10-Q

BV FINANCIAL, INC. AND SUBSIDIARIES

Note 1 – Summary Of Significant Accounting Policies

General

The unaudited consolidated financial statements and other financial information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes, of BV Financial, Inc. (the "Company") included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Business

BV Financial, Inc. (“BV Financial,” the “Company” or “we”) was organized as a federal corporation and savings and
loan holding company in January 2005 as part of the mutual holding company reorganization of Bay-Vanguard Federal
Savings Bank. In February 2019, the Company became a Maryland-chartered corporation and a bank holding
company.

Prior to consummation of its mutual to stock conversion in July 2023, BayVanguard, M.H.C., Inc. (the “MHC”) was
the Maryland-chartered mutual holding company of the Company. The MHC’s only business was the ownership of
86.3% of the outstanding common stock of the Company. On January 19, 2023, the MHC adopted a Plan of
Conversion and Reorganization (the “Plan”) pursuant to which the MHC undertook a “second-step” conversion and
BayVanguard Bank (the “Bank”), the Company’s wholly owned subsidiary, reorganized from the two-tier mutual
holding company structure to the fully-public stock holding company structure (the “Conversion”). The Conversion
was consummated on July 31, 2023 on which date the MHC ceased to exist. As part of the Conversion, the Company
sold 9,798,980 shares of its common stock at a price of $10.00 per share. Each outstanding share of Company common
stock owned by the existing public stockholders of the Company were converted into new shares of Company common
stock based on an exchange ratio of 1.5309-to-1. The Company had 11,375,803 shares of Company common stock
outstanding as a result of the stock offering and Conversion.

The Company is a registered bank holding company subject to comprehensive regulation and examination by the
Board of Governors of the Federal Reserve System (the “Federal Reserve Board”).

The Bank is headquartered in Baltimore, Maryland and is a full-service community-oriented financial institution dedicated to serving the financial service needs of consumers and businesses. The Bank is engaged primarily in the business of attracting deposits from the general public and using such funds to originate one-to-four-family real estate, construction, multi-family, commercial real estate, farm, marine loans, commercial and consumer loans.

The Bank's deposits are insured up to the applicable legal limits by the Federal Deposit Insurance Corporation's Deposit Insurance Fund. The Bank is a member of the Federal Home Loan Bank System.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and the Bank. All intercompany balances
and transactions have been eliminated in consolidation.

Basis of Financial Statement Presentation and Significant Estimates

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America "GAAP". 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 date of the consolidated balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for credit losses, goodwill and intangible asset impairment, and the valuation of deferred tax assets.

BV FINANCIAL, INC. AND SUBSIDIARIES

Significant Group Concentrations of Credit Risk

A significant portion of the Company's activities are with customers located within the Baltimore metropolitan area and on the Eastern Shore of Maryland. The Company does not have any significant concentrations to any one industry or customer.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts due from banks, cash items in the process of clearing, and interest-bearing deposits with banks with original maturities of less than 90 days.

Securities

The Company classifies investment securities as held to maturity ("HTM") or available for sale ("AFS"). Debt securities that the Company has the positive intent and ability to hold to maturity are classified as held to maturity and are reported at amortized cost (including amortization of premiums or accretion of discounts). Net unrealized gains and losses for debt securities classified as available for sale are recognized as increases or decreases in other comprehensive income or loss, net of taxes, and excluded from the determination of net income.

Equity securities are reported at fair value with unrealized gains and losses included in net gains/losses in noninterest income.

Realized gains and losses on sales of securities are determined using the specific identification method and are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Premiums and discounts on callable debt securities are amortized through the earliest call date.

When the fair value of an AFS debt security has declined below its amortized cost basis, the Company is required to assess whether the decline is from a credit loss or other factors. For securities that are not explicitly guaranteed by the federal government, an analysis is performed on the individual security using the latest available information to determine if the decline in fair value is attributable to a credit loss. If such determination is made, the Company would record an allowance for credit loss for the debt instrument. As of March 31, 2024, we have recognized no credit losses on AFS securities.

For HTM debt securities, an allowance will be recognized when lifetime credit losses are expected, in an amount that
reflects the expected contractual credit losses, even when the risk of such loss is remote. Any security, either explicitly
or implicitly guaranteed by the U.S. Government is excluded from this analysis. This includes U.S. Treasury securities,
securities issued by agencies of the U.S. Government and mortgage-backed securities issued by Ginnie Mae, Fannie
Mae and Freddie Mac.

The allowance for credit losses ("ACL") for HTM securities is computed using bond global default rates tracked by
S&P with a loss given default of 45%. Accrued interest receivable on the HTM debt securities excluded from this
analysis totaled $12,000 at March 31, 2024.

Federal Home Loan Bank Stock

Federal law requires a member institution of the Federal Home Loan Bank System to hold stock of its district Federal
Home Loan Bank (the “FHLB") in an amount determined by both asset size and borrowings from the FHLB. Purchases
and sales of stock are made directly with the FHLB at par value.

The Bank held $654,000 and $626,000 of FHLB restricted stock at March 31, 2024 and December 31, 2023, respectively.

The restricted stock is carried at cost. Management evaluates whether this investment is impaired based on its assessment of the ultimate recoverability of the investment rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of the investment is influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this

BV FINANCIAL, INC. AND SUBSIDIARIES

situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB.

Loans Receivable

Loans receivable are stated at unpaid principal balances, adjusted for premiums and discounts on loans purchased, the
undisbursed portion of loans in process, net deferred loan origination fees and costs, fair value adjustments on loans
acquired in a merger, and the allowance for credit losses. Interest income is accrued on the unpaid principal balance.
Loan origination fees and costs are deferred and recognized as an adjustment to the yield of the related loans. The
Company is amortizing these amounts over the contractual life of the loan using the interest method. For purchased
loans, the related premium or discount is recognized over the contractual life of the purchased loan and is included as
part of interest income. The accrual of interest is generally discontinued when the contractual payment of principal or
interest has become 90 days past due or management has serious doubts about further collectability of principal or
interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of
collection and is either guaranteed or well secured. When a loan is placed on non-accrual status, unpaid interest
credited to income is reversed. Interest received on non-accrual loans generally is either applied against principal or
reported as interest income, according to management's judgment as to the collectability of principal. Generally, loans
are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual
terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no
longer in doubt. Interest payments on impaired loans are recorded in the same manner as interest payments on
nonaccrual loans.

Allowance for Credit Losses

The ACL includes quantitative estimates of losses for collectively and individually evaluated loans. The quantitative estimate for collectively evaluated loans (other than investor commercial real estate loans) is determined using the average charge-off method that utilizes historical losses for all Maryland banks with assets less than $1 billion beginning in March 2000. The loss history is updated through the most recent quarter-end prior to the reporting period. The investor commercial real estate portfolio utilizes the national loss history for banks with assets less than $1 billion over the same time period. Investor CRE loans are made nationwide, therefore, management deems it appropriate to utilize national loss rates when evaluating this portfolio. Adjustments are made to the historical loss factors under each scenario for economic conditions, portfolio concentrations, collateral values, the level and trend of delinquent and problem loans and internal changes in staffing, loan policies and monitoring of the portfolio. Loans are selected for individual evaluation primarily based on their payment status and whether the loan has been placed on non-accrual. Loans on non-accrual status include all loans greater than 90 days delinquent and other loans with weaknesses sufficient for management to place these loans on non-accrual status.

The ACL is measured on a collective basis when similar risk factors exist as determined by internal loan coding and assignment to a portfolio segment.

The Company utilizes reasonable and supportable forecasts of future economic conditions when estimating the ACL on loans. The model's calculation also uses an adjustment for a 12-month forecast period utilizing the most recent 12-month economic forecast from the Board of Governors of the Federal Reserve System for national gross domestic product ("GDP"). The model compares the average history of loss rates described above to the forecasted GDP to determine the value of the forward looking adjustment.

BV FINANCIAL, INC. AND SUBSIDIARIES

The establishment of the allowance for credit losses is significantly affected by management's judgment and by economic and other uncertainties, and there is a likelihood that different amounts would be reported under different conditions or assumptions. The Federal Deposit Insurance Corporation (the "FDIC") and the Maryland Office of the Commissioner of Financial Regulation, as an integral part of their examination process, periodically review the allowance for credit losses for reasonableness and, as a result of such reviews, we may be required to increase our ACL or recognize loan charge-offs.

The calculation of ACL excludes accrued interest receivable balances because these balances are reversed in a timely manner against previously recognized interest income when a loan is placed on non-accrual status.

Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposure

The Company's off-balance sheet credit instruments primarily consist of unfunded commitments on existing loans. In the ordinary course of business, the Company has entered into commitments to extend credit. Such financial instruments are recorded on the balance sheet when they are funded.

The Company records a reserve for unfunded commitments on off-balance sheet credit exposures through a charge to the provision for credit loss expense. The reserve is estimated by loan segment at each measurement date under the ASC 326 model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur, and is included in other liabilities on the Company's consolidated balance sheets.

Mortgage Loans Held for Sale

Mortgages originated for sale are carried at the lower of aggregate cost or fair value of each outstanding loan. Sales of loans are recorded when the proceeds are received. Any gain or loss is recorded in noninterest income. There were no mortgage loans held for sale on March 31, 2024 or December 31, 2023.

The Company sells certain of its mortgage loans on a best effort basis to third-party investors on a servicing released basis. Upon sale and delivery, loans are legally isolated from the Company and the Company has no ability to restrict or constrain the ability of third-party investors to pledge or exchange the mortgage loans. The Company does not have the entitlement or ability to repurchase the mortgage loans or unilaterally cause third-party investors to put the mortgage loans back to the Company.

Foreclosed Real Estate

Foreclosed real estate and repossessed assets are composed of property acquired through a foreclosure proceeding or acceptance of a deed in lieu of foreclosure. If the fair value of the asset, net of estimated selling costs, is less than the related loan balance at the time of acquisition, a charge against the allowance for credit losses is recorded. After foreclosure, valuations are periodically performed by management and the assets are carried at the lower of cost or fair value less estimated costs to sell. Revenues and expenses from operations and changes in the valuation allowance are included in noninterest income and expenses.

Premises and Equipment

Land is stated at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed based on the straight-line method over the estimated useful lives of the respective assets. Expenditures for improvements are capitalized while costs for maintenance and repairs are expensed as incurred.

Leases

The Company determines if an arrangement is a lease at inception. All of the Company’s leases are currently classified as operating leases and are included in other assets and other liabilities on the Company’s Consolidated Balance Sheets. Periodic operating lease costs are recorded in occupancy expenses of premises on the Company's Consolidated Statements of Income.

BV FINANCIAL, INC. AND SUBSIDIARIES

assets and liabilities are recognized at the lease commencement date based on the present value of the expected future lease payments over the remaining lease term. In determining the present value of future lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The operating ROU assets are adjusted for any lease payments made at or before the lease commencement date, initial direct costs, any lease incentives received and, for acquired leases, any favorable or unfavorable fair value adjustments. The present value of the lease liability may include the impact of options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options provided in the lease terms. Lease expense is recognized on a straight-line basis over the expected lease term. Lease agreements that include lease and non-lease components, such as common area maintenance charges, are accounted for separately.

Investment in Life Insurance

Investment in life insurance is reflected at the net cash surrender value to the Company.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Goodwill is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates it is likely an impairment has occurred. Any impairment of goodwill would be recorded against income in the period of impairment.

Intangible Assets

Intangible assets, consisting of core deposit intangibles, represent purchased assets that also lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged on its own or in combination with a related contract, asset or liability. Core deposit intangibles are amortized on an accelerated basis over an estimated useful life. Core deposit intangibles are evaluated annually for impairment. Any impairment of intangible assets would be recorded against income in the period of impairment.

Deferred Income Taxes

Deferred income taxes are recognized for temporary differences between the financial reporting basis and income tax basis of assets and liabilities based on enacted tax rates expected to be in effect when such amounts are realized or settled. Deferred tax assets are recognized only to the extent that it is more likely than not that such amounts will be realized based on consideration of available evidence.

Statements of Cash Flows

Cash and cash equivalents in the statements of cash flows include cash, federal funds sold and interest-bearing deposits in other banks. Federal funds are generally purchased and sold for one-day periods.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when: (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the appropriate period. Diluted earnings per share are computed by dividing net income by the weighted average shares outstanding as adjusted for the dilutive effect of stock options based on the treasury stock method. Unearned ESOP shares are removed from the weighted average number of shares in the calculations. As of March 31, 2024 and March 31, 2023, the Company had 55,648 and 36,350 shares, respectively, of unexercised stock options. As a result of the

BV FINANCIAL, INC. AND SUBSIDIARIES

Conversion, the shares have been adjusted to reflect the 1.5309-to-1 exchange ratio. Options with an exercise price greater than the average market price of the common shares are excluded from the calculation as their effect would be anti-dilutive.

Information related to the calculation of earnings per share is presented in Note 12.

Stock-Based Compensation

The Company accounts for stock-based compensation under the fair value method of accounting. For stock options, the Company uses a Black-Scholes valuation model to measure stock-based compensation expense at the date of grant. Compensation expense related to stock-based awards is recognized over the period during which an individual is required to provide service in exchange for such award.

Revenue Recognition

Management is required by accounting pronouncements governing the recognition of revenue to recognize revenue when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The Company records revenue from contracts with customers in accordance with ASC 606, “Revenue from Contracts with Customers.” Under ASC 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation.

The Company’s primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are not within the scope of ASC 606. The Company evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity.

Accounting Standards Updates

ASU 2023-07, “Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures.” The amendments in ASU 2023-07 are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. This ASU requires disclosure of significant segment expenses that are regularly provided to the chief operating decision mark (“CODM”), an amount for other segment items by reportable segment and a description of its composition, all annual disclosures required by FASB ASU Topic 280 in interim periods as well, and the title and position of the CODM and how the CODM uses the reported measures. Additionally, this ASU requires that at least one of the reported segment profit and loss measures should be the measure that is most consistent with the measurement principles used in an entity’s consolidated financial statements. Lastly, this ASU requires public business entities with a single reportable segment to provide all disclosures required by these amendments in this ASU and all existing segment disclosures in Topic 280. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively. The adoption of ASU 2023-07 is not expected to have a material impact on the Bank’s financial statements.

ASU 2023-09, “Income Taxes (Topic 740), Improvement to Income Tax Disclosures.” The amendments in ASU 2023-09 require an entity to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, which is greater than five percent of the amount computed by multiplying pretax income by the entity’s applicable statutory rate, on an annual basis. Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to or greater than five percent of total income taxes paid (net of refunds received). Lastly, the amendments in this ASU require an entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis; however, retrospective application is permitted. The adoption of ASU 2023-09 is not expected to have a material impact on the Bank’s financial statements.

BV FINANCIAL, INC. AND SUBSIDIARIES

Note 2 - Securities

Securities available for sale at March 31, 2024 and December 31, 2023 consisted of the following:


	March 31, 2024
(dollars in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value

Available for sale
Agencies	$	691	$	—	$	1	$	690
Corporate securities		1,724		—		292		1,432
Mortgage-backed securities		28,700		4		2,405		26,299
Treasury		5,335		—		4		5,331
Total	$	36,450	$	4	$	2,702	$	33,752


	December 31, 2023
(dollars in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value

Available for sale
Agencies	$	4,728	$	—	$	5	$	4,723
Corporate securities		1,722		—		304		1,418
Mortgage-backed securities		31,032		5		2,397		28,640
Total	$	37,482	$	5	$	2,706	$	34,781

Securities held to maturity at March 31, 2024 and December 31, 2023 consisted of the following:


	March 31, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value

Held to maturity
Agencies	$	4,002	$	—	$	19	$	3,983
Corporate securities (1)		3,195		—		542		2,653
Mortgage-backed securities		2,956		2		440		2,518
Total	$	10,153	$	2	$	1,001	$	9,154


	December 31, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value

Held to maturity
Agencies	$	4,003	$	—	$	22	$	3,981
Corporate securities (1)		3,194		—		570		2,624
Mortgage-backed securities		3,012		3		414		2,601
Total	$	10,209	$	3	$	1,006	$	9,206

(1) Amount is net of CECL credit reserve of $5,000 at March 31, 2024 and $6,000 at December 31, 2023.

The Company pledged securities with an amortized cost of $35.4 million and a fair value of $32.5 million at March 31, 2024 to secure deposits from municipalities. At December 31, 2023, the Company pledged securities with an amortized cost of $41.4 million and a fair value of $38.6 million to secure deposits from municipalities.The amortized cost and fair value of securities

BV FINANCIAL, INC. AND SUBSIDIARIES

as of March 31, 2024 and December 31, 2023, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or without prepayment penalties.


	March 31, 2024
	Available for sale				Held to maturity
	Amortized		Fair		Amortized		Fair
(dollars in thousands)	cost		value		cost		value

Maturing
Due under one year	$	18,792	$	18,634	$	4,190	$	4,169
Due after one year through five years		3,486		3,318		3,223		2,680
Due after five years through ten years		1,929		1,612		520		481
Due after ten years		12,243		10,188		2,220		1,824
Total	$	36,450	$	33,752	$	10,153	$	9,154


	December 31, 2023
	Available for sale				Held to maturity
	Amortized		Fair		Amortized		Fair
(dollars in thousands)	cost		value		cost		value

Maturing
Due under one year	$	8,156	$	8,053	$	4,003	$	3,981
Due after one year through five years		4,605		4,478		25		24
Due after five years through ten years		7,788		7,350		3,745		3,138
Due after ten years		16,933		14,900		2,436		2,063
Total	$	37,482	$	34,781	$	10,209	$	9,206

All mortgage-backed securities are guaranteed by Freddie Mac, Fannie Mae or Ginnie Mae.

BV FINANCIAL, INC. AND SUBSIDIARIES

Investment securities with unrealized losses for continuous periods of less than 12 months and 12 months or longer are as follows:


	Less than 12 months				Over 12 months				Total
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
March 31, 2024	losses		value		losses		value		losses		value
(dollars in thousands)
Available for sale
Corporate securities	$	60	$	690	$	232	$	742	$	292	$	1,432
Agency securities		1		690		—		—		1		690
Mortgage-backed securities		1		78		2,404		24,319		2,405		24,397
Treasuries		4		5,331		—		—		4		5,331
Total	$	66	$	6,789	$	2,636	$	25,061	$	2,702	$	31,850

Held to maturity
Corporate securities (1)	$	—	$	—	$	542	$	2,653	$	542	$	2,653
Agency securities		—		—		19		3,983		19		3,983
Mortgage-backed securities		—		22		440		2,396		440		2,418
Total	$	—	$	22	$	1,001	$	9,032	$	1,001	$	9,054

	Less than 12 months				Over 12 months				Total
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
December 31, 2023	losses		value		losses		value		losses		value
(dollars in thousands)
Available for sale
Corporate securities	$	83	$	667	$	221	$	751	$	304	$	1,418
Agency securities		5		4,723		—		—		5		4,723
Mortgage-backed securities		1		478		2,396		26,152		2,397		26,630
Total	$	89	$	5,868	$	2,617	$	26,903	$	2,706	$	32,771

Held to maturity
Corporate securities (1)	$	—	$	—	$	570	$	2,624	$	570	$	2,624
Agency securities		—		—		22		3,981		22		3,981
Mortgage-backed securities		—		14		414		2,482		414		2,496
Total	$	—	$	14	$	1,006	$	9,087	$	1,006	$	9,101

(1) Fair value amount is net of CECL credit reserve of $5,000 at March 31, 2024 and $6,000 at December 31, 2023.

As of March 31, 2024 and December 31, 2023, the Company determined that for its available-for-sale debt securities in an unrealized loss position, it did not intend to sell nor was it more likely than not that it would be required to sell the security and that the decline in fair value was not due to credit factors, put due to changes in interest rates and other factors. Accordingly, at March 31, 2024 and December 31, 2023, the Company did not record an allowance for credit losses for its available-for-dale debt securities.

BV FINANCIAL, INC. AND SUBSIDIARIES

We monitor the credit quality of HTM debt securities through both internal analysis performed on a quarterly basis and credit ratings when available. The following table reflects the credit ratings for the HTM debt securities at March 31, 2024.


(dollars in thousands)	AAA		A-		BBB/BBB+		BBB-		Not Rated		Total

Corporate securities	$	—	$	499	$	1,248	$	698	$	750	$	3,195
Agency securities		4,002		—		—		—		—		4,002
Mortgage-backed securities		2,956		—		—		—		—		2,956
	$	6,958	$	499	$	1,248	$	698	$	750	$	10,153

The following table provides a breakdown of our HTM debt securities by year of origination at March 31, 2024.


(dollars in thousands)	Total		2023		2022		2021		2020		2019		Prior
Corporate securities	$	3,195	$	—	$	750	$	2,445	$	—	$	—	$	—
Agency securities		4,002		—		4,002		—		—		—		—
Mortgage-backed securities		2,956		—		1,820		134		—		—		1,002
	$	10,153	$	—	$	6,572	$	2,579	$	—	$	—	$	1,002

The following table is a roll forward of our allowance for credit losses on HTM debt securities at March 31, 2024.


(dollars in thousands)	Three Months Ended March 31, 2024			Three Months Ended March 31, 2023
Beginning Balance	$	6		$	—
Impact of adopting ASC 326		—			10
(Recovery) for credit losses		(1	)		(3	)
Ending Balance	$	5		$	7

BV FINANCIAL, INC. AND SUBSIDIARIES

Note 3 – Loans Receivable

Portfolio loans, net of deferred costs and fees, are summarized by type as follows at March 31, 2024 and December 31, 2023:


	Period Ended
	March 31, 2024						December 31, 2023
(dollars in thousands)	Amount			Percent			Amount			Percent
Real estate
One to four family - owner occupied	$	128,585			18.14	%	$	130,026			18.45	%
One to four family - non owner occupied		103,957			14.67	%		108,090			15.34	%
Commercial owner occupied		100,139			14.13	%		102,512			14.54	%
Commercial investor		292,109			41.20	%		287,194			40.76	%
Construction and land		22,575			3.19	%		21,865			3.10	%
Farm loans		14,567			2.06	%		14,877			2.11	%
Total real estate loans		661,932			93.39	%		664,564			94.30	%

Marine and other consumer loans		17,990			2.54	%		18,279			2.59	%
Guaranteed by U.S. Government		3,517			0.50	%		3,715			0.53	%
Commercial		25,297			3.57	%		18,244			2.58	%
Total consumer and commercial		46,804			6.61	%		40,238			5.70	%

Total loans		708,736			100.0	%		704,802			100.0	%
Allowance for credit losses		(8,506	)					(8,554	)
Total loans, net of deferred costs and fees	$	700,230					$	696,248

Net deferred loan origination fees and costs at March 31, 2024 and December 31, 2023 totaled $1.9 million and $1.8 million, respectively.

In the normal course of banking business, risks related to specific loan categories are as follows:

Real Estate Loans – Real estate loans are typically made to consumers and businesses and are secured by real estate. Credit risk arises from the borrower’s continuing financial stability, which can be adversely impacted by the economy as well as borrower-specific occurrences. Also impacting credit risk would be a shortfall in the value of the real estate in relation to the outstanding loan balance in the event of a default or subsequent liquidation of the collateral.

Residential lending repayment is generally dependent on economic and market conditions in the Company's lending area. Commercial real estate, commercial and construction loan repayments are generally dependent on the operations of the related properties or the financial condition of its borrower or guarantor. Accordingly, repayment of such loans can be more susceptible to adverse conditions in the real estate market and the regional economy.

Marine Loans – Marine loans are typically made to consumers and are secured by marine-based collateral. Credit risk is similar to real estate loans above as it is subject to the borrower’s continuing financial stability and the value of the collateral securing the loan. Marine loans may entail greater risk than residential mortgage loans, as they are collateralized by assets that depreciate rapidly. Repossessed collateral for a defaulted loan may not provide an adequate source of repayment for the outstanding.

Other Consumer – Other consumer loans include installment loans and personal lines of credit which may be secured or unsecured. Credit risk is similar to real estate loans above as it is subject to the borrower’s continuing financial stability and the value of the collateral securing the loan, if any. Consumer loans may entail greater risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against the borrower.

BV FINANCIAL, INC. AND SUBSIDIARIES

Guaranteed by the U.S. Government – Loans guaranteed by the U.S. Government present similar risks as reflected in the other categories mentioned herein. However, the primary differentiating factor is that an explicit guarantee is provided by the government, therefore substantially mitigating any risk of loss in the event of credit deterioration.

Commercial – Commercial loans are secured or unsecured loans for business purposes. Loans are typically secured by accounts receivable, inventory, equipment and/or other assets of the business. Credit risk arises from the successful operation of the business which may be affected by competition, rising interest rates, regulatory changes and adverse conditions in the local and regional economy.

Non-accrual loans as of March 31, 2024 and December 31, 2023 were as follows:


	March 31, 2024						December 31, 2023
	No		With an				No		With an
(dollars in thousands)	Allowance		Allowance		Total		Allowance		Allowance		Total
Real estate
One to four family - owner occupied	$	1,303	$	—	$	1,303	$	1,160	$	—	$	1,160
One to four family - non owner occupied		190		—		190		273		—		273
Commercial owner occupied		704		—		704		739		—		739
Commercial investor		7,844		—		7,844		8,057		—		8,057
Construction and land		314		—		314		321		—		321
Commercial		388		—		388		—		—		—
Total real estate loans		10,743		—		10,743		10,550		—		10,550

Marine and other consumer loans		2		—		2		4		—		4
Total consumer and commercial loans		2		—		2		4		—		4

Total nonaccrual loans	$	10,745	$	—	$	10,745	$	10,554	$	—	$	10,554

Loans can be current but classified as non-accrual due to customer operating results or payment history. All interest accrued but not collected from loans that are placed on non-accrual or charged-off is reversed against interest income. In accordance with the Company’s policy, such interest income is recognized on a cash basis or cost-recovery method, until qualifying for return to accrual status.

The Company considers a loan to be past due or delinquent when the terms of the contractual obligation are not met by the borrower. An analysis of days past due loans as of March 31, 2024 follows:


	March 31, 2024
	30 - 59		60 - 89		90+
	Days		Days		Days		Total		Current		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Real estate
One to four family - owner occupied	$	2,604	$	—	$	787	$	3,391	$	125,194	$	128,585
One to four family - non owner occupied		—		—		—		—		103,957		103,957
Commercial owner occupied		1,029		295		436		1,760		98,379		100,139
Commercial investor		329		—		6,808		7,137		284,972		292,109
Construction and land		550		—		256		806		21,769		22,575
Farm loans		—		—		—		—		14,567		14,567
Total real estate loans		4,512		295		8,287		13,094		648,838		661,932

Marine and other consumer loans		46		—		—		—		17,990		17,990
Guaranteed by U.S. Government		104		—		—		104		3,413		3,517
Commercial		—		—		388		388		24,909		25,297
Total consumer and commercial loans		150		—		388		492		46,312		46,804

Total loans	$	4,662	$	295	$	8,675	$	13,586	$	695,150	$	708,736

BV FINANCIAL, INC. AND SUBSIDIARIES

An analysis of days past due loans as of December 31, 2023 follows:


	December 31, 2023
	30 - 59		60 - 89		90+
	Days		Days		Days		Total		Current		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Real estate
One to four family - owner occupied	$	2,043	$	645	$	619	$	3,307	$	126,719	$	130,026
One to four family - non owner occupied		322		—		219		541		107,549		108,090
Commercial owner occupied		901		—		468		1,369		101,143		102,512
Commercial investor		371		—		6,907		7,278		279,916		287,194
Construction and land		826		—		258		1,084		20,781		21,865
Farm loans		—		—		—		—		14,877		14,877
Total real estate loans		4,463		645		8,471		13,579		650,985		664,564

Marine and other consumer loans		39		—		—		39		18,240		18,279
Guaranteed by U.S. Government		—		—		—		—		3,715		3,715
Commercial		—		401		—		401		17,843		18,244
Total consumer and commercial loans		39		401		—		440		39,798		40,238

Total loans	$	4,502	$	1,046	$	8,471	$	14,019	$	690,783	$	704,802

Allowance for Credit Losses ("ACL")

The following tables detail activity in the ACL at and for the three months ended March 31, 2024 and 2023. An allocation of the allowance to one category of loans does not prevent the Company from using that allowance to absorb losses in a different category.


Three Months Ended	March 31, 2024
(dollars in thousands)	Beginning Balance		Charge-offs			Recoveries		Provisions (recovery)			Ending Balance
Real estate
One to four family - owner occupied	$	1,728	$	—		$	52	$	(83	)	$	1,697
One to four family - non owner occupied		1,030		(1	)		29		(43	)		1,015
Commercial owner occupied		563		—			3		12			578
Commercial investor		3,725		—			—		(155	)		3,570
Construction and land		772		—			1		(10	)		763
Farm loans		179		—			—		(5	)		174
Total real estate loans		7,997		(1	)		85		(284	)		7,797

Marine and other consumer loans		403		—			1		24			428
Other consumer		—		—			—		—			—
Guaranteed by U.S. Government		—		—			—		—			—
Commercial		154		—			—		127			281
Total consumer and commercial		557		—			1		151			709

Total loans	$	8,554	$	(1	)	$	86	$	(133	)	$	8,506

The following table summarized the ACL activity for the three months ended March 31, 2024.


(dollars in thousands)
Reduction in credit losses - loans	$	(133	)
Reduction in allowance for securities - HTM		(1	)
Provision for allowance for credit losses - unfunded commitments		152
Provision for credit losses per the consolidated statements of income	$	18

BV FINANCIAL, INC. AND SUBSIDIARIES


Three Months Ended	March 31, 2023
(dollars in thousands)	Beginning Balance		Impact of ASC 326 Adoption		Charge-offs			Recoveries		Provisions (recovery)		Ending Balance
Real estate
One to four family - owner occupied	$	344	$	1,117	$	—		$	9	$	—	$	1,470
One to four family - non owner occupied		562		356		—			21		—		939
Commercial owner occupied		366		78		—			—		—		444
Commercial investor		2,272		1,506		—			—		13		3,791
Construction and land		93		496		—			5		—		594
Farm loans		17		135		—			—		—		152
Total real estate loans		3,654		3,688		—			35		13		7,390

Marine and other consumer loans		68		336		(1	)		3		—		406
Commercial		91		208		—			—		—		299
Total consumer and commercial		159		544		(1	)		3		—		705

Total loans	$	3,813	$	4,232	$	(1	)	$	38	$	13	$	8,095

The following table summarized the ACL activity for the three months ended March 31, 2023.


(dollars in thousands)
Provision for credit losses - loans	$	13
Reduction in allowance for securities - HTM		(3	)
Reduction in allowance for credit losses - unfunded commitments		(8	)
Provision for credit losses per the consolidated statement of income	$	2

BV FINANCIAL, INC. AND SUBSIDIARIES

Term Loans by Origination Year


(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at March 31, 2024	2024		2023		2022		2021		2020		Prior			Revolving		Total
One to four family - owner occupied
Pass	$	246	$	6,364	$	7,859	$	13,142	$	9,865	$	79,621		$	10,610	$	127,707
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		343		—		499			36		878
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total One to four family - owner occupied	$	246	$	6,364	$	7,859	$	13,485	$	9,865	$	80,120		$	10,646	$	128,585
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—				$	—	$	—

One to four family - non owner occupied
Pass	$	564	$	13,201	$	30,583	$	18,812	$	10,292	$	28,656		$	—	$	102,108
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		1,849			—		1,849
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total One to four family - non owner occupied	$	564	$	13,201	$	30,583	$	18,812	$	10,292	$	30,505		$	—	$	103,957
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	(1	)	$	—	$	(1	)

Commercial owner occupied
Pass	$	1,496	$	20,582	$	15,984	$	16,526	$	5,896	$	33,503		$	—	$	93,987
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—				935		5,217			—		6,152
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Commercial owner occupied	$	1,496	$	20,582	$	15,984	$	16,526	$	6,831	$	38,720		$	—	$	100,139
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—				$	—	$	—

Commercial investor
Pass	$	3,101	$	68,455	$	96,594	$	65,434	$	15,469	$	35,212		$	—	$	284,265
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		6,808		1,036			—		7,844
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Commercial investor	$	3,101	$	68,455	$	96,594	$	65,434	$	22,277	$	36,248		$	—	$	292,109
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Construction and land
Pass	$	8,167	$	7,842	$	1,527	$	2,037	$	487	$	688		$	—	$	20,748
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		1,546		281			—		1,827
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Construction and land	$	8,167	$	7,842	$	1,527	$	2,037	$	2,033	$	969		$	—	$	22,575
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Farm loans
Pass	$	328	$	—	$	4,137	$	1,815	$	259	$	8,028		$	—	$	14,567
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		—			—		—
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Farm loans	$	328	$	—	$	4,137	$	1,815	$	259	$	8,028		$	—	$	14,567
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Marine and other consumer loans
Pass	$	309	$	3,387	$	2,151	$	6,335	$	1,751	$	4,055		$	—	$	17,988
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		2			—		2
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Marine and other consumer loans	$	309	$	3,387	$	2,151	$	6,335	$	1,751	$	4,057		$	—	$	17,990
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—				$	—	$	—

Guaranteed by U.S. Government
Pass	$	—	$	-	$	—	$	—	$	24	$	3,493		$	—	$	3,517
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		—			—		—
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Guaranteed by U.S. Government	$	—	$	—	$	—	$	—	$	24	$	3,493		$	—	$	3,517
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Commercial
Pass	$	4,679	$	467	$	4,069	$	7,948	$	3,456	$	3,600		$	—	$	24,219
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		388		—		—		690			—		1,078
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Commercial	$	4,679	$	467	$	4,457	$	7,948	$	3,456	$	4,290		$	—	$	25,297
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—


(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at March 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving		Total
Total Loans
Pass	$	18,890	$	120,298	$	162,904	$	132,049	$	47,499	$	196,856	$	10,610	$	689,106
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		388		343		9,289		9,574		36		19,630
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total loans	$	18,890	$	120,298	$	163,292	$	132,392	$	56,788	$	206,430	$	10,646	$	708,736

BV FINANCIAL, INC. AND SUBSIDIARIES

Term Loans by Origination Year


(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at December 31, 2023	2023		2022		2021		2020		2019		Prior			Revolving		Total
One to four family - owner occupied
Pass	$	6,387	$	7,906	$	13,727	$	9,974	$	9,707	$	71,463		$	10,492	$	129,656
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		331			39		370
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total One to four family - owner occupied	$	6,387	$	7,906	$	13,727	$	9,974	$	9,707	$	71,794		$	10,531	$	130,026
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	(2	)	$	—	$	(2	)

One to four family - non owner occupied
Pass	$	13,810	$	30,603	$	20,582	$	10,742	$	7,611	$	22,795		$	—	$	106,143
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		1,947			—		1,947
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total One to four family - non owner occupied	$	13,810	$	30,603	$	20,582	$	10,742	$	7,611	$	24,742		$	—	$	108,090
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Commercial owner occupied
Pass	$	20,967	$	16,071	$	16,642	$	5,998	$	5,071	$	31,536		$	—	$	96,285
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		943		1,502		3,782			—		6,227
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Commercial owner occupied	$	20,967	$	16,071	$	16,642	$	6,941	$	6,573	$	35,318		$	—	$	102,512
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	(3	)	$	—	$	(3	)

Commercial investor
Pass	$	68,682	$	89,812	$	65,624	$	16,205	$	9,991	$	28,823		$	—	$	279,137
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		6,907		—		1,150			—		8,057
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Commercial investor	$	68,682	$	89,812	$	65,624	$	23,112	$	9,991	$	29,973		$	—	$	287,194
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Construction and land
Pass	$	6,901	$	9,650	$	2,271	$	650	$	—	$	704		$	—	$	20,176
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		1,400		—		289			—		1,689
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Construction and land	$	6,901	$	9,650	$	2,271	$	2,050	$	—	$	993		$	—	$	21,865
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Farm loans
Pass	$	—	$	4,141	$	2,281	$	261	$	2,641	$	5,553		$	—	$	14,877
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		—			—		—
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Farm loans	$	—	$	4,141	$	2,281	$	261	$	2,641	$	5,553		$	—	$	14,877
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Marine and other consumer loans
Pass	$	3,542	$	2,187	$	6,417	$	1,788	$	396	$	3,945		$	—	$	18,275
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		4			—		4
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Marine and other consumer loans	$	3,542	$	2,187	$	6,417	$	1,788	$	396	$	3,949		$	—	$	18,279
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	(80	)	$	—	$	(80	)

Guaranteed by U.S. Government
Pass	$	—	$	-	$	—	$	26	$	417	$	3,272		$	—	$	3,715
Special Mention		—		—		—		—		—		—			—		—
Substandard		—		—		—		—		—		—			—		—
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Guaranteed by U.S. Government	$	—	$	—	$	—	$	26	$	417	$	3,272		$	—	$	3,715
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Commercial
Pass	$	501	$	4,299	$	6,236	$	2,000	$	628	$	3,483		$	—	$	17,147
Special Mention		—		400		—		—		—		—			—		400
Substandard		—		—		—		—		—		697			—		697
Doubtful		—		—		—		—		—		—			—		—
Loss		—		—		—		—		—		—			—		—
Total Commercial	$	501	$	4,699	$	6,236	$	2,000	$	628	$	4,180		$	—	$	18,244
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	—


(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Total Loans
Pass	$	120,790	$	164,669	$	133,780	$	47,644	$	36,462	$	171,574	$	10,492	$	685,411
Special Mention		—		400		—		—		—		—		—		400
Substandard		—		—		—		9,250		1,502		8,200		39		18,991
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total loans	$	120,790	$	165,069	$	133,780	$	56,894	$	37,964	$	179,774	$	10,531	$	704,802

Classified Assets. Federal regulations provide for the classification of loans and other assets, such as debt and equity securities considered to be of lesser quality, as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those

BV FINANCIAL, INC. AND SUBSIDIARIES

classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss allowance is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management.

When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover probable accrued losses. General allowances represent loss allowances which have been established to cover probable accrued losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, such that additional general or specific loss allowances may be required.

In connection with the filing of our periodic reports with the FDIC and in accordance with our classification of assets policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification in accordance with applicable regulations.

Through our loan evaluation process, we have identified certain loans for which the primary source of loan repayment may no longer be a viable option. The Company is dependent on the liquidation of the collateral to provide funds for repayment of the loan. The following table shows the loans determined by management to be collateral dependent at March 31, 2024.


	Loan Balance		Estimated Collateral Values		Loan Balance		Estimated Collateral Values
(dollars in thousands)	Real Estate		Real Estate		Business\Other Assets		Business\Other Assets
One to four family - owner occupied	$	1,303	$	4,559	$	—	$	—
One to four family - non-owner occupied		190		451		—		—
Commercial owner occupied real estate		704		1,820		—		—
Commercial investor real estate		7,844		10,070		—		—
Construction and land		314		822		—		—
Commercial		97		210		—		124
Marine and other consumer		—		—		2		27
Total	$	10,452	$	17,932	$	2	$	151

BV FINANCIAL, INC. AND SUBSIDIARIES

Borrowers experiencing financial difficulty ("BEFD") modifications included in the individually assessed loan schedules above, as of March 31, 2024 were as follows:


(dollars in thousands)	Number of Loans	Amortized Cost
One to four family - owner occupied	3	$	249
One to four family - non owner occupied	1		130
Commercial investor real estate	1		1,036
Farm loans	1		785
Total accrual BEFD modification loans	6	$	2,200

Modifications on non-accrual	1	$	1,036

All BEFD modifications were loan term extensions. There were no BEFD modifications past due as of March 31, 2024. There was one loan, on non-accrual, that had payment defaults in the past 12 months.

The following tables detail the amortized cost basis at the end of the reporting period for loans made to borrowers experiencing financial difficulty during the three months ended March 31, 2024.


	Three Months Ended March 31, 2024
(dollars in thousands)	Term Extensions		Payment Deferral and Term Extensions		Total		Percentage of Total Loans
One to four family - owner occupied	$	249	$	—	$	249		0.04	%
One to four family - non-owner occupied		130		—		130		0.02	%
Commercial investor real estate		1,036		—		1,036		0.14	%
Faarm loans		785		—		785		0.11	%
Total	$	2,200	$	—	$	2,200		0.31	%

Note 4 - Goodwill And Other Intangible Assets

Goodwill and other intangible assets are presented in the tables below.


(dollars in thousands)	As of March 31, 2024		As of December 31, 2023

Goodwill	$	14,420	$	14,420


	March 31, 2024						December 31, 2023
	Carrying Amount		Accumulated Amortization		Net		Carrying Amount		Accumulated Amortization		Net

Core deposit intangible	$	1,868	$	901	$	967	$	1,868	$	856	$	1,012

As of March 31, 2024 future estimated annual amortization expense is as follows:


Year ending
(dollars in thousands)
2024	$	135
2025		180
2026		180
2027		180
2028		180
Thereafter		112
Total Estimated Amortization Expense	$	967

Management performed its annual analysis of goodwill and core deposit intangibles ("CDI") during the fourth quarter of 2023 and concluded that there was no impairment at December 31, 2023. At March 31, 2024, management's analysis concluded that there were no changes in the Company's financial statements or operations subsequent to the fourth quarter 2023 annual analysis that would indicate that it was more likely than not that goodwill or CDI was impaired.

BV FINANCIAL, INC. AND SUBSIDIARIES

Note 5 – Foreclosed Real Estate

Foreclosed real estate assets are presented net of the valuation allowance. The Company considers foreclosed real estate as classified assets for regulatory and financial reporting. Foreclosed real estate carrying amounts reflect management’s estimate of the realizable value of these properties incorporating current appraised values, local real estate market conditions and related selling costs. The Company had foreclosed real estate of $170,000 and $170,000 at March 31, 2024 and December 31, 2023, respectively.

During the three months ended March 31, 2024 and March 31, 2023, the Company incurred foreclosed real estate expenses of $5,000 and $96,000, respectively.

The Company had $220,000 and $174,000 in loans secured by residential real estate for which formal foreclosure proceedings were in process as of March 31, 2024 and December 31, 2023, respectively.

The table below shows the foreclosed real estate roll forward balance as of March 31, 2024.


(dollars in thousands)	March 31, 2024		December 31, 2023
Beginning of period balance	$	170	$	1,987
Improvements and additions		—		57
Proceeds from sale		—		(2,583	)
Gain on sale		—		709
End of period balance	$	170	$	170

Note 6 - Deposits

Deposits consisted of the following:


	March 31, 2024			December 31, 2023
(dollars in thousands)	Balance		Percentage	Balance		Percentage
Noninterest-bearing checking accounts	$	139,107	21.75%	$	142,030	22.40%
Interest-bearing checking accounts		90,146	14.10%		83,656	13.19%
Money market accounts		86,728	13.56%		87,310	13.77%
Savings accounts		149,655	23.40%		147,608	23.28%
Certificates of deposit		173,852	27.19%		173,516	27.36%
Total deposits	$	639,488	100.00%	$	634,120	100.00%

At March 31, 2024, the Bank had two account relationships from local government entities that comprised 3.5% and 1.6% of total deposits, respectively. At March 31, 2024 the Company had $10.0 million of brokered certificates of deposits. The Company had no brokered deposits at December 31, 2023.

At March 31, 2024 and December 31, 2023, the Bank had $29.1 million and $32.1 million in certificates of deposits of $250,000 or more, respectively. Deposits in excess of $250,000 may not be insured by the FDIC.

BV FINANCIAL, INC. AND SUBSIDIARIES

At March 31, 2024 scheduled maturities of certificates of deposits are as follows:


(dollars in thousands)	March 31, 2024
Within one year	$	116,384
Year 2		40,289
Year 3		4,771
Year 4		8,958
Year 5		3,450
Thereafter		—
Total certificates of deposit	$	173,852

Note 7 - Borrowings And Subordinated Debt

A summary of the Company’s borrowings at March 31, 2024 and December 31, 2023 are indicated as follows:


		March 31, 2024					December 31, 2023
(dollars in thousands)	Maturity	Balance			Rate		Balance			Rate
										—
BV Financial Inc. Series 2020 Notes	2030	$	35,000		4.88%		$	35,000		4.88%
Easton Capital Trust I	2034		—			—		3,093		SOFR + 2.85%
Total Borrowings, gross			35,000					38,093
Less: Debt issuance costs			(233	)				(272	)
Less: net fair value adjustment			—					(570	)
Total Borrowings, net		$	34,767				$	37,251

During the quarter ended March 31, 2024, the Company paid off $3.0 million in junior subordinated debt assumed via a previous acquisition that had an interest rate in the most recent quarter of 8.49%. This resulted in the write-off (increase in interest expense) of the remaining purchase accounting fair market value adjustment of $566,000.

Note 8 – Lease Commitments And Contingencies

Operating Leases

The Company determines if an arrangement is a lease at inception. All of the Company’s leases are currently classified
as operating leases and are included in other assets and other liabilities on the Company’s Consolidated Balance
Sheets. Periodic operating lease costs are recorded in occupancy expenses of premises on the Company's Consolidated
Statements of Income.

Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease
liabilities represent the Company’s obligation to make lease payments arising from the lease arrangements. Operating
lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the
expected future lease payments over the remaining lease term. In determining the present value of future lease
payments, the Company uses its incremental borrowing rate based on the information available at the lease
commencement date. The operating ROU assets are adjusted for any lease payments made at or before the lease
commencement date, initial direct costs, any lease incentives received and, for acquired leases, any favorable or
unfavorable fair value adjustments. The present value of the lease liability may include the impact of options to extend
or terminate the lease when it is reasonably certain that the Company will exercise such options provided in the lease
terms. Lease expense is recognized on a straight-line basis over the expected lease term. Lease agreements that include
lease and non-lease components, such as common area maintenance charges, are accounted for separately.

BV FINANCIAL, INC. AND SUBSIDIARIES

The table below details the right of use asset (net of accumulated amortization), lease liability and other information related to the Company's operating leases:


	Consolidated Balance
(dollars in thousands)	Sheet Classification	March 31, 2024			December 31, 2023

Operating lease right of use asset	Other assets	$	1,079		$	1,128
Operating lease liabilities	Other liabilities	$	1,115		$	1,162

Other information related to leases:
Weighted average remaining lease term of operating leases		5.3 years			5.5 years
Weighted average discount rate of operating leases			4.26	%		4.26	%

The table below details the Company's lease cost, which is included in occupancy expense in the Consolidated Statements of Income.


	Three Months Ended March 31,
(dollars in thousands)	2024		2023

Operating lease cost	$	72	$	44

Cash paid for lease liability	$	57	$	44

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:


(dollars in thousands)	As of March 31, 2024
Lease payments due:
Within one year	$	243
After one but within two years		443
After two but within three years		103
After three but within four years		64
After four but within five years		64
After five years		213
Total undiscounted lease payments		1,130
Less: imputed interest		(15	)
Present value of operating lease liabilities	$	1,115

Note 9 – Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possible additional discretionary actions by the regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The Basel III Capital Rules became effective for the Bank on January 1, 2015 (subject to a phase-in period for certain provisions). Quantitative measures established by the Basel III Capital Rules to ensure capital adequacy require the maintenance of minimum amounts and ratios (set forth in the table below) of Common Equity Tier 1 capital, Tier 1 capital, and Total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to adjusted quarterly average assets (as defined).

BV FINANCIAL, INC. AND SUBSIDIARIES

In connection with the adoption of the Basel III Capital Rules, the Bank elected to opt-out of the requirement to include accumulated other comprehensive income in Common Equity Tier 1 capital. Common Equity Tier 1 capital for the Bank is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities and subject to transition provisions.

Insured depository institutions are required to meet the following in order to qualify as "well capitalized:" (1) a common equity Tier 1 risk-based capital ratio of 6.5%; (2) a Tier 1 risk-based capital ratio of 8%; (3) a total risk-based capital ratio of 10%; and (4) a Tier 1 leverage ratio of 5%.

The maintenance of a capital conservation buffer of 2.5% is also required. The Basel III Capital Rules also provide for a "countercyclical capital buffer" that is applicable to only certain covered institutions and does not have any current applicability to the Bank. The aforementioned capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of Common Equity Tier 1 capital to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall.


											To be well
											capitalized under
						For capital					prompt corrective
	Actual					adequacy purposes					action provisions
As of March 31, 2024	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
Tier 1 Leverage ratio	$	165,718		19.26	%	$	34,425		4.00	%	$	43,031		5.00	%

Tier 1 capital (to risk-weighted assets)	$	165,718		23.94	%	$	41,538		6.00	%	$	55,384		8.00	%

Common Equity Tier 1 Capital Ratio (to risk-weighted assets)	$	165,718		23.94	%	$	31,153		4.50	%	$	44,999		6.50	%

Total Capital ratio (to risk-weighted assets)	$	174,374		25.19	%	$	55,384		8.00	%	$	69,229		10.00	%


											To be well capitalized under
						For capital					prompt corrective
	Actual					adequacy purposes					action provisions
As of December 31, 2023	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
Tier 1 Leverage ratio	$	162,125		18.50	%	$	35,055		4.00	%	$	43,819		5.00	%

Tier 1 capital (to risk-weighted assets)	$	162,125		24.00	%	$	40,523		6.00	%	$	54,031		8.00	%

Common Equity Tier 1 Capital Ratio (to risk-weighted assets)	$	162,125		24.00	%	$	30,393		4.50	%	$	43,900		6.50	%

Total Capital ratio (to risk-weighted assets)	$	170,571		25.26	%	$	54,031		8.00	%	$	67,539		10.00	%

Note 10 – Fair Value Measurements

The Company adopted ASC Topic 820, “Fair Value Measurements” and ASC Topic 825, “The Fair Value Option for Financial Assets and Financial Liabilities,” which provides a framework for measuring and disclosing fair value under U.S. GAAP. ASC Topic 820 requires disclosures about the fair value of assets and liabilities recognized in the consolidated balance sheet in periods subsequent to initial recognition, whether the measurements are made on a recurring basis (for example, AFS investment securities) or on a nonrecurring basis (for example, individually evaluated loans).

ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. AFS securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis such as loans held for investment and certain

BV FINANCIAL, INC. AND SUBSIDIARIES

other assets. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets.

Under ASC Topic 820, the Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine the fair value. These hierarchy levels are:

Level 1 inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

Level 2 inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with the Company’s quarterly valuation process. Intra-quarter transfers in and out of level 3 assets and liabilities recorded at fair value on a recurring basis are disclosed. There were no such transfers during the quarter ended March 31, 2024 or the year ended December 31, 2023.

Following is a description of valuation methodologies used for assets and liabilities recorded at fair value:

Securities Available for Sale

AFS investment securities are recorded at fair value on a recurring basis. Standard inputs include quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include agency and mortgage-backed securities issued by government sponsored entities (“GSEs”), municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Equity Securities Carried at Fair Value Through Income

Equity securities carried at fair value through income are recorded at fair value on a recurring basis. Standard inputs include quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 equity securities include those traded on an active exchange, such as the New York Stock Exchange. Level 2 equity securities include mutual funds with asset-backed securities issued by GSEs as the underlying investment supporting the fund. Equity securities classified as Level 3 include mutual funds with asset-backed securities in less liquid markets.

Loans Receivable

The Company does not record loans at fair value on a recurring basis; however, from time to time, a loan is individually evaluated and an ACL is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan are segregated individually. Management estimates the fair value of individually evaluated loans using one of several methods, including the collateral value, market value of similar debt, or discounted cash flows. Individually evaluated loans not requiring an allowance are those for which the fair value of expected

BV FINANCIAL, INC. AND SUBSIDIARIES

repayments or collateral exceed the recorded investment in such loans.

In accordance with FASB ASC 820, loans where an allowance is established based on the fair value of collateral (loans with impairment) require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price (e.g., contracted sales price), the Company records the loan as nonrecurring Level 2. When the fair value of the collateral dependent loan is derived from an appraisal, the Company records the loan as nonrecurring Level 3. Fair value is re-assessed at least quarterly or more frequently when circumstances occur that indicate a change in the fair value. The fair values of collateral dependent loans that are not measured based on collateral values are measured using discounted cash flows and considered to be Level 3 inputs.

Foreclosed Real Estate

Foreclosed real estate is adjusted for fair value upon transfer of the loans to foreclosed assets. Subsequently, foreclosed real estate is reported at the lower of carrying value or fair value. Fair value is based on independent market prices, appraised value of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price (e.g., contracted sales price), the Company records the foreclosed asset as nonrecurring Level 2 when the fair value is derived from an appraisal, the Company records the foreclosed asset at nonrecurring Level 3.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The tables below present the recorded amount of assets as of March 31, 2024 and December 31, 2023 measured at fair value on a recurring basis.


			Level 1		Level 2		Level 3
			Quoted prices		Significant		Significant
			in active		other		other
			markets for		observable		unobservable
As of March 31, 2024	Total		identical assets		inputs		inputs
	(dollars in thousands)
Securities available for sale
Agency Securities	$	690	$	—	$	690	$	—
Corporate securities		1,432		—		1,432		—
Mortgage-backed securities		26,299		—		26,299		—
Treasuries		5,331		—		5,331		—
	$	33,752	$	—	$	33,752	$	—


			Level 1		Level 2		Level 3
			Quoted prices		Significant		Significant
			in active		other		other
			markets for		observable		unobservable
As of December 31, 2023	Total		identical assets		inputs		inputs
	(dollars in thousands)
Securities available for sale
Agencies	$	4,723	$	—	$	4,723	$	—
Corporate securities		1,418		—		1,418		—
Mortgage-backed securities		28,640		—		28,640		—
	$	34,781	$	—	$	34,781	$	—

BV FINANCIAL, INC. AND SUBSIDIARIES

The Company may be required to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a non recurring basis as of March 31, 2024 and December 31, 2023 were included in the tables below.


			Level 1		Level 2		Level 3
			Quoted prices		Significant		Significant
			in active		other		other
			markets for		observable		unobservable
As of March 31, 2024	Total		identical assets		inputs		inputs
(dollars in thousands)
Individually evaluated loans	$	10,745	$	—	$	—	$	10,745
Foreclosed real estate and repossessed assets		170		—		—		170
	$	10,915	$	—	$	—	$	10,915


			Level 1		Level 2		Level 3
			Quoted prices		Significant		Significant
			in active		other		other
			markets for		observable		unobservable
As of December 31, 2023	Total		identical assets		inputs		inputs
(dollars in thousands)
Individually evaluated loans	$	10,554	$	—	$	—	$	10,554
Foreclosed real estate and repossessed assets		170		—		—		170
	$	10,724	$	—	$	—	$	10,724

Note 11 – Fair Value Of Financial Instruments

Financial instruments require disclosure of fair value information, whether or not recognized in the consolidated balance sheets, when it is practical to estimate the fair value. A financial instrument is defined as cash, evidence of an ownership interest in an entity or a contractual obligation which requires the exchange of cash. Certain items are specifically excluded from the financial instrument fair value disclosure requirements, including the Company’s common stock, foreclosed real estate, premises and equipment and other assets and liabilities.

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Therefore, any aggregate unrealized gains or losses should not be interpreted as a forecast of future earnings or cash flows. Furthermore, the fair values disclosed should not be interpreted as the aggregate current value of the Company.

BV FINANCIAL, INC. AND SUBSIDIARIES

The Company’s estimated fair values of financial instruments are presented in the following table.


		March 31, 2024				December 31, 2023
	Fair value	Carrying		Fair		Carrying		Fair
(dollars in thousands)	hierarchy	amount		value		amount		value

Financial assets
Cash and cash equivalents	Level 1	$	78,837	$	78,837	$	73,742	$	73,742
Equity investment	Level 2		246		246		256		256
Securities held to maturity	Level 2		10,153		9,154		10,209		9,206
Securities held to available for sale	Level 2		33,752		33,752		34,781		34,781
Federal Home Loan Bank of Atlanta stock	Level 2		654		654		626		626
Loans receivable	Level 3		700,230		685,045		696,248		686,879
Accrued interest receivable	Level 2		3,147		3,147		3,279		3,279

Financial liabilities
Deposits	Level 3	$	639,488	$	636,834	$	634,120	$	631,720
Subordinated Debentures	Level 3		34,767		27,559		37,251		31,018
Accrued interest payable	Level 2		753		753		193		193

Note 12 – Earnings Per Share (“EPS”)

Basic earnings per common share represent income available to common shareholders, divided by the weighted average number of common shares outstanding during the period. As a result of the Conversion, previously outstanding shares were adjusted to reflect the 1.5309-to-1 exchange ratio. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may have been issued by the Company related to outstanding unvested restricted stock unit and performance stock unit awards were determined using the treasury stock method and included in the calculation of dilutive common stock equivalents. The Company has not granted any stock options since 2017.

As of three months ended March 31, 2024, and 2023, there were no, unvested restricted stock or performance stock unit awards which were excluded from the calculation as their effect would be anti-dilutive. Basic and diluted earnings per share have been computed based on weighted-average common and common equivalent shares outstanding as follows:


	Three Months Ended March 31,				Three Months Ended March 31,
	2024				2023
(dollars in thousands, except per share data)	Basic		Diluted		Basic		Diluted

Net income	$	2,574	$	2,574	$	3,115	$	3,115
Weighted average common shares outstanding		10,638		10,638		7,967		7,967
Dilutive securities
Stock options		—		31		—		22
Adjusted weighted average shares outstanding		10,638		10,669		7,967		7,989
Earnings-per share amount	$	0.24	$	0.24	$	0.39	$	0.39

BV FINANCIAL, INC. AND SUBSIDIARIES

Note 13 – Income Taxes

The Company files a consolidated federal income tax return with its subsidiaries. Deferred tax assets and liabilities are determined using the liability (or balance sheet) method which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. If it is more likely than not that some portion or the entire deferred tax asset will not be realized, deferred tax assets will be reduced by a valuation allowance. It is the Company’s policy to recognize accrued interest and penalties related to unrecognized tax benefits as a component of tax expense.


	Three Months Ended March 31,
(dollars in thousands)	2024		2023

Current expense
Federal	$	519	$	818
State		238		372
Total current expense		757		1,190
Deferred expense		269		—
Income tax expense	$	1,026	$	1,190

BV FINANCIAL, INC. AND SUBSIDIARIES

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

General

Management’s discussion and analysis is intended to enhance your understanding of our financial condition and results of operations. The financial information in this section is derived from the accompanying financial statements. You should read the financial information in this section in conjunction with the business and financial information contained in this Quarterly Report on Form 10-Q and in the Company’s 2023 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 22, 2024.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “intend,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

•

statements of our goals, intentions and expectations;

•

statements regarding our business plans, prospects, growth and operating strategies;

•

statements regarding the quality of our loan and investment portfolios; and

•

estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not undertake any obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

•

general economic conditions, either nationally or in our market areas, that are worse than expected including as a result of employment levels and labor shortages, and a potential recession or slowed economic growth;

•

the impact of the COVID-19 pandemic on our business and results of operations;

•

changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for credit losses;

•

changes in the economic assumptions used to calculated the allowance for credit losses;

•

our ability to access cost-effective funding;

•

changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;

•

fluctuations in real estate values and both residential and commercial real estate market conditions;

•

our continued ability to originate loans outside of our market area;

•

our ability to implement and change our business strategies;

•

competition among depository and other financial institutions;

•

inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations or prepayments on loans we have made and make;

•

adverse changes in the securities markets;

BV FINANCIAL, INC. AND SUBSIDIARIES

•

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements and insurance premiums;

•

a potential government shutdown;

•

changes in the quality or composition of our loan or investment portfolios;

•

technological changes that may be more difficult or expensive than expected;

•

system failure or cyber-security breaches of our information technology infrastructure;

•

the failure to maintain current technologies and/or successfully implement future information technology enhancements;

•

the inability of third-party providers to perform as expected;

•

our ability to manage market risk, credit risk and operational risk in the current economic environment;

•

our ability to enter new markets successfully and capitalize on growth opportunities;

•

our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire, and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;

•

changes in consumer spending, borrowing and savings habits;

•

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

•

our ability to retain key employees;

•

our compensation expense associated with equity allocated or awarded to our employees; and

•

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by law or regulation, we do not undertake, and we specifically disclaim any obligation to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies and Use of Critical Accounting Estimates

Our accounting policies are integral to understanding the results reported. We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies.

Allowance for Credit Losses

On January 1, 2023, the Company adopted Accounting Standards Updates (ASU) 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” Accounting Standards Codification ("ASC") 326 requires entities to estimate an allowance for credit losses ("ACL") on certain types of financial instruments measured at amortized cost using a current expected credit losses ("CECL") methodology, replacing the prior-required incurred loss methodology. It also applies to unfunded commitments to extend credit, including loan commitments, standby letters of credit, and other similar instruments. The impairment model for available-for-sale debt securities was modified and ASC 326 also provided for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The amendments of ASC 326, upon adoption, were applied on a modified retrospective basis, by recording an increase in the reported balance of loans and the allowance for credit losses on loans, an increase in the liability for credit losses on commitments to extend credit and reducing total equity of both the Company and the Bank. As a result of adopting ASC 326, the Company recorded a decrease to retained earnings, net of taxes, of $547,000.

BV FINANCIAL, INC. AND SUBSIDIARIES

The ACL is an estimate of the expected credit losses for loans held for investment and for off-balance sheet exposures. ASC 326, "Financial Instruments-Credit Losses," requires an immediate recognition of the credit loss expected to occur over the lifetime of a financial asset whether originated or purchased. Charge-offs are recorded to the ACL when management believes the loan in uncollectible. Subsequent recoveries, if any, are credited to the ACL. Management believes the ACL is maintained in accordance with GAAP and in compliance with appropriate regulatory guidelines. The ACL includes quantitative estimates of losses for collectively and individually evaluated loans. The quantitative estimate for collectively evaluated loans (other than investor commercial real estate loans) is determined using the average charge-off method that utilizes historical losses for all Maryland banks with assets less than $1 billion beginning in March 2000. The investor commercial real estate portfolio utilizes the national loss history for banks with assets less than $1 billion over the same time period. Adjustments are made to the historical loss factors under each scenario for economic conditions, portfolio concentrations, collateral values, the level and trend of delinquent and problem loans and internal changes in staffing, loan policies and monitoring of the portfolio. Loans are selected for individual evaluation primarily based on their payment status and whether the loan has been placed on non-accrual status. Loans on non-accrual status include all loans greater than 90 days delinquent and other loans with weaknesses sufficient for management to place these loans on non-accrual status. The ACL is measured on a collective basis when similar risk factors exist as determined by internal loan coding and assignment to a portfolio segment. The Company utilizes reasonable and supportable forecasts of future economic conditions when estimating the ACL on loans. The model's calculation also uses an adjustment for a 12-month forecast period utilizing the most recent 12-month economic forecast from the Board of Governors of the Federal Reserve System for national gross domestic product ("GDP"). The model compares the average history of loss rates described above to the forecasted GDP to determine the value of the forward-looking adjustment. The establishment of the allowance for credit losses is significantly affected by management's judgment and by economic and other uncertainties, and there is a likelihood that different amounts would be reported under different conditions or assumptions. The Federal Deposit Insurance Corporation and the Maryland Office of the Commissioner of Financial Regulation, as an integral part of their examination process, periodically review the allowance for credit losses for reasonableness and, as a result of such reviews, we may be required to increase our ACL or recognize loan charge-offs. The calculation of ACL excludes accrued interest receivable balances because these balances are reversed in a timely manner against previously recognized interest income when a loan is placed on non-accrual.

ASU Update 2022-02 On January 1, 2023, the Company adopted ASU 2022-02 –Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the TDRs recognition and measurement guidance and, instead, requires that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan. The amendments enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. In addition, ASU Update 2022-02 requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases. The Company adopted ASU 2022-02 using a modified retrospective transition method for TDRs. The impact of adoption was immaterial. The disclosure amendments in the Update 2022-02 were applied prospectively.

Goodwill

The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates it is likely impairment has occurred. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. In any given year the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value of the reporting unit is in excess of the carrying value, or if the Company elects to bypass the qualitative assessment, a quantitative impairment test is performed. In performing a quantitative test for impairment, the fair value of net assets is estimated based on analyses of the Company’s market value, discounted cash flows, and peer values. The determination of goodwill impairment is sensitive to market-based economics and other key assumptions used in determining or allocating fair value. Variability in the market and changes in assumptions or subjective measurements used to estimate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations. Our annual goodwill impairment test is performed each year as of September 30. The Company performed its 2023 goodwill impairment qualitative assessment and determined its goodwill was not considered impaired. We monitor our performance and evaluate our goodwill for impairment annually or more frequently as needed.

BV FINANCIAL, INC. AND SUBSIDIARIES

Deferred Income Taxes

At March 31, 2024, we had a net deferred tax asset totaling $8.7 million. In accordance with ASC Topic 740 “Income Taxes,” we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established if it is not more likely than not realizable. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting deferred tax assets and liabilities. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a regular basis as regulatory or business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect income. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize its federal and state deferred tax asset.

BV FINANCIAL, INC. AND SUBSIDIARIES

Comparison of Financial Condition at March 31, 2024 (Unaudited) and December 31, 2023

Total Assets. Total assets were $892.5 million at March 31, 2024, an increase of $7.2 million, or 0.82%, from $885.3 million at December 31, 2023. The increase was due primarily to a $5.1 million increase in cash and a $3.9 million increase in loans receivable funded by an increase in deposits and quarterly net income. The increase in deposits included the issuance of $10 million in brokered deposits during the period.

Cash and Cash Equivalents. Cash and cash equivalents increased $5.1 million, or 6.9%, to $78.8 million at March 31, 2024 from $73.7 million at December 31, 2023 primarily due to the increase in deposits.

Net Loans Receivable. Loans receivable increased $3.9 million, or 0.56%, to $708.7 million at March 31, 2024 from $704.8 million at December 31, 2023. Increases in commercial and industrial loans of $7.0 million and investor commercial real estate loans of $4.9 million offset decreases in owner occupied one-to-four loans of $1.4 million, non-owner occupied one- to four-family loans of $4.1 million and owner occupied commercial real estate loans of $2.4 million.

Allowance for Credit Losses.

Our allowance for credit losses – loans was $8.5 million at March 31, 2024 compared to $8.55 million at December 31, 2023. The slight decrease in the required ACL resulted from lower historical loss rates and lower life of loan calculations offsetting the higher balances of loans outstanding at March 31, 2024 compared to December 31, 2023. The ratio of our allowance for credit losses to total loans was 1.20% at March 31, 2024 compared to 1.19% at March 31, 2023, while the allowance for credit losses to non-performing loans was 79.2% at March 31, 2024 compared to 176.5% at March 31, 2023.

Securities. Securities available for sale (“AFS”) decreased $1.0 million, or 3.0%, to $33.8 million at March 31, 2024 from $34.8 million at December 31, 2023. The decrease was due to new purchases not fully replacing maturities and paydowns in the portfolio. Securities held-to-maturity were relatively unchanged at $10.2 million.

Total Liabilities. Total liabilities increased $4.6 million or 0.7%, to $690.8 million at March 31, 2024 from $686.2 million at December 31, 2023. The increase was primarily due to an increase in total deposits of $5.4 million, and an increase in escrow accounts and other accrued balances offsetting the pay-off of the junior subordinated debt of $3.0 million.

Deposits. Total deposits increased $5.4 million, or 0.85%, to $639.5 million at March 31, 2024 from $634.1 million at December 31, 2023. Interest-bearing deposits increased $8.3 million, or 1.7%, to $500.4 million at March 31, 2024 from $492.1 million at December 31, 2023. Noninterest bearing deposits decreased $2.9 million, or 2.1%, to $139.1 million at March 31, 2024 from $142.0 million at December 31, 2023. During the first quarter of 2024, the Company replaced $10.0 million in retail certificates of deposits with $10 million of brokered deposits at a cost lower than that would have been required to retain the retail certificates.

Federal Home Loan Bank Borrowings. The Company had no Federal Home Loan Bank borrowings at March 31, 2024 or December 31, 2023.

Stockholders’ Equity. Stockholders’ equity increased $2.7 million, or 1.3%, to $201.8 million at March 31, 2024, primarily due to net income.

BV FINANCIAL, INC. AND SUBSIDIARIES

Comparison of Operating Results for the Three Months Ended March 31, 2024 and 2023

Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans are included in the computation of average balances only. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Average balances exclude loans held for sale, if applicable. Net deferred loan origination fees totaled $1.9 million and $1.7 million at March 31, 2024 and 2023, respectively.


	For the Three Months Ended March 31,
	2024						2023
(dollars in thousands)	Average Outstanding Balance			Interest		Average Yield/Rate(1)	Average Outstanding Balance			Interest		Average Yield/Rate(1)
	(Unaudited)
Interest-earning assets:
Loans	$	708,367		$	9,782	5.54%	$	667,888		$	8,773		5.33	%
Securities available-for-sale		34,045			306	3.61%		36,134			266		2.99	%
Securities held-to-maturity		10,815			92	3.41%		11,915			93		3.18	%
Cash, cash equivalents and other interest-earning assets		62,681			824	5.27%		50,883			556		4.43	%
Total interest-earning assets		815,908			11,004	5.41%		766,820			9,688		5.12	%
Noninterest-earning assets		67,460						81,403
Total assets	$	883,368					$	848,223

Interest-bearing liabilities:
Interest-bearing demand deposits	$	84,550			236	1.12%	$	91,842			18		0.08	%
Savings deposits		146,629			65	0.18%		164,817			40		0.10	%
Money market deposits		87,738			352	1.61%		99,583			97		0.39	%
Certificates of deposit		173,093			1,333	3.09%		152,264			510		1.36	%
Total interest-bearing deposits		492,010			1,986	1.62%		508,506			665		0.53	%
Federal Home Loan Bank advances		—			—	—		24,150			289	4.85
Subordinated debentures		35,805			1,055	11.82%		37,069			534		5.84	%
Total borrowings		35,805			1,055	11.82%		61,219			823		5.45	%
Total interest-bearing liabilities		527,815			3,041	2.31%		569,725			1,488		1.06	%
Noninterest-bearing demand deposits		139,688						158,807
Other noninterest-bearing liabilities		16,145						22,042
Total liabilities		683,648						750,574
Equity		199,720						97,649
Total liabilities and equity	$	883,368					$	848,223
Net interest income				$	7,963					$	8,200
Net interest rate spread(2)						3.10%							4.06	%
Net interest-earning assets(3)	$	288,093					$	197,095
Net interest margin(4)						3.91%							4.34	%
Average interest-earning assets to interest-bearing liabilities		154.58	%					134.59	%

(1)

Annualized.

(2)

Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(3)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4)

Net interest margin represents net interest income divided by average total interest-earning assets.

BV FINANCIAL, INC. AND SUBSIDIARIES

The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by current rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately based on the changes due to rate and volume.


	For the Three Months Ended March 31, 2024
	Interest Income Increase (Decrease) Due to
	(In thousands)
	Volume			Rate			Total
Interest income:
Loans receivable	$	559		$	450		$	1,009

Investment securities AFS		(19	)		59			40
Investment securities HTM		(9	)		8			(1	)
Total Investment securities		(28	)		67			39

Equity Investments		2			(2	)		-
Short-term investments and other
interest-earning assets		155			113			268
Total interest-earning assets	$	688		$	628		$	1,316

Interest expense:
Deposits	$	(88	)	$	1,409		$	1,321

FHLB Borrowings & Other Borrowings		(289	)		—			(289	)
Subordinated Debentures		(37	)		558			521
Total Borrowings		(326	)		558			232
Total interest-bearing liabilities		(414	)		1,967			1,553

Change in net interest income	$	1,102		$	(1,339	)	$	(237	)

BV FINANCIAL, INC. AND SUBSIDIARIES

General. Net income decreased by $541,000 or 17.4% for the three months ended March 31, 2024, compared to $3.1 million for the three months ended March 31, 2023. The decrease was due primarily to the write-off (increase in interest expense) of the remaining purchase accounting fair market value adjustment of $566,000 upon the pay-off of $3.0 million in junior subordinated debt assumed in a prior acquisition.

Interest Income. Interest income increased $1.3 million, or 13.6%, to $11.0 million for the three months ended March 31, 2024 from $9.7 million for the three months ended March 31, 2023. The increase was due primarily to increases in interest income on loans, and interest income on cash, cash equivalents and other interest-earning assets. Interest income on loans increased $1.0 million, or 11.5%, to $9.8 million for the three months ended March 31, 2024 from $8.8 million for the three months ended March 31, 2023 due to increases in the average balance of loans and the average rate earned on loans. The average balance of loans increased $40.5 million, or 6.1%, to $708.4 million for the three months ended March 31, 2024 from $667.9 million for the three months ended March 31, 2023. The weighted average yield on loans increased 21 basis points to 5.54% for the three months ended March 31, 2024 compared to 5.33% for the three months ended March 31, 2023, as variable rate loans reset to higher interest rates and the rates on new loans exceeded the rates on paid off loans due to the higher interest rate environment. Interest income on cash, cash equivalents and other interest-earning assets increased $268,000 to $824,000 for the three months ended March 31, 2024 from $556,000 for the three months ended March 31, 2023 due to an increase in the average balance of cash, cash equivalents and other interest-earning assets and the average rate.

Interest Expense. Interest expense increased $1.5 million, or 104.4%, to $3.0 million for the three months ended March 31, 2024 compared to $1.5 million for the three months ended March 31, 2023, due to a $1.3 million increase in interest expense on deposits as rates paid increased and depositors moved money into higher cost certificate of deposit accounts, a $521,000 increase in interest expense on subordinated debt due to the write-off of the fair market value adjustment noted above somewhat offset by a $289,000 decrease in interest expense on advances from the FHLB as there were no advances outstanding in the quarter ended March 31, 2024.

The increase in interest expense on deposits was due to a 109 basis point increase in the average rate, offset by a $16.5 million decrease in the average balance of interest-bearing deposits to $492.0 million at March 31, 2024 from $508.5 million for the three months ended March 31, 2023. The average rate on interest-bearing deposits was 1.62% for the three months ended March 31, 2024 compared to 0.53% for the three months ended March 31, 2023.

Interest expense on FHLB advances decreased to $0 for the three months ended March 31, 2024 from $289,000 in the three months ended March 31, 2023 as all advances were paid off.

Interest expense on subordinated debentures increased $521,000, or 97.6%, to $1.1 million for the three months ended March 31, 2024 compared to $534,000 for the three months ended March 31, 2023.The increase was due primarily to the write-off (increase in interest expense) of the remaining purchase accounting fair market value adjustment of $566,000 upon the pay-off of $3.0 million in junior subordinated debt assumed in a prior acquisition.

Net Interest Income. Net interest income was $8.0 million for the three months ended March 31, 2024 compared to $8.2 million in the three months ended March 31, 2023. The net interest margin for the three months ended March 31, 2024 was 3.91% compared to 4.34% for the three months ended March 31, 2023. The 125 basis point increase in the cost of interest-bearing liabilities offset the higher average balances and rates earned on loans and short-term investments. Included in interest expense is the above-mentioned write-off of the $566,000 remaining fair market value adjustment on the pay-off the $3.0 million junior subordinated debt. Additionally, the cost of interest-bearing deposits increased by 109 basis points to 1.62% in the quarter ended March 31, 2024 compared to the quarter ended March 31, 2023.

BV FINANCIAL, INC. AND SUBSIDIARIES

Provision for Credit Losses.

The provision for credit losses was $18,000 for the three months ended March 31, 2024 compared to a provision for credit losses of $2,000 for the three months ended March 31, 2023. The provision in the current quarter consisted of a credit to the ACL-loans of $133,000, a credit to the ACL-HTM securities of $1,000 and an increase in the ACL-Unfunded commitments of $152,000. The Company had net recoveries on previously charged off loans of $85,000 in the quarter ended March 31, 2024 as compared to net recoveries of $37,000 in the quarter ended March 31, 2023.

Non-interest Income. For the three months ended March 31, 2024, noninterest income totaled $578,000 compared to $807,000 in the quarter ended March 31, 2023. The decrease is almost entirely due to lower income on insurance policies. In the quarter ended March 31, 2023, the Company received a $235,000 death benefit on the policies.

Non-interest Expense. For the three months ended March 31, 2024, noninterest expense totaled $4.9 million compared to $4.7 million for the three months ended March 31, 2023. Compensation and benefits expenses increased by 8.7% due to increases in staffing and salary levels. Other expenses increased $116,000 or 22.7% primarily due to higher fraud losses. Professional fees decreased by $88,000 or 44.0% due to the recovery of previously expensed legal fees of $109,000 on the disposition of a problem loan. Foreclosed real estate expenses decreased by $122,000 or 96.1% due to the sale of large foreclosed real estate properties in 2023.

Income Tax Expense. For the three months ended March 31, 2024, income tax expense was $1.0 million for an effective tax rate of 28.5%. In the quarter ended March 31, 2023, income tax expense was $1.2 million for an effective tax rate of 27.65%. The lower tax rate in the quarter ended March 31, 2023 was due to a higher level of income from life insurance in that quarter.

Liquidity and Capital Resources

Liquidity. Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from maturities of securities. We also have the ability to borrow from the FHLB of Atlanta. At March 31, 2024, we had $169.1 million available under a line of credit with the FHLB of Atlanta, and had $25.0 million of FHLB in unfunded letters of credit used to secure municipal deposits outstanding against the line of credit with the FHLB of Atlanta. This resulted in additional borrowing availability from the FHLB of $144.1 million. The Company also has a short term unsecured facility from a correspondent bank in the amount of $20.0 million.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. We are committed to maintaining a strong liquidity position.

We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances, brokered deposits or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. At March 31, 2024 and March 31, 2023, the Company had $10 million and $0 in brokered deposits, respectively. The Bank's uninsured deposits totaled $190.1 million or 27.9% of total deposits of which $57.2 million were secured using the market value of pledged collateral or letters of credit issued by FHLB, and an additional $42.5 million were deposits of BV Financial, Inc. at the Bank.

Capital Resources. At March 31, 2024, the Bank exceeded all of its regulatory capital requirements and was categorized as well capitalized. Management is not aware of any conditions or events since the most recent notification that would change our category.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable, as the Company is a smaller reporting company.

BV FINANCIAL, INC. AND SUBSIDIARIES

Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Co-Chief Executive Officers and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2024. Based on that evaluation, the Company’s management, including the Co-Chief Executive Officers and the Chief Financial Officer, concluded that the Registrant’s disclosure controls and procedures were effective.

During the quarter ended March 31, 2024, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

BV FINANCIAL, INC. AND SUBSIDIARIES

Part II – Other Information

Item 1. Legal Proceedings

The Company is subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s financial condition or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed under the heading "Risk Factors" contained in the Prospectus. The Company's evaluation of the risk factors applicable to it has not changed materially from those disclosed in the Prospectus.

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

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

BV FINANCIAL, INC. AND SUBSIDIARIES

Item 6. Exhibits


3.1		Amended and Restated Articles of Incorporation of BV Financial, Inc. (1)

3.2		Amended and Restated Bylaws of BV Financial Bancorp, Inc. (2)

31.1 31.2		Certification of Co- Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Co- Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.3		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of Co-Chief Executive Officers and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		The following materials for the quarter ended March 31, 2024, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements

104		Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)

(1)

Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A (Commission File No. 001-41764), filed on July 31, 2023.

(2)

Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-270496), filed on March 13, 2023.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		BV FINANCIAL, INC.

Date: May 13, 2024		/s/ Timothy L. Prindle
		Timothy L. Prindle Co-President and Chief Executive Officer
Date: May 13, 2024		/s/ David M. Flair
		David M. Flair
		Co-President and Chief Executive Officer


Date: May 13, 2024		/s/ Michael J. Dee
		Michael J. Dee
		Executive Vice President and Chief Financial Officer


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2024
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Maryland		14-1920944
(State of Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


Securities registered pursuant to Section 12(b) of Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	BVFL	The NASDAQ Stock Market LLC


Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☒	Smaller Reporting Company	☒
Emerging growth company	☒


	March 31, 2024			December 31, 2023
(dollars in thousands, except per share amounts)	(unaudited)			(derived from audited financial statements)

Assets
Cash	$	8,520		$	9,260
Interest-bearing deposits in other banks		70,317			64,482
Cash and cash equivalents		78,837			73,742
Equity investment		246			256
Securities available for sale		33,752			34,781
Securities held to maturity (fair value of $9,154 and $9,206, ACL of $5 and $6)		10,153			10,209
Total loans		708,736			704,802
Allowance for credit losses		(8,506	)		(8,554	)
Net loans		700,230			696,248
Foreclosed real estate		170			170
Premises and equipment, net		14,473			14,250
Federal Home Loan Bank of Atlanta stock, at cost		654			626
Investment in life insurance		19,744			19,657
Accrued interest receivable		3,147			3,279
Goodwill		14,420			14,420
Intangible assets, net		967			1,012
Deferred tax assets, net		8,699			8,969
Other assets		7,053			7,635
Total assets	$	892,545		$	885,254
Liabilities and Stockholders' Equity
Liabilities
Noninterest-bearing deposits	$	139,107		$	142,030
Interest-bearing deposits		500,381			492,090
Total deposits		639,488			634,120
Subordinated debentures		34,767			37,251
Other liabilities		16,538			14,818
Total liabilities		690,793			686,189
Stockholders' equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued or outstanding; Common stock, $0.01 par value; 45,000,000 shares authorized at March 31, 2024 and December 31, 2023; 11,375,803 shares issued and outstanding as of March 31, 2024 and December 31, 2023		114			114
Paid-in capital		110,534			110,465
Retained earnings		100,346			97,772
Unearned common stock held by employee stock ownership plan		(7,286	)		(7,328	)
Accumulated other comprehensive loss		(1,956	)		(1,958	)
Total stockholders' equity		201,752			199,065
Total liabilities and stockholders' equity	$	892,545		$	885,254


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Changes in Stockholders' Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
Signatures		45


(dollars in thousands, except per share amounts)	Three Months Ended March 31,
Interest Income	2024		2023
Loans, including fees	$	9,782	$	8,773
Investment securities available for sale		306		266
Investment securities held to maturity		92		93
Other interest income		824		556
Total interest income		11,004		9,688
Interest Expense
Interest on deposits		1,986		665
Interest on FHLB borrowings		—		289
Interest on subordinated debentures		1,055		534
Total interest expense		3,041		1,488
Net interest income		7,963		8,200
Provision for credit losses		18		2
Net interest income after provision for credit losses		7,945		8,198
Noninterest Income
Service fees on deposits		103		94
Fees from debit cards		171		173
Income from investment in life insurance		87		318
Other income		217		222
Total noninterest income		578		807
Noninterest Expense
Compensation and related benefits		3,129		2,879
Occupancy		438		416
Data processing		377		349
Advertising		5		13
Professional fees		112		200
Equipment		102		105
Foreclosed real estate and holding costs		5		127
Amortization of intangible assets		45		46
FDIC insurance premiums		83		54
Other		627		511
Total noninterest expense		4,923		4,700
Net income before tax		3,600		4,305
Income tax expense		1,026		1,190
Net income	$	2,574	$	3,115
Basic earnings per share	$	0.24	$	0.39
Diluted earnings per share	$	0.24	$	0.39



(dollars in thousands)	Common stock		Paid-in capital		Unearned common stock held by ESOP			Retained earnings			Accumulated other comprehensive loss			Total

Balance, December 31, 2023	$	114	$	110,465	$	(7,328	)	$	97,772		$	(1,958	)	$	199,065
Net income		—		—		—			2,574			—			2,574
Other comprehensive income
(net of tax of $1)		—		—		—			—			2			2
Stock compensation		—		69		—			—			—			69
ESOP shares committed to be released		—		—		42			—			—			42

Balance, March 31, 2024	$	114	$	110,534	$	(7,286	)	$	100,346		$	(1,956	)	$	201,752




(dollars in thousands)	Common stock		Paid-in capital		Unearned common stock held by ESOP			Retained earnings			Accumulated other comprehensive loss			Total

Balance, December 31, 2022	$	74	$	15,406	$	—		$	84,612		$	(2,341	)	$	97,751
Net income		—		—		—			3,115			—			3,115
Other comprehensive income
(net of tax of $101)		—		—		—			—			268			268
Stock compensation		—		66		—			—			—			66
CECL ASU Transition		—		—		—			(547	)		—			(547	)

Balance, March 31, 2023	$	74	$	15,472	$	—		$	87,180		$	(2,073	)	$	100,653