Loans, net of allowance for credit losses of $2,324 and $1,692, respectively		147,198		144,379

Federal Home Loan Bank stock, at cost		1,778		1,778
Real estate held for sale		99		99
Foreclosed real estate		16		—
Premises and equipment		2,~~208~~156		12,~~952~~150
Accrued interest receivable:
Loans		~~380~~443		~~296~~437
Securities		~~700~~599		~~701~~886
Cash value of life insurance		3,~~811~~839		3,~~930~~826
Other assets		54,~~387~~296		~~243~~4,710

Total Assets	$	~~264~~266,~~548~~368	$	~~254~~269,~~260~~218

LIABILITIES
Deposits:
Noninterest-bearing	$	27,~~565~~936	$	28,~~602~~232
Interest-bearing		~~174~~177,~~250~~701		~~168~~177,~~282~~832
Total deposits		~~201~~205,~~815~~637		~~196~~206,~~884~~064

Advances from Federal Home Loan Bank		31,000		10,000
Borrowings		25,000		29,000

Accrued interest payable		3182		1112
Accrued expenses and other liabilities		~~892~~706		~~836~~820
Total Liabilities		~~233~~231,~~738~~425		~~207~~235,~~731~~896

COMMITMENTS AND CONTINGENCIES		—		—

STOCKHOLDERS’ EQUITY
Preferred stock, 1,000,000 shares authorized, $0.01 par value, no shares issued and outstanding		—		—
Common stock, 30,000,000 shares authorized, $0.01 par value, 3,565,430 shares issued and 2,869,586 shares outstanding (3,016,653 in 2021)		36		36
Common stock, 30,000,000 shares authorized, $0.01 par value, 3,565,430 shares issued and 2,885,039 shares outstanding (2,885,039 in 2022)		36		36
Additional paid-in-capital		30,~~755~~800		30,~~694~~777
Retained earnings, substantially restricted		24,~~702~~611		2324,~~527~~916
Accumulated other comprehensive income (loss)		(12,957)		2,096
Accumulated other comprehensive loss		(9,006)		(10,831)
Unearned ESOP shares		(1,~~571~~497)		(1,~~649~~524)
Unearned stock compensation plan		(~~344~~407)		(~~473~~458)
Treasury stock, at cost - 695,844 shares (548,777 in 2021)		(9,811)		(7,702)
Treasury stock, at cost - 680,391 shares (680,391 in 2022)		(9,594)		(9,594)
Total Stockholders’ Equity		3034,~~810~~943		4633,~~529~~322

Total Liabilities and Stockholders’ Equity	$	~~264~~266,~~548~~368	$	~~254~~269,~~260~~218

See accompanying Notes to Consolidated Financial Statements.

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Table of Contents

MID-SOUTHERN BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share information) (Unaudited)


	Three Months Ended				~~Nine Months Ended~~
	~~September~~March 3031,				~~September 30,~~
	~~2022~~2023		~~2021~~2022		~~2022~~		~~2021~~
INTEREST INCOME
Loans, including fees	$	1,~~556~~721	$	1,~~317~~315	$	~~4,326~~	$	~~3,887~~
Investment securities:
Mortgage-backed securities		~~158~~190		~~137~~104		~~405~~		~~421~~
Municipal tax exempt		~~428~~413		381		~~1,233~~		~~1,130~~
Other debt securities		~~122~~115		6375		~~320~~		~~190~~
Federal Home Loan Bank dividends		2127		4		30		13
Interest-bearing deposits with banks and time deposits		917		14		16		2
Total interest income		2,~~294~~483		1,~~903~~883		~~6,330~~		~~5,643~~

INTEREST EXPENSE
Deposits		~~128~~346		~~121~~107		~~342~~		~~371~~
Borrowings		~~166~~277		43		~~275~~		~~130~~
Total interest expense		~~294~~623		~~164~~150		~~617~~		~~501~~

Net interest income		21,~~000~~860		1,~~739~~733		~~5,713~~		~~5,142~~

Provision for loan losses		85		—		135		—
Provision for credit losses		52		—
Net interest income after provision for loan losses		1,915		1,739		5,578		5,142
Net interest income after provision for credit losses		1,808		1,733

NONINTEREST INCOME
Deposit account service charges		~~100~~91		8781		~~271~~		~~207~~
Brokered loan fees		2515		4843		~~126~~		~~199~~
Increase in cash value of life insurance		14		16		43		47
Net loss on sales of securities available for sale		(27)		—
ATM and debit card fee income		144		138		432		412
Increase in cash value of life insurance		14		14
Gain on life insurance		—		—		36		—
ATM and debit card fee income		139		136
Other income		12		1211		36		35
Total noninterest income		~~295~~244		~~301~~285		~~944~~		~~900~~

NONINTEREST EXPENSE
Compensation and benefits		~~936~~891		~~902~~833		~~2,752~~		~~2,743~~
Occupancy and equipment		161		~~139~~138		~~437~~		~~405~~
Data processing		~~118~~211		~~103~~118		~~354~~		~~323~~
Professional fees		~~145~~169		~~145~~144		~~447~~		~~423~~
Loss on disposal of premises and equipment		10		—		17		—
Directors' compensation		89		81
Directors' compensation		84		70		254		242
Stockholders' meeting expense		18		18
Stockholders' meeting expense		8		12		41		50
Supervisory examinations		15		18
Supervisory examinations		18		17		53		50
Deposit insurance premiums		20		16
Deposit insurance premiums		16		10		49		40
Marketing and business development		26		22
Other expenses		~~171~~149		~~153~~129		~~524~~		~~479~~
Total noninterest expense		1,~~667~~749		1,~~551~~517		~~4,928~~		~~4,755~~

Income before income taxes		~~543~~303		~~489~~501		~~1,594~~		~~1,287~~

Income tax expense		31		33		89		56
Income tax (benefit) expense		(37)		34

Net Income	$	~~512~~340	$	~~456~~467	$	~~1,505~~	$	~~1,231~~

Earnings per common share:
Basic	$	0.1913	$	0.1617	$	~~0.55~~	$	~~0.42~~
Diluted	$	0.1913	$	0.1617	$	~~0.55~~	$	~~0.42~~

See accompanying Notes to Consolidated Financial Statements.

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Table of Contents

MID-SOUTHERN BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands) (Unaudited)


	Three Months Ended				~~Nine Months Ended~~
	~~September~~March 3031,				~~September 30,~~
	~~2022~~2023		~~2021~~2022		~~2022~~		~~2021~~
Net Income	$	~~512~~340	$	~~456~~467	$	~~1,505~~	$	~~1,231~~

Other Comprehensive Loss, net of tax
Other Comprehensive Income (Loss), net of tax
Unrealized losses on securities available for sale:
Unrealized gains (losses) on securities available for sale:
Net unrealized holding losses arising during the period		(5,381)		(892)		(20,037)		(1,665)
Net unrealized holding gains (losses) arising during the period		2,403		(7,837)
Income tax benefit		1,339		221		4,984		414
Income tax (expense) benefit		(598)		1,949
Net of tax amount		(41,~~042)~~805		(~~671~~5,888)		~~(15,053)~~		~~(1,251)~~

Other Comprehensive Loss, net of tax		(4,042)		(671)		(15,053)		(1,251)
Reclassification adjustment for realized losses included in net income during the period		(27)		—

Income tax benefit		7		—
Total Comprehensive Loss	$	(3,530)	$	(215)	$	(13,548)	$	(20)
Net of tax amount		(20)		—

Other Comprehensive Income (Loss), net of tax		1,825		(5,888)

Total Comprehensive Income (Loss)	$	2,165	$	(5,421)

See accompanying Notes to Consolidated Financial Statements.

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Table of Contents

MID-SOUTHERN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share information) (Unaudited)


							Accumulated				Unearned
			Additional				Other		Unearned		~~Unearned~~Stock
	Common		Paid-in		Retained		Comprehensive		ESOP		~~Stock~~Compensation		Treasury
	Stock		Capital		Earnings		Income (Loss)		Shares		~~Compensation~~Plan		Stock		Total
Balances at January 1, 2021	$	36	$	30,559	$	22,299	$	3,213	$	(1,769)	$	(422)	$	(4,912)	$	49,004

Net income		—		—		378		—		—		—		—		378
Other comprehensive loss		—		—		—		(1,505)		—		—		—		(1,505)
Cash dividends ($0.03 per share)		—		—		(91)		—		—		—		—		(91)
ESOP shares committed to be released		—		15		—		—		26		—		—		41
Purchase of 327 treasury shares		—		—		—		—		—		—		(5)		(5)
Stock compensation expense		—		13		—		—		—		45		—		58

Balances at March 31, 2021	$	36	$	30,587	$	22,586	$	1,708	$	(1,743)	$	(377)	$	(4,917)	$	47,880

Net income		—		—		397		—		—		—		—		397
Other comprehensive income		—		—		—		925		—		—		—		925
Cash dividends ($0.03 per share)		—		—		(89)		—		—		—		—		(89)
ESOP shares committed to be released		—		14		—		—		26		—		—		40
Purchase of 5,612 treasury shares		—		—		—		—		—		—		(86)		(86)
Forfeiture of unearned stock awards		—		—		—		—		—		3		(3)		—
Exercise of stock options		—		(9)		—		—		—		—		16		7
Stock compensation expense		—		13		—		—		—		29		—		42

Balances at June 30, 2021	$	36	$	30,605	$	22,894	$	2,633	$	(1,717)	$	(345)	$	(4,990)	$	49,116

Net income		—		—		456		—		—		—		—		456
Other comprehensive loss		—		—		—		(671)		—		—		—		(671)
Cash dividends ($0.03 per share)		—		—		(85)		—		—		—		—		(85)
ESOP shares committed to be released		—		14		—		—		26		—		—		40
Purchase of 150,663 treasury shares		—		—		—		—		—		—		(2,681)		(2,681)
Stock compensation expense		—		13		—		—		—		30		—		43

Balances at September 30, 2021	$	36	$	30,632	$	23,265	$	1,962	$	(1,691)	$	(315)	$	(7,671)	$	46,218

Balances at January 1, 2022	$	36	$	30,694	$	23,527	$	2,096	$	(1,649)	$	(473)	$	(7,702)	$	46,529

Net income		—		—		467		—		—		—		—		467
Other comprehensive loss		—		—		—		(5,888)		—		—		—		(5,888)
Cash dividends ($0.04 per share)		—		—		(113)		—		—		—		—		(113)
ESOP shares committed to be released		—		13		—		—		26		—		—		39
Purchase of 16,117 treasury shares		—		—		—		—		—		—		(241)		(241)
Forfeiture of unearned stock awards		—		—		—		—		—		2		(2)		—
Exercise of stock options		—		(8)		—		—		—		—		111		103
Stock compensation expense		—		13		—		—		—		41		—		54

Balances at March 31, 2022	$	36	$	30,712	$	23,881	$	(3,792)	$	(1,623)	$	(430)	$	(7,834)	$	40,950

Net income		—		—		526		—		—		—		—		526
Balances at January 1, 2023	$	36	$	30,777	$	24,916	$	(10,831)	$	(1,524)	$	(458)	$	(9,594)	$	33,322
Other comprehensive loss		—		—		—		(5,123)		—		—		—		(5,123)
Cash dividends ($0.04 per share)		—		—		(108)		—		—		—		—		(108)
ESOP shares committed to be released		—		11		—		—		26		—		—		37
Purchase of 136,780 treasury shares		—		—		—		—		—		—		(1,952)		(1,952)
Forfeiture of unearned stock awards		—		—		—		—		—		2		(2)		—
Stock compensation expense		—		11		—		—		—		41		—		52

Balances at June 30, 2022	$	36	$	30,734	$	24,299	$	(8,915)	$	(1,597)	$	(387)	$	(9,788)	$	34,382
Impact of adoption of ASC 326		—		—		(481)		—		—		—		—		(481)
Net income		—		—		340		—		—		—		—		340
Other comprehensive income		—		—		—		1,825		—		—		—		1,825
Cash dividends ($0.06 per share)		—		—		(164)		—		—		—		—		(164)
ESOP shares committed to be released		—		7		—		—		27		—		—		34
Stock compensation expense		—		16		—		—		—		51		—		67

Net income		—		—		512		—		—		—		—		512
Balances at March 31, 2023	$	36	$	30,800	$	24,611	$	(9,006)	$	(1,497)	$	(407)	$	(9,594)	$	34,943
Other comprehensive loss		—		—		—		(4,042)		—		—		—		(4,042)
Cash dividends ($0.04 per share)		—		—		(109)		—		—		—		—		(109)
ESOP shares committed to be released		—		10		—		—		26		—		—		36
Purchase of 1,589 treasury shares		—		—		—		—		—		—		(21)		(21)
Forfeiture of unearned stock awards		—		—		—		—		—		2		(2)		—
Stock compensation expense		—		11		—		—		—		41		—		52

Balances at September 30, 2022	$	36	$	30,755	$	24,702	$	(12,957)	$	(1,571)	$	(344)	$	(9,811)	$	30,810

See accompanying Notes to Consolidated Financial Statements.

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MID-SOUTHERN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


	~~Nine~~Three Months Ended
	~~September~~March 3031,
	~~2022~~2023		~~2021~~2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	~~1,505~~340	$	~~1,231~~467
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of premiums and accretion of discounts on securities, net		~~339~~92		~~279~~123
Provision for loan losses		135		—
Provision for credit losses		52		—
Stock compensation expense		~~158~~67		~~143~~54
Depreciation expense		~~145~~48		~~126~~45
Loss on disposal of premises and equipment		17		—
ESOP compensation expense		34		39
ESOP compensation expense		112		121
Deferred income taxes		(19)		(32)
Deferred income taxes		(104)		(28)
Increase in cash value of life insurance		(14)		(14)
Increase in cash value of life insurance		(43)		(47)
Net loss on sales of securities available for sale		27		—
Gain on life insurance		(36)		—
Decrease in accrued interest receivable		281		58
(Increase) decrease in accrued interest receivable		(83)		7
Increase in accrued interest payable		70		—
Increase in accrued interest payable		20		1
Net change in other assets and liabilities		(183)		(101)
Net change in other assets and liabilities		(32)		24
Net Cash Provided By Operating Activities		795		639
Net Cash Provided By Operating Activities		2,133		1,857

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale		~~(25,951)~~—		(1423,~~084~~119)
Principal collected on mortgage-backed securities available for sale		~~6,347~~972		52,~~513~~932
Proceeds from maturities of securities available for sale		21,~~837~~030		2,~~853~~109
Principal collected on mortgage-backed securities held to maturity		3		8
Proceeds from sales of securities available for sale		4,101		—
Purchase of Federal Home Loan Bank stock		(1,057)		—
Principal collected on mortgage-backed securities held to maturity		4		1
Proceeds from redemption of Federal Home Loan Bank Stock		57—		—57
Net increase in loans receivable		(203,~~040~~470)		(4,~~905~~738)
Purchase of premises and equipment		(~~386~~54)		(~~100~~40)
Proceeds from settlement of life insurance		203		—
Investment in cash value of life insurance		—		(2)
Investment in cash value of life insurance		(5)		(2)
Net Cash Provided By (Used In) Investing Activities		2,583		(22,800)
Net Cash Used In Investing Activities		(37,992)		(10,717)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		4,931		21,115
Net increase (decrease) in deposits		(427)		12,774
Repayments to Federal Home Loan Bank		(1029,000)		~~(1,000)~~—
Proceeds from Federal Home Loan Bank		31,000		—
Proceeds from Federal Reserve		25,000		—
Proceeds from the exercise of stock options		~~103~~—		7103
Purchase of treasury stock		~~(2,214)~~—		(~~2,772~~241)
Cash dividends paid		(~~330~~164)		(~~265~~113)
Net Cash Provided By Financing Activities		23,490		17,085
Net Cash Provided By (Used In) Financing Activities		(4,591)		12,523

Net Increase (Decrease) in Cash and Cash Equivalents		(12,369)		8,225
Net Decrease in Cash and Cash Equivalents		(1,213)		(9,638)

Cash and cash equivalents at beginning of year		165,~~379~~684		916,~~661~~379

Cash and Cash Equivalents at End of Period	$	4,~~010~~471	$	176,~~886~~741

Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest	$	~~597~~553	$	~~500~~150
Net tax payments		~~145~~—		27—

See accompanying Notes to Consolidated Financial Statements.

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MID-SOUTHERN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Presentation of Interim Information

Mid-Southern Bancorp, Inc., (the "Company") was incorporated in January 2018 and became the holding company for Mid-Southern Savings Bank, FSB (the "Bank"), on July 11, 2018, upon the completion of the Bank’s conversion from the mutual holding company ownership structure and the Company’s related public stock offering. Please see Note 2 – Conversion and Stock Issuance for more information.

The accompanying unaudited consolidated financial statements and notes have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC on March 2524, ~~2022~~2023 ("~~2021~~2022 Form 10-K").

In the opinion of management, the unaudited consolidated financial statements include all adjustments considered necessary for a fair presentation of the unaudited interim consolidated financial statements in accordance with GAAP. All of these adjustments are of a normal, recurring nature. Such adjustments are the only adjustments included in the unaudited consolidated financial statements. Interim results are not necessarily indicative of results for a full year or any other period.

The unaudited consolidated financial statements include the accounts of the Company and its subsidiary. All material intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform with the current period presentation. The reclassifications had no effect on net income or stockholders’ equity. In preparing the unaudited consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the allowance for ~~loan~~credit losses, the valuation of foreclosed real estate and the underlying collateral of ~~impaired~~individually analyzed loans, deferred tax assets, and the fair value of financial instruments.

On April 5, 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an "emerging growth company" we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our ~~condensed~~ consolidated financial statements may not be comparable to companies that comply with such new or revised accounting standards.

2. Conversion and Stock Issuance

The Company, an Indiana corporation, was organized by Mid-Southern, M.H.C. (the “MHC") and the Bank in connection with the MHC’s plan of conversion from mutual to stock form of ownership (the "Conversion"). Upon consummation of the Conversion, which occurred on July 11, 2018, the Company became the holding company for the Bank and now owns all of the issued and outstanding shares of the Bank’s common stock.

3. Investment Securities

Investment securities have been classified in the consolidated balance sheets according to management’s intent. Debt securities held by the Company include U.S. Treasury and other U.S. government agency obligations, mortgage-backed securities and other debt securities issued by the Government National Mortgage Association ("GNMA"), a U.S. government agency, and mortgage-backed securities and collateralized mortgage obligations issued by the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"), which are government-sponsored enterprises. Mortgage-backed securities ("MBS") represent participating interests in pools of long-term first mortgage loans originated and serviced by the issuers

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~~of the securities. Collateralized mortgage obligations ("CMO") are complex mortgage~~MID-~~backed~~SOUTHERN ~~securities~~BANCORP, ~~that restructure the cash flows and risks of the underlying mortgage collateral~~INC. ~~The Company also holds debt securities issued by municipalities and political subdivisions of state and local governments.~~

~~Investment~~NOTES ~~securities~~TO atCONSOLIDATED ~~September 30, 2022~~FINANCIAL ~~and December 31, 2021 are summarized as follows:~~STATEMENTS

(Unaudited)


			Gross		Gross
(In thousands)	Amortized		Unrealized		Unrealized		Fair
September 30, 2022	Cost		Gains		Losses		Value

Securities available for sale:
Mortgage-backed securities:
Agency MBS	$	13,585	$	—	$	2,090	$	11,495
Agency CMO		21,805		2		2,136		19,671
		35,390		2		4,226		31,166

Other debt securities:
U.S. Treasury securities		9,837		—		421		9,416
U.S. Government agency obligations		1,996		—		178		1,818
Municipal obligations		73,708		3		12,427		61,284

Total securities available for sale	$	120,931	$	5	$	17,252	$	103,684

Securities held to maturity:
Mortgage-backed securities:
Agency MBS	$	18	$	—	$	—	$	18

Total securities held to maturity	$	18	$	—	$	—	$	18

December 31, 2021

Securities available for sale:
Mortgage-backed securities:
Agency MBS	$	11,941	$	47	$	135	$	11,853
Agency CMO		24,196		47		465		23,778
		36,137		94		600		35,631

Other debt securities:
Municipal obligations		68,366		3,318		22		71,662

Total securities available for sale	$	104,503	$	3,412	$	622	$	107,293

Securities held to maturity:
Mortgage-backed securities:
Agency MBS	$	21	$	—	$	—	$	21

Total securities held to maturity	$	21	$	—	$	—	$	21

mortgage-backed securities and other debt securities issued by the Government National Mortgage Association ("GNMA"), a U.S. government agency, mortgage-backed securities and collateralized mortgage obligations issued by the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"), which are government-sponsored enterprises. Mortgage-backed securities ("MBS") represent participating interests in pools of long-term first mortgage loans originated and serviced by the issuers of the securities. Collateralized mortgage obligations ("CMO") are complex mortgage-backed securities that restructure the cash flows and risks of the underlying mortgage collateral. The Company also holds debt securities issued by municipalities and political subdivisions of state and local governments.

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MID-SOUTHERN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~-9-~~Investment securities at March 31, 2023 and December 31, 2022 are summarized as follows:


			Gross		Gross
(In thousands)	Amortized		Unrealized		Unrealized		Fair
March 31, 2023	Cost		Gains		Losses		Value

Securities available for sale:
Mortgage-backed securities:
Agency MBS	$	12,950	$	—	$	1,742	$	11,208
Agency CMO		20,564		43		2,088		18,519
		33,514		43		3,830		29,727

Other debt securities:
U.S. Treasury securities		9,843		—		316		9,527
U.S. Government agency obligations		1,983		—		130		1,853
Municipal obligations		68,206		74		7,828		60,452
		80,032		74		8,274		71,832

Total securities available for sale	$	113,546	$	117	$	12,104	$	101,559

Securities held to maturity:
Mortgage-backed securities:
Agency MBS	$	13	$	—	$	—	$	13

Total securities held to maturity	$	13	$	—	$	—	$	13

December 31, 2022

Securities available for sale:
Mortgage-backed securities:
Agency MBS	$	13,257	$	—	$	1,868	$	11,389
Agency CMO		21,233		18		2,257		18,994
		34,490		18		4,125		30,383

Other debt securities:
U.S. Treasury securities		9,840		—		401		9,439
U.S. Government agency obligations		1,996		—		183		1,813
Municipal obligations		73,442		18		9,744		63,716
		85,278		18		10,328		74,968

Total securities available for sale	$	119,768	$	36	$	14,453	$	105,351

Securities held to maturity:
Mortgage-backed securities:
Agency MBS	$	17	$	—	$	—	$	17

Total securities held to maturity	$	17	$	—	$	—	$	17

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~~The~~MID-SOUTHERN ~~amortized cost and fair value of debt securities as of September 30~~BANCORP, ~~2022,~~ ~~by contractual maturity, are shown below~~INC. ~~Expected maturities of MBS and CMO may differ from contractual maturities because the mortgages underlying the obligations may be prepaid without penalty.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value
Due in one year or less	$	2,270	$	2,229	$	—	$	—
Due after one year through five years		14,717		14,042		—		—
Due after five years through ten years		5,451		5,132		—		—
Due after ten years		63,103		51,115		—		—
		85,541		72,518		—		—
MBS and CMO		35,390		31,166		18		18

	$	120,931	$	103,684	$	18	$	18

The amortized cost and fair value of debt securities as of March 31, 2023, by contractual maturity, are shown below. Expected maturities of MBS and CMO may differ from contractual maturities because the mortgages underlying the obligations may be prepaid without penalty.

Information pertaining to investment securities available for sale with gross unrealized losses at September 30, 2022, aggregated by investment category and the length of time that individual investment securities have been in a continuous loss position, follows.


	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value
Due in one year or less	$	4,586	$	4,481	$	—	$	—
Due after one year through five years		11,208		10,801		—		—
Due after five years through ten years		4,313		4,090		—		—
Due after ten years		59,925		52,460		—		—
		80,032		71,832		—		—
MBS and CMO		33,514		29,727		13		13

	$	113,546	$	101,559	$	13	$	13


	Number of			Gross
(Dollars in thousands)	Investment	Fair		Unrealized
September 30, 2022	Positions	Value		Losses
Securities available for sale:
Continuous loss position less than 12 months:
US Treasury	6	$	9,417	$	421
Agency MBS	8		4,765		650
Agency CMO	10		6,763		273
Federal agency obligations	1		1,818		178
Municipal obligations	118		58,374		11,724
Total less than 12 months	143		81,137		13,246

Continuous loss position more than 12 months:
Agency MBS	5		6,730		1,440
Agency CMO	10		11,472		1,863
Municipal obligations	3		1,728		703
Total more than 12 months	18		19,930		4,006

Total securities available for sale	161	$	101,067	$	17,252

Information pertaining to investment securities available for sale with gross unrealized losses at March 31, 2023, aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows.

-10-


	Number of			Gross
(Dollars in thousands)	Investment	Fair		Unrealized
March 31, 2023	Positions	Value		Losses
Securities available for sale:
Continuous loss position less than 12 months:
Agency CMO	4	$	1,144	$	16
Municipal obligations	10		5,287		236
Total less than 12 months	14		6,431		252

Continuous loss position more than 12 months:
U.S. Treasury securities	6		9,527		316
U.S. Government agency obligations	1		1,852		130
Agency MBS	13		11,208		1,742
Agency CMO	15		15,948		2,072
Municipal obligations	82		45,997		7,592
Total more than 12 months	117		84,532		11,852

Total securities available for sale	131	$	90,963	$	12,104

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~~Information~~MID-SOUTHERN ~~pertaining to investment securities available for sale with gross unrealized losses at December 31~~BANCORP, ~~2021,~~ ~~aggregated by investment category and the length of time that individual investment securities have been in a continuous loss position, follows~~INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Number of			Gross
(Dollars in thousands)	Investment	Fair		Unrealized
December 31, 2021	Positions	Value		Losses
Securities available for sale:
Continuous loss position less than 12 months:
Agency MBS	4	$	7,964	$	113
Agency CMO	4		4,792		46
Municipal obligations	3		2,452		22
Total less than 12 months	11		15,208		181

Continuous loss position more than 12 months:
Agency MBS	1		879		22
Agency CMO	8		12,553		419
Total more than 12 months	9		13,432		441

Total securities available for sale	20	$	28,640	$	622

Information pertaining to investment securities available for sale with gross unrealized losses at December 31, 2022, aggregated by investment category and the length of time that individual investment securities have been in a continuous loss position, follows.

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.


	Number of			Gross
(Dollars in thousands)	Investment	Fair		Unrealized
December 31, 2022	Positions	Value		Losses
Securities available for sale:
Continuous loss position less than 12 months:
U.S. Treasury securities	6	$	9,439	$	401
U.S. Government agency obligations	1		1,812		183
Agency MBS	8		4,701		559
Agency CMO	8		4,212		204
Municipal obligations	89		46,971		6,309
Total less than 12 months	112		67,135		7,656

Continuous loss position more than 12 months:
Agency MBS	5		6,687		1,309
Agency CMO	12		13,357		2,053
Municipal obligations	25		12,588		3,435
Total more than 12 months	42		32,632		6,797

Total securities available for sale	154	$	99,767	$	14,453

At September 30, 2022, the Company had no debt securities in the held to maturity classification in a loss position. At September 30, 2022, the debt securities available for sale in a loss position were 97.5% of the Company’s total available for sale securities portfolio. All of the debt securities in a loss position at September 30, 2022 were backed by residential first mortgage loans or were obligations issued by federal or local government-sponsored enterprises. These unrealized losses relate principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition for purposes of evaluating whether declines in value are other-than-temporary, management considers whether the securities are issued by the federal government, its agencies or sponsored enterprises or local governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As the Company has the ability to hold the debt securities until maturity, or for the foreseeable future if classified as available for sale, no declines are deemed to be other-than-temporary.

There were no securities sold during the three- and nine-month periods ended September 30, 2022. There were no securities sold during the three- and nine-month periods ended September 30, 2021.

4At March 31, 2023, the Company had no debt securities in the held to maturity classification in a loss position. ~~Loans~~ The debt securities available for sale in a loss position were 89.6% and ~~Allowance~~94.7% of the Company’s total available for ~~Loan~~sale ~~Losses~~securities portfolio at March 31, 2023 and December 31, 2022, respectively. All of the debt securities in a loss position at March 31, 2023 were backed by residential first mortgage loans or were obligations issued by federal or local government-sponsored enterprises. These unrealized losses occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase. The Company does not consider available-for-sale securities with unrealized losses at March 31, 2023 to be experiencing credit losses and recognized no resulting allowance for credit losses. It is more likely than not that the Company will not be required to sell these investments before recovery of the amortized cost basis, which may be the maturity dates of the securities.

~~The~~During the three-month period ended March 31, 2023, the Company’s ~~loan~~realized ~~and~~gross ~~allowance~~losses of $27,000 on the sale of available for ~~loan~~sale ~~loss~~municipal ~~policies~~securities. ~~are~~There aswere ~~follows:~~no securities sales during the three-month period ended March 31, 2022.

Loans Held for Investment. Loans are stated at unpaid principal balances, less net deferred loan fees and the allowance for loan losses. The Company grants real estate mortgages, commercial business and consumer loans. A substantial portion of the loan portfolio is represented by mortgage loans to customers in southern Indiana. The ability of the Company’s customers to honor their contracts is dependent upon the real estate and general economic conditions in this area.

At March 31, 2023, U.S. agency mortgage-~~11-~~backed available for sale investment securities with a par value of $28.5 million were pledged as collateral for an advance from the Federal Reserve through the Bank Term Funding Program (“BTFP”). There were no investment securities pledged as collateral for any purpose as of December 31, 2022.

4. Loans and Allowance for Credit Losses

The Company’s loan and allowance for credit loss policies are as follows:

Loans Held for Investment. Loans are stated at unpaid principal balances, less net deferred loan fees and the allowance for credit losses. The Company grants real estate mortgages, commercial business and consumer loans.

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MID-SOUTHERN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A substantial portion of the loan portfolio is represented by mortgage loans to customers in southern Indiana. The ability of the Company’s customers to honor their contracts is dependent upon the real estate and general economic conditions in this area.

Loan origination and commitment fees, as well as certain direct costs of underwriting and closing loans, are deferred and amortized as a yield adjustment to interest income over the lives of the related loans using the interest method. Amortization of net deferred loan fees is discontinued when a loan is placed on nonaccrual status.

Nonaccrual Loans. The recognition of income on a loan is discontinued and previously accrued interest is reversed when interest or principal payments become 90 days past due unless, in the opinion of management, the outstanding interest remains collectible. Past due status is determined based on contractual terms. Generally, by applying the cash receipts method, interest income is subsequently recognized only as received until the loan is returned to accrual status. The cash receipts method is used when the likelihood of further loss on the loan is remote. Otherwise, the Company applies the cost recovery method and applies all payments as a reduction of the unpaid principal balance until the loan qualifies for return to accrual status. Interest income on ~~impaired~~nonaccrual loans is recognized using the cost recovery method, unless the likelihood of further loss on the loan is remote.

A loan is restored to accrual status when all principal and interest payments are brought current and the borrower has demonstrated the ability to make future payments of principal and interest as scheduled, which generally requires that the borrower demonstrate a period of performance of at least six consecutive months.

Allowance for ~~Loan~~Credit Losses on Loans. The allowance for ~~loan~~credit losses on loans is established as losses are estimated to have occurred through a provision for ~~loan~~credit losses charged to earnings. ~~Additions to the allowance for loan losses are made by the provision for loan losses charged to earnings.~~ Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

~~The~~On January 1, 2023, the Company ~~uses~~implemented aAccounting ~~disciplined~~Standards ~~process~~Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326) as amended by ASU 2018-19, ASU 2019-04, ASU 2019-05 and ~~methodology~~ASU 2022-02 (collectively “ASC 326”), commonly referred to ~~evaluate~~as the current expected credit loss methodology (“CECL”). Under the CECL model, the allowance for ~~loan~~credit losses on atloans ~~least~~represents a ~~quarterly~~valuation ~~basis~~allowance ~~that~~estimated isat ~~based~~each ~~upon~~balance ~~management’s~~sheet ~~periodic~~date ~~review~~in ofaccordance ~~the~~with ~~collectability~~GAAP ofthat is deducted from the loans’ inamortized ~~light~~cost ofbasis ~~historical~~to ~~experience,~~present the ~~nature~~net ~~and~~amount ~~volume~~expected ofto be collected on the loan portfolio,. ~~adverse~~As ~~situations~~a ~~that~~result, ~~may affect~~ the ~~borrower’s~~opening ~~ability~~balances tofor ~~repay,~~the ~~estimated~~allowance ~~value~~for ofcredit ~~any~~losses ~~underlying~~increased ~~collateral~~by $557,000 ~~and~~as ~~prevailing~~of ~~economic~~January ~~conditions~~1, 2023. ~~This~~The ~~evaluation~~adoption isreduced ~~inherently~~the ~~subjective~~Company’s asretained itearnings ~~requires~~on ~~estimates~~a ~~that~~tax-effected ~~are~~basis ~~susceptible~~of to$425,000, ~~significant~~with ~~revision~~no asimpact ~~more~~on ~~information becomes available~~earnings.

The ~~allowance~~Company ~~consists~~measures ofexpected ~~specific~~credit ~~and~~losses ~~general~~for ~~components.~~its ~~The~~portfolio ~~specific~~segments ~~component~~utilizing ~~relates~~the toWeighted ~~loans~~Average ~~that~~Remaining ~~are~~Maturity ~~individually~~(“WARM”) ~~evaluated~~allowance for ~~impairment~~credit orlosses ~~loans~~methodology. ~~otherwise~~The ~~classified~~WARM asmethodology ~~doubtful~~uses oran ~~substandard.~~average ~~For~~loss ~~such~~rate ~~loans~~for ~~that~~each ~~are~~loan ~~classified~~segment asand ~~impaired,~~applies anthat ~~allowance~~rate isto ~~established~~future ~~when~~expected ~~the~~outstanding ~~discounted~~balances ~~cash~~of ~~flows~~that orsegment. ~~collateral~~The ~~value~~Company ofselected the ~~impaired~~WARM methodology given the loan isportfolio’s ~~lower~~current ~~than~~size ~~the~~and ~~carrying~~complexity. ~~value~~The Company has elected to exclude accrued interest receivable and net deferred fees from its calculation of ~~that~~the ~~loan~~allowance for credit losses.

The ~~general~~Company ~~component~~uses ~~covers~~a ~~non-classified~~disciplined ~~loans~~process and ~~classified~~methodology ~~loans that are found, upon individual evaluation,~~ to ~~not~~evaluate bethe ~~impaired.~~allowance ~~Such~~for ~~loans~~credit ~~are pooled by portfolio segment and~~ losses ~~are~~on ~~modeled~~loans ~~using~~on ~~annualized~~at ~~historical~~least ~~loss~~a ~~experience~~quarterly ~~adjusted~~basis ~~for~~that ~~qualitative factors. The historical loss experience~~ is ~~determined by portfolio segment and is~~ based onupon ~~the Company~~management’s ~~actual~~periodic ~~loss~~review ~~history~~of ~~over~~ the ~~most~~collectability ~~recent~~of ~~twenty~~the ~~calendar~~loans ~~quarters~~in ~~unless~~light ~~the~~of historical ~~loss~~ experience, isthe ~~not~~nature ~~considered~~and ~~indicative~~volume of the ~~level~~loan ofportfolio, ~~risk~~adverse insituations ~~the~~that ~~remaining~~may ~~balance~~affect ofthe aborrower’s ~~particular~~ability ~~portfolio~~to ~~segment~~repay, inestimated ~~which~~value ~~case~~of anany ~~adjustment~~underlying iscollateral, ~~determined~~and byprevailing ~~management~~economic conditions. ~~The~~This ~~Company’s~~evaluation ~~historical loss experience~~ is ~~then~~inherently ~~adjusted~~subjective ~~for~~as ~~qualitative~~it ~~factors~~requires estimates that are ~~reviewed~~susceptible onto asignificant ~~quarterly~~revision ~~basis~~as more information becomes available.

Management’s determination of the allowance for loan losses considers changes and trends in the following qualitative loss factors: lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices and management experience, national and local economic conditions, new loan trends, past due and nonaccrual loans, loan reviews, collateral values, credit concentrations and other internal and external factors such as competition, legal and regulatory changes. Each loan pool’s historical loss rate is adjusted based on positive or negative changes in the qualitative loss factor. This adjustment is what determines the adjusted loss rate used in management’s allowance for loan loss adequacy calculation.14-

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Table of Contents

~~for~~MID-SOUTHERN ~~loans~~BANCORP, ~~considered impaired in order to evaluate the effectiveness of the estimation process and make any changes in the methodology as necessary~~INC.

~~The~~NOTES ~~following~~TO ~~portfolio~~CONSOLIDATED ~~segments~~FINANCIAL are considered in the allowance for loan loss analysis: one-to-four family residential real estate, multi-family residential real estate, residential construction, commercial construction, commercial real estate non owner occupied, commercial real estate owner occupied, farmland, junior liens, home equity lines of credit, commercial business, and consumer loans.STATEMENTS

(Unaudited)

The allowance consists of specific and general components. The specific component relates to loans that are individually evaluated or loans otherwise classified as doubtful or substandard. For such loans that are classified as individually analyzed, an allowance is established when the discounted cash flows or collateral value of the individually analyzed loan is lower than the carrying value of that loan.

The general component covers non-classified loans and classified loans that are not individually analyzed. Such loans are pooled by portfolio segment and losses are modeled using annualized historical loss experience adjusted for qualitative factors. The historical loss experience is determined by portfolio segment and is based on the Company’s actual loss history since 2008 unless the historical loss experience is not considered indicative of the level of risk in the remaining balance of a particular portfolio segment, in which case an adjustment is determined by management. The Company’s historical loss experience is then adjusted for qualitative factors that are reviewed on a quarterly basis.

Management’s determination of the allowance for credit losses on loans considers changes and trends in the following qualitative loss factors: lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices and management experience, national and local economic conditions, new loan trends, past due and nonaccrual loans, loan reviews, collateral values, credit concentrations and other internal and external factors such as competition, legal and regulatory changes. Each loan pool’s historical loss rate is adjusted based on positive or negative changes in the qualitative loss factor. This adjustment determines the adjusted loss rate used in management’s allowance for credit loss adequacy calculation.

Management exercises significant judgment in evaluating the relevant historical loss experience and the qualitative factors. Management also monitors the differences between estimated and actual incurred loan losses for individually analyzed loans in order to evaluate the effectiveness of the estimation process and make any changes in the methodology as necessary.

The following portfolio segments are considered in the allowance for credit losses analysis: one-to-four family residential real estate, multi-family residential real estate, construction, commercial real estate, commercial business, and consumer loans.

Residential real estate loans primarily consist of loans to individuals for the purchase or refinance of their primary residence, with a smaller portion of the segment secured by non-owner-occupied residential investment properties and multi-family residential investment properties. Also, included within the residential real estate loan portfolio are home equity loans and junior lien loans, which are secured by liens on the borrower’s personal residence. The risks associated with residential real estate loans are closely correlated to the local housing market and general economic conditions, as repayment of the loans is primarily dependent on the borrower’s or tenant’s personal cash flow and employment status.

The Company’s construction loan portfolio consists of single-family residential properties, multi-family properties and commercial projects, and includes both owner-occupied and speculative investment properties. Risks inherent in construction lending are related to the market value of the property held as collateral, the cost and timing of constructing or improving a property, the borrower’s ability to use funds generated by a project to service a loan until a project is completed, movements in interest rates and the real estate market during the construction phase, and the ability of the borrower to obtain permanent financing.

Commercial real estate loans are comprised of loans secured by various types of collateral including, office buildings, warehouses, retail space and mixed-use buildings located in the Company’s primary lending area. Risks related to commercial real estate lending are related to the market value of the property taken as collateral, the underlying cash flows and general economic condition of the local real estate market. Repayment of these loans is generally dependent on the ability of the borrower to attract tenants at lease rates or general business operating cash flows that provide for adequate debt service and can be impacted by local economic conditions which impact vacancy rates and the general level of business activity. The Company generally obtains loan guarantees from financially capable parties for commercial real estate loans.

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Table of Contents

MID-SOUTHERN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

operating cash flows that provide for adequate debt service and can be impacted by local economic conditions which impact vacancy rates and the general level of business activity. The Company generally obtains loan guarantees from financially capable parties for commercial real estate loans.

Commercial business loans include lines of credit to businesses, term loans and letters of credit secured by business assets such as equipment, accounts receivable, inventory, or other assets excluding real estate and are generally made to finance capital expenditures or fund operations. Commercial loans contain risks related to the value of the collateral securing the loan and the repayment is primarily dependent upon the financial success and viability of the borrower. As with commercial real estate loans, the Company generally obtains loan guarantees from financially capable parties for commercial business loans.

Consumer loans consist primarily of home improvement loans, automobile and truck loans, boat loans, mobile home loans, loans secured by savings deposits, and other personal loans. The risks associated with these loans are related to the local housing market and local economic conditions including the unemployment level.

~~Loan~~Allowance ~~Charge-Offs.~~for ~~For~~Credit ~~portfolio~~Losses ~~segments~~on ~~other~~Unfunded ~~than~~Loan ~~consumer~~Commitments. ~~loans,~~The ~~the~~ Company’s ~~practice~~records isan toallowance ~~charge-off~~for ~~any~~credit ~~loan~~losses oron ~~portion~~unfunded ~~of a~~ loan ~~when~~commitments ~~the~~through ~~loan~~a isprovision ~~determined~~for bycredit ~~management~~losses. toThe beallowance ~~uncollectible~~for ~~due~~credit tolosses ~~the~~on ~~borrower’s~~unfunded ~~failure~~loan tocommitments ~~meet~~is ~~repayment~~estimated ~~terms,~~by ~~the~~loan ~~borrower’s~~segment ~~deteriorating~~under ~~or deteriorated financial condition,~~ the ~~depreciation~~CECL ofmodel ~~the~~using ~~underlying collateral,~~ the ~~loan’s~~same ~~classification~~methodologies as afunded ~~loss~~portfolio ~~by regulatory examiners~~loans, ortaking ~~for~~into ~~other~~consideration ~~reasons. A partial charge-off is recorded on a loan when~~ the ~~collectability~~likelihood ofthat afunding ~~portion~~will ofoccur ~~the~~and ~~loan has been confirmed, such as when a loan~~ is ~~discharged~~included in ~~bankruptcy,~~accrued ~~the~~expenses ~~collateral~~and ~~is liquidated, a loan is restructured at a reduced principal balance, or~~ other ~~identifiable~~liabilities ~~events~~on ~~that lead management to determine~~ the ~~full~~Company’s ~~principal~~consolidated balance ofsheets. ~~the~~Upon ~~loan~~implementation ~~will~~of ~~not~~ASC be326 ~~repaid.~~on AJanuary ~~specific~~1, ~~reserve~~2023, isthe ~~recognized~~Company asrecorded aan ~~component of the~~ allowance for ~~estimated~~credit losses on ~~loans~~unfunded ~~individually~~loan ~~evaluated~~commitments ~~for~~of ~~impairment~~$73,000. ~~Partial~~The ~~charge-offs~~adoption onreduced ~~nonperforming and impaired loans are included in~~ the Company’s ~~historical~~retained ~~loss~~earnings ~~experience~~on ~~used~~a totax-effected ~~estimate~~basis ~~the general component~~ of ~~the~~$56,000, ~~allowance~~with ~~for~~no ~~loan~~impact ~~losses~~on ~~as discussed above~~earnings. ~~Specific reserves are not considered charge-offs in management’s evaluation of the general~~

~~-13-~~The following table summarizes the total impact of the adoption of ASC 326 on January 1, 2023:

Table of Contents

component of the allowance for loan losses because they are estimates and the outcome of the loan relationship is undetermined.

Consumer loans not secured by real estate are typically charged off at 90 days past due, or earlier if deemed uncollectible, unless the loans are in the process of collection. Overdrafts are charged off after 60 days past due. A charge-off is typically recorded on a loan secured by real estate when the property is foreclosed upon when the carrying value of the loan exceeds the property’s fair value less the estimated costs to sell.

Impaired Loans. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Values for collateral dependent loans are generally based on appraisals obtained from independent licensed real estate appraisers, with adjustments applied for estimated costs to sell the property, costs to complete unfinished or repair damaged property and other factors. New appraisals or valuations are generally obtained for all significant properties (if the value is estimated to exceed $100,000) when a loan is identified as impaired. Subsequent appraisals are obtained or an internal evaluation is prepared annually, or more frequently if management believes there has been a significant change in the market value of a collateral property securing a collateral dependent impaired loan. In instances where it is not deemed necessary to obtain a new appraisal, management bases its impairment evaluation on the original appraisal with adjustments for current conditions based on management’s assessment of market factors and inspection of the property.

At September 30, 2022, there were seven loans with a recorded investment of $249,000 that are secured by residential real estate property for which formal foreclosure proceedings are in process. The recorded investment in consumer mortgage loans collateralized by residential real estate property in the process of foreclosure was $19,000 at December 31, 2021.

Loans at September 30, 2022 and December 31, 2021 consisted of the following:


	~~September~~January 301 ,2023		~~December 31,~~
(In thousands)	2022		2021
	As reported under		Pre-ASC 326		Impact of ASC 326
Real estate mortgage loans:
(In thousands)	ASC 326		Adoption		Adoption
One-to-four family residential	$	64,725	$	64,098
Allowance for credit losses on loans:
Multi-family residential		11,350		9,385
One-to-four family residential	$	717	$	705	$	12
Residential construction		1,601		1,406
Multi-family residential		389		86		303
Commercial real estate		47,865		36,678
Construction		101		18		83
Commercial real estate construction		3,996		1,632
Commercial real estate		775		650		125
Commercial business loans		12,466		8,804
Commercial business		207		199		8
Consumer loans		2,254		2,152
Consumer		60		34		26
Total loans		144,257		124,155
Total allowance for credit losses on loans	$	2,249	$	1,692	$	557

Deferred loan origination fees and costs, net		(131)		(64)
Total allowance for credit losses on unfunded loan commitments	$	73	$	—	$	73
Allowance for loan losses		(1,653)		(1,523)

Loans, net	$	142,473	$	122,568

Loan Charge-14Offs. For portfolio segments other than consumer loans, the Company’s practice is to charge-off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, the loan’s classification as a loss by regulatory examiners, or for other reasons. A partial charge-off is recorded on a loan when the collectability of a portion of the loan has been confirmed, such as when a loan is discharged in bankruptcy, the collateral is liquidated, a loan is restructured at a reduced principal balance, or other identifiable events that lead management to determine the full principal balance of the loan will not be repaid. A specific reserve is recognized as a component of the allowance for estimated losses on individually analyzed loans. Partial charge-offs on nonperforming and individually analyzed loans are included in the Company’s historical loss experience used to estimate the general component of the allowance for credit

-16-

Table of Contents

~~The~~MID-SOUTHERN ~~following table provides the components of the Company’s recorded investment in loans at September 30~~BANCORP, ~~2022:~~ INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total
	(In thousands)
Recorded Investment in Loans:
Principal loan balance	$	64,725	$	11,350	$	5,597	$	47,865	$	12,466	$	2,254	$	144,257

Accrued interest receivable		159		17		7		147		46		4		380

Net deferred loan fees/costs		9		(31)		(24)		(104)		(23)		42		(131)

Recorded investment in loans	$	64,893	$	11,336	$	5,580	$	47,908	$	12,489	$	2,300	$	144,506

Recorded Investment in Loans as Evaluated for Impairment:
Individually evaluated for impairment	$	1,145	$	—	$	—	$	139	$	295	$	7	$	1,586

Collectively evaluated for impairment		63,748		11,336		5,580		47,769		12,194		2,293		142,920

Ending balance	$	64,893	$	11,336	$	5,580	$	47,908	$	12,489	$	2,300	$	144,506

losses as discussed above. Specific reserves are not considered charge-offs in management’s evaluation of the general component of the allowance for credit losses because they are estimates and the outcome of the loan relationship is undetermined.

Individually Analyzed Loans. A loan is individually analyzed when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not individually analyzed. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Individually analyzed loans are measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Values for individually evaluated collateral dependent loans are generally based on appraisals obtained from independent licensed real estate appraisers, with adjustments applied for estimated costs to sell the property, costs to complete unfinished or repair damaged property and other factors. New appraisals or valuations are generally obtained for all significant properties (if the value is estimated to exceed $100,000) when a loan is individually analyzed. Subsequent appraisals are obtained or an internal evaluation is prepared annually, or more frequently if management believes there has been a significant change in the market value of a collateral property securing a collateral dependent individually analyzed loan. In instances where it is not deemed necessary to obtain a new appraisal, management bases its evaluation on the original appraisal with adjustments for current conditions based on management’s assessment of market factors and inspection of the property.

At March 31, 2023, the Company had $16,000 in foreclosed residential real estate properties where physical possession has occurred. The Company did not have any foreclosed residential real estate properties where physical possession had occurred at December 31, 2022.

At March 31, 2023, there were five loans with an amortized cost of $168,000 that are secured by residential real estate property for which formal foreclosure proceedings are in process. The amortized cost of loans collateralized by residential real estate property in the process of foreclosure was $116,000 at December 31, 2022.

-17-

Table of Contents

MID-SOUTHERN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~The~~Loans ~~following~~at ~~table~~March 31, 2023 ~~provides~~and ~~the~~December 31, 2022 ~~components~~consisted of the ~~Company’s recorded investment in loans at December 31, 2021~~following:


	~~One-to-Four~~March 31,		December 31,
	Family		Multi-Family				Commercial		Commercial
(In thousands)	2023		2022
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total
Real estate mortgage loans:
	(In thousands)
One-to-four family residential	$	66,100	$	64,747
Recorded Investment in Loans:
Multi-family residential		8,660		8,271
Principal loan balance	$	64,098	$	9,385	$	3,038	$	36,678	$	8,804	$	2,152	$	124,155
Construction		4,559		7,847

Commercial real estate		54,349		48,590
Accrued interest receivable		158		11		7		76		38		6		296
Commercial business loans		14,143		14,675

Consumer loans		1,865		2,077
Net deferred loan fees/costs		7		(24)		(13)		(52)		(27)		45		(64)
Total loans		149,676		146,207

Recorded investment in loans	$	64,263	$	9,372	$	3,032	$	36,702	$	8,815	$	2,203	$	124,387
Deferred loan origination fees and costs, net		(154)		(136)

Allowance for credit losses on loans		(2,324)		(1,692)
Recorded Investment in Loans as Evaluated for Impairment:

Individually evaluated for impairment	$	1,041	$	—	$	—	$	170	$	328	$	3	$	1,542
Loans, net	$	147,198	$	144,379

Collectively evaluated for impairment		63,222		9,372		3,032		36,532		8,487		2,200		122,845

Ending balance	$	64,263	$	9,372	$	3,032	$	36,702	$	8,815	$	2,203	$	124,387

~~-15-~~

-18-

Table of Contents

AnMID-SOUTHERN ~~analysis of the allowance for loan losses as of September 30~~BANCORP, ~~2022~~ ~~is as follows:~~INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total
	(In thousands)
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	21	$	—	$	—	$	—	$	18	$	—	$	39

Collectively evaluated for impairment		719		112		17		593		140		33		1,614

Ending balance	$	740	$	112	$	17	$	593	$	158	$	33	$	1,653

The following table provides the components of the Company’s recorded investment in loans at December 31, 2022:

An analysis of the allowance for loan losses as of December 31, 2021 is as follows:


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total

	(In thousands)
Recorded Investment in Loans:
Principal loan balance	$	64,747	$	8,271	$	7,847	$	48,590	$	14,675	$	2,077	$	146,207

Accrued interest receivable		178		14		19		182		36		8		437

Net deferred loan fees/costs		13		(24)		(32)		(106)		(24)		37		(136)

Total	$	64,938	$	8,261	$	7,834	$	48,666	$	14,687	$	2,122	$	146,508

Recorded Investment in Loans as Evaluated:
Individually evaluated	$	490	$	—	$	—	$	125	$	279	$	—	$	894

Collectively evaluated		64,448		8,261		7,834		48,541		14,408		2,122		145,614

Total	$	64,938	$	8,261	$	7,834	$	48,666	$	14,687	$	2,122	$	146,508


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total
	(In thousands)
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	21	$	—	$	—	$	—	$	19	$	—	$	40

Collectively evaluated for impairment		852		102		25		363		108		33		1,483

Ending balance	$	873	$	102	$	25	$	363	$	127	$	33	$	1,523

An analysis of the allowance for credit losses on loans as of December 31, 2022 is as follows:

An analysis of the changes in the allowance for loan losses for the three months ended September 30, 2022 is as follows:


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total

	(In thousands)
Ending allowance balance attributable to loans:
Individually evaluated	$	21	$	—	$	—	$	—	$	14	$	—	$	35

Collectively evaluated		684		86		18		650		185		34		1,657

Total	$	705	$	86	$	18	$	650	$	199	$	34	$	1,692


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	751	$	112	$	10	$	558	$	109	$	31	$	1,571
Provisions		(13)		—		7		35		49		7		85
Charge-offs		—		—		—		—		—		(8)		(8)
Recoveries		2		—		—		—		—		3		5

Ending balance	$	740	$	112	$	17	$	593	$	158	$	33	$	1,653

-19-

-16-

Table of Contents

AnMID-SOUTHERN ~~analysis of the changes in the allowance for loan losses for the nine months ended September 30~~BANCORP, ~~2022~~ ~~is as follows:~~INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	873	$	102	$	25	$	363	$	127	$	33	$	1,523
Provisions		(138)		10		(8)		230		31		10		135
Charge-offs		—		—		—		—		—		(14)		(14)
Recoveries		5		—		—		—		—		4		9

Ending balance	$	740	$	112	$	17	$	593	$	158	$	33	$	1,653

An analysis of the changes in the allowance for credit losses on loans for the three months ended March 31, 2023 is as follows:

An analysis of the changes in the allowance for loan losses for the three months ended September 30, 2021 is as follows:


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total

	(In thousands)
Allowance for credit losses on loans:
Beginning balance	$	705	$	86	$	18	$	650	$	199	$	34	$	1,692
Impact of adopting ASC 326		12		303		83		125		8		26		557
Provisions		4		25		(41)		104		(13)		(1)		78
Charge-offs		—		—		—		—		—		(5)		(5)
Recoveries		2		—		—		—		—		—		2

Ending balance	$	723	$	414	$	60	$	879	$	194	$	54	$	2,324


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	999	$	103	$	32	$	312	$	137	$	29	$	1,612
Provisions		(73)		(4)		(7)		56		21		7		—
Charge-offs		—		—		—		—		—		(3)		(3)
Recoveries		40		—		—		—		—		2		42

Ending balance	$	966	$	99	$	25	$	368	$	158	$	35	$	1,651

An analysis of the changes in the allowance for credit losses on loans for the three months ended March 31, 2022 is as follows:

An analysis of the changes in the allowance for loan losses for the nine months ended September 30, 2021 is as follows:


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total

	(In thousands)
Allowance for credit losses on loans:
Beginning balance	$	873	$	102	$	25	$	363	$	127	$	33	$	1,523
Provisions		(93)		(8)		(5)		112		(7)		1		—
Charge-offs		—		—		—		—		—		(4)		(4)
Recoveries		2		—		—		—		—		1		3

Ending balance	$	782	$	94	$	20	$	475	$	120	$	31	$	1,522


	One-to-Four
	Family		Multi-Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	992	$	98	$	55	$	306	$	113	$	25	$	1,589
Provisions		(70)		1		(30)		62		24		13		—
Charge-offs		—		—		—		—		—		(9)		(9)
Recoveries		44		—		—		—		21		6		71

Ending balance	$	966	$	99	$	25	$	368	$	158	$	35	$	1,651

The following table summarizes the amortized cost and allowance for credit losses allocated to loans which are collaterally dependent to determine expected credit losses as of March 31, 2023:


							Allocated
	Real Estate		Other		Total		Allowance

	(In thousands)
One-to-four family residential	$	464	$	—	$	464	$	21
Commercial real estate		113		—		113		—
Commercial business		—		261		261		10

Total	$	577	$	261	$	838	$	31

~~-17-~~

-20-

Table of Contents

~~The~~MID-SOUTHERN ~~following table summarizes the Company’s impaired loans as of September 30~~BANCORP, ~~2022~~ ~~and for the three and nine months ended September 30, 2022~~INC. ~~The Company did not recognize any interest income on impaired loans using the cash receipts method of accounting for the three- and nine-month periods ended September 30, 2022.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


							Three Months Ended				Nine Months Ended
	At September 30, 2022						September 30, 2022				September 30, 2022
	Unpaid						Average		Interest		Average		Interest
	Recorded		Principal		Related		Recorded		Income		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
	(In thousands)
Loans with no related allowance recorded:
One-to-four family residential	$	876	$	945	$	—	$	859	$	—	$	788	$	1
Commercial real estate		73		73		—		79		1		89		3
Commercial business		—		—		—		—		—		—		—
Consumer		7		7		—		4		—		3		—
	$	956	$	1,025	$	—	$	942	$	1	$	880	$	4

Loans with an allowance recorded:
One-to-four family residential	$	269	$	276	$	21	$	269	$	3	$	257	$	9
Commercial real estate		66		69		—		66		—		67		2
Commercial business		295		295		18		302		4		314		12
Consumer		—		—		—		—		—		—		—
	$	630	$	640	$	39	$	637	$	7	$	638	$	23

Total:
One-to-four family residential	$	1,145	$	1,221	$	21	$	1,128	$	3	$	1,045	$	10
Commercial real estate		139		142		—		145		1		156		5
Commercial business		295		295		18		302		4		314		12
Consumer		7		7		—		4		—		3		—
	$	1,586	$	1,665	$	39	$	1,579	$	8	$	1,518	$	27

The following table summarizes the Company’s individually analyzed loans for the three-month period ended March 31, 2022. The Company did not recognize any interest income on individually analyzed loans using the cash receipts method of accounting for the three-month period ended March 31, 2022.

-18-


	Three Months Ended
	March 31, 2022
	Average		Interest
	Recorded		Income
	Investment		Recognized


Loans with no related allowance recorded:
One-to-four family residential	$	717	$	—
Commercial real estate		100		1
Commercial business		—		—
Consumer		1		—
	$	818	$	1

Loans with an allowance recorded:
One-to-four family residential	$	245	$	3
Commercial real estate		68		1
Commercial business		326		4
Consumer		—		—
	$	639	$	8

Total:
One-to-four family residential	$	962	$	3
Commercial real estate		168		2
Commercial business		326		4
Consumer		1		—
	$	1,457	$	9

Table of Contents

The following table summarizes the Company’s impaired loans for the three- and nine-month periods ended September 30, 2021. The Company did not recognize any interest income on impaired loans using the cash receipts method of accounting for the three- and nine-month periods ended September 30, 2021.


	Three Months Ended				Nine Months Ended
	September 30, 2021				September 30, 2021
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
	(In thousands)
Loans with no related allowance recorded:
One-to-four family residential	$	785	$	1	$	964	$	2
Commercial real estate		123		1		105		3
Commercial business		—		—		6		—
	$	908	$	2	$	1,075	$	5

Loans with an allowance recorded:
One-to-four family residential	$	220	$	2	$	228	$	7
Commercial real estate		123		2		153		5
Commercial business		343		4		352		14
	$	686	$	8	$	733	$	26

Total:
One-to-four family residential	$	1,005	$	3	$	1,192	$	9
Commercial real estate		246		3		258		8
Commercial business		343		4		358		14
	$	1,594	$	10	$	1,808	$	31

-1921-

Table of Contents

~~The~~MID-SOUTHERN ~~following table summarizes the Company’s impaired loans as of December 31~~BANCORP, ~~2021:~~ INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	At December 31, 2021
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In thousands)
Loans with no related allowance recorded:
One-to-four family residential	$	822	$	905	$	—
Commercial real estate		102		102		—
Commercial business		—		—		—
Consumer		3		3		—
	$	927	$	1,010	$	—

Loans with an allowance recorded:
One-to-four family residential	$	219	$	218	$	21
Commercial real estate		68		72		—
Commercial business		328		328		19
Consumer		—		—		—
	$	615	$	618	$	40

Total:
One-to-four family residential	$	1,041	$	1,123	$	21
Commercial real estate		170		174		—
Commercial business		328		328		19
Consumer		3		3		—
	$	1,542	$	1,628	$	40

The following table summarizes the Company’s individually analyzed loans as of December 31, 2022:

Nonperforming loans consists of nonaccrual loans and loans over 90 days past due and still accruing interest. The following table presents the recorded investment in nonperforming loans at September 30, 2022 and December 31, 2021:


	At December 31, 2022
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance

	(In thousands)
Loans with no related allowance recorded:
One-to-four family residential	$	762	$	820	$	—
Commercial real estate		60		60		—
Commercial business		—		—		—
Consumer		—		—		—
	$	822	$	880	$	—

Loans with an allowance recorded:
One-to-four family residential	$	267	$	274	$	21
Commercial real estate		66		68		—
Commercial business		279		279		14
Consumer		—		—		—
	$	612	$	621	$	35

Total:
One-to-four family residential	$	1,029	$	1,094	$	21
Commercial real estate		126		128		—
Commercial business		279		279		14
Consumer		—		—		—
	$	1,434	$	1,501	$	35


	At September 30, 2022						At December 31, 2021
			Loans 90+						Loans 90+
			Days		Total				Days		Total
	Nonaccrual		Past Due		Nonperforming		Nonaccrual		Past Due		Nonperforming
	Loans		Still Accruing		Loans		Loans		Still Accruing		Loans
	(In thousands)
One-to-four family residential	$	845	$	—	$	845	$	735	$	—	$	735
Commercial real estate		4		—		4		15		—		15
Consumer		8		—		8		3		—		3

Total	$	857	$	—	$	857	$	753	$	—	$	753

The following table presents the amortized cost of nonaccrual loans and loans past due over 90 days and still accruing at March 31, 2023 and December 31, 2022:

-20-


	At March 31, 2023						At December 31, 2022
			Nonaccrual		Loans 90+				Nonaccrual		Loans 90+
			Loans		Days				Loans		Days
	Nonaccrual		Without an		Past Due		Nonaccrual		Without an		Past Due
	Loans		Allowance		Still Accruing		Loans		Allowance		Still Accruing

	(In thousands)
One-to-four family residential	$	612	$	171	$	—	$	732	$	193	$	—
Construction		146		—		—		—		—		—
Commercial real estate		320		—		—		—		—		—

Total	$	1,078	$	171	$	—	$	732	$	193	$	—

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Table of Contents

MID-SOUTHERN ~~The following tables present the aging of the recorded investment in loans at September 30~~BANCORP, ~~2022~~ ~~and December 31, 2021:~~INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


					Over
	30‑59 Days		60‑89 Days		90 Days		Total				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans
	(In thousands)
September 30, 2022
One-to-four family residential	$	540	$	252	$	78	$	870	$	64,023	$	64,893
Multi-family residential		—		—		—		—		11,336		11,336
Construction		—		—		—		—		5,580		5,580
Commercial real estate		—		—		—		—		47,908		47,908
Commercial business		—		—		—		—		12,489		12,489
Consumer		—		—		—		—		2,300		2,300

Total	$	540	$	252	$	78	$	870	$	143,636	$	144,506

The following tables present the aging of the amortized cost of loans at March 31, 2023:


December 31, 2021
							Over				Total
One-to-four family residential	$	545	$	248	$	57	$	850	$	63,413	$	64,263
			30‑59 Days		60‑89 Days		90 Days		Total		Accruing		Nonaccrual		Total
Multi-family residential		—		—		—		—		9,372		9,372
	Current		Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Construction		—		—		—		—		3,032		3,032
	(In thousands)
Commercial real estate		451		—		—		451		36,251		36,702
March 31, 2023
Commercial business		—		—		—		—		8,815		8,815
One-to-four family residential	$	65,022	$	466	$	—	$	—	$	466	$	65,488	$	612	$	66,100
Consumer		—		—		3		3		2,200		2,203
Multi-family residential		8,660		—		—		—		—		8,660		—		8,660

Construction		4,413		—		—		—		—		4,413		146		4,559
Total	$	996	$	248	$	60	$	1,304	$	123,083	$	124,387
Commercial real estate		53,976		53		—		—		53		54,029		320		54,349
Commercial business		14,143		—		—		—		—		14,143		—		14,143
Consumer		1,846		19		—		—		19		1,865		—		1,865

Total	$	148,060	$	538	$	—	$	—	$	538	$	148,598	$	1,078	$	149,676

The following tables present the aging of the recorded investment in loans at December 31, 2022:


							Over				Total
			30‑59 Days		60‑89 Days		90 Days		Total		Accruing		Nonaccrual		Total
	Current		Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans

	(In thousands)
December 31, 2022
One-to-four family residential	$	63,610	$	596	$	—	$	—	$	596	$	64,206	$	732	$	64,938
Multi-family residential		8,261		—		—		—		—		8,261		—		8,261
Construction		7,834		—		—		—		—		7,834		—		7,834
Commercial real estate		48,222		444		—		—		444		48,666		—		48,666
Commercial business		14,676		11		—		—		11		14,687		—		14,687
Consumer		2,122		—		—		—		—		2,122		—		2,122

Total	$	144,725	$	1,051	$	—	$	—	$	1,051	$	145,776	$	732	$	146,508

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, public information, historical payment experience, credit documentation, and current economic trends, among other factors. The Company classifies loans based on credit risk at least quarterly. The Company uses the following regulatory definitions for risk ratings:

Pass: Loans not meeting the criteria below are considered to be pass rated loans.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

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Table of Contents

MID-SOUTHERN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Doubtful: Loans classified as doubtful have all the weaknesses inherent in 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, highly questionable and improbable.

Loss: Loans classified as loss are considered uncollectible and of such little value that their continuance on the institution’s books as an asset is not warranted.

~~Pass: Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.~~

~~-21-~~

-24-

Table of Contents

~~The~~MID-SOUTHERN ~~following~~BANCORP, ~~table presents the recorded investment in loans by risk category as of the dates indicated:~~INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	One-to-		Multi-
	Four Family		Family				Commercial		Commercial
	Residential		Residential		Construction		Real Estate		Business		Consumer		Total
	(In thousands)
September 30, 2022
Pass	$	64,048	$	11,336	$	5,580	$	47,904	$	12,489	$	2,293	$	143,650
Special mention		—		—		—		—		—		—		—
Substandard		845		—		—		4		—		7		856
Doubtful		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—

Total	$	64,893	$	11,336	$	5,580	$	47,908	$	12,489	$	2,300	$	144,506

December 31, 2021
Pass	$	63,399	$	9,372	$	3,032	$	36,593	$	8,815	$	2,200	$	123,411
Special mention		—		—		—		87		—		—		87
Substandard		864		—		—		22		—		3		889
Doubtful		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—

Total	$	64,263	$	9,372	$	3,032	$	36,702	$	8,815	$	2,203	$	124,387

The following table shows the amortized cost of loans, segregated by portfolio segment, risk category and year of origination as of March 31, 2023 and gross charge-offs for the three months ended March 31, 2023:

Modification of a loan is considered to be a troubled debt restructuring ("TDR") if the debtor is experiencing financial difficulties and the Company grants a concession to the debtor that it would not otherwise consider. By granting the concession, the Company expects to obtain more cash or other value from the debtor, or to increase the probability of receipt, than would be expected by not granting the concession. The concession may include, but is not limited to, reduction of the stated interest rate of the loan, reduction of accrued interest, extension of the maturity date or reduction of the face amount of the debt. A concession will be granted when, as a result of the restructuring, the Company does not expect to collect all amounts due, including interest at the original stated rate. A concession may also be granted if the debtor is not able to access funds elsewhere at a market rate for debt with similar risk characteristics as the restructured debt. The Company’s determination of whether a loan modification is a TDR considers the individual facts and circumstances surrounding each modification.


													Revolving
	2023		2022		2021		2020		2019		Prior		Loans		Total

	(In thousands)
One-to-four family residential
Pass	$	1,611	$	13,417	$	10,554	$	6,491	$	2,782	$	26,300	$	4,333	$	65,488
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		612		—		612
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total one-to-four family residential		1,611		13,417		10,554		6,491		2,782		26,912		4,333		66,100
Current period gross charge-offs		—		—		—		—		—		—		—		—
Multi-family residential
Pass		498		2,395		3,107		2,210		—		450		—		8,660
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total multi-family residential		498		2,395		3,107		2,210		—		450		—		8,660
Current period gross charge-offs		—		—		—		—		—		—		—		—
Construction
Pass		1,246		481		—		—		—		—		2,686		4,413
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		146		—		—		—		—		146
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total construction		1,246		481

Filing Compare · Mid-Southern Bancorp, Inc.