Monroe Federal Bancorp Files 10-Q for Q1 2024

TL;DR

**Monroe Federal Bancorp 10-Q filed. Financials for Q1 2024 out. Check retained earnings & AOCI.**

AI Summary

Monroe Federal Bancorp, Inc. filed its 10-Q for the period ending June 30, 2024. The filing details financial performance and position, including retained earnings and accumulated other comprehensive income as of various dates in 2023 and 2024. The company is a federally chartered savings institution based in Tipp City, Ohio.

Why It Matters

This filing provides investors with a quarterly update on the financial health and operational performance of Monroe Federal Bancorp, Inc., crucial for investment decisions.

Risk Assessment

Risk Level: low — This is a standard quarterly financial filing with no immediate red flags or significant new risks indicated.

Key Numbers

• 2024-06-30 — Reporting Period End Date (Indicates the end of the fiscal quarter for which financial data is reported.)
• 2024-09-23 — Filing Date (Shows when the 10-Q was officially submitted to the SEC.)

Key Players & Entities

• Monroe Federal Bancorp, Inc. (company) — Filer of the 10-Q
• 2024-06-30 (date) — End of reporting period
• 2024-09-23 (date) — Filing date
• Tipp City, OH (location) — Company headquarters

FAQ

Key Financial Figures

• $0.01 — he registrant's common stock, par value $0.01 per share, were issued and outstanding

Filing Documents

• tmb-20240630x10q.htm (10-Q) — 3231KB
• tmb-20240630xex31d1.htm (EX-31.1) — 12KB
• tmb-20240630xex31d2.htm (EX-31.2) — 12KB
• tmb-20240630xex32d1.htm (EX-32.1) — 6KB
• tmb-20240630xex32d2.htm (EX-32.2) — 6KB
• tmb-20240630x10q003.jpg (GRAPHIC) — 10KB
• 0001558370-24-012959.txt ( ) — 13876KB
• tmb-20240630.xsd (EX-101.SCH) — 34KB
• tmb-20240630_cal.xml (EX-101.CAL) — 70KB
• tmb-20240630_def.xml (EX-101.DEF) — 181KB
• tmb-20240630_lab.xml (EX-101.LAB) — 387KB
• tmb-20240630_pre.xml (EX-101.PRE) — 330KB
• tmb-20240630x10q_htm.xml (XML) — 4058KB

. – Financial Information

Part I . – Financial Information 4 Item 1.

Financial Statements

Financial Statements 4 Balance Sheets as of June 30, 2024 (unaudited) and March 31, 2024 4 5 6 7 8

Notes to Financial Statements (unaudited)

Notes to Financial Statements (unaudited) 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 33 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 45 Item 4.

Controls and Procedures

Controls and Procedures 45

. – Other Information

Part II . – Other Information 46 Item 1.

Legal Proceedings

Legal Proceedings 46 Item 1A.

Risk Factors

Risk Factors 46 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 46 Item 3. Defaults Upon Senior Securities 46 Item 4. Mine Safety Disclosures 46 Item 5. Other Information 46 Item 6. Exhibits 46 Signature Page 47 2 Table of Contents EXPLANATORY NOTE Monroe Federal Bancorp, Inc. (the "Company," "we" or "us") was incorporated on May 21, 2024, to serve as the savings and loan holding company for Monroe Federal Savings and Loan Association ("Monroe Federal" or the "Association") upon the consummation of the Association's conversion from the mutual form of organization to the stock form of organization. As of June 30, 2024, the conversion had not yet been consummated, and the Company had no assets or liabilities and had not conducted any business activities other than organizational activities. Accordingly, the financial statements and related notes and the other financial information contained in this report relate primarily to the Association. The unaudited financial statements and other financial information contained in this report should be read in conjunction with the Association's audited financial statements and related notes as of and for each of the years ended March 31, 2024 and 2023, contained in the Company's definitive prospectus dated August 9, 2024, filed with the Securities and Exchange Commission. 3 Table of Contents

— Financial Information

Part I — Financial Information

Financial Statements

Item 1. Financial Statements MONROE FEDERAL SAVINGS & LOAN ASSOCIATION Condensed Balance Sheets (Unaudited) June 30, March 31, 2024 2024 Assets Cash and due from banks $ 1,168,835 $ 2,981,089 Interest-bearing deposits in other financial institutions 158,543 7,529,609 Federal funds sold 556,000 107,000 Cash and cash equivalents 1,883,378 10,617,698 Available-for-sale securities 24,609,617 25,181,361 Loans receivable 109,817,423 108,724,627 Allowance for credit losses ( 870,818 ) ( 855,455 ) Net loans 108,946,605 107,869,172 Premises and equipment 5,288,699 5,339,998 Restricted stock 607,900 515,000 Bank owned life insurance 3,518,217 3,491,015 Accrued interest receivable 474,864 483,027 Deferred federal income taxes 1,329,877 1,328,523 Other assets 816,061 511,468 Total assets $ 147,475,218 $ 155,337,262 Liabilities and Equity Liabilities Deposits Demand $ 42,481,297 $ 48,459,382 Savings and money market 48,323,964 51,227,399 Time 38,498,450 42,405,531 Total deposits 129,303,711 142,092,312 Advances from the Federal Home Loan Bank 7,600,000 3,000,000 Advances by borrowers for taxes and insurance 555,117 329,730 Directors plan liability 778,182 762,416 Accrued interest payable and other liabilities 898,905 588,099 Total liabilities 139,135,915 146,772,557 Equity Retained earnings 12,801,872 12,917,702 Accumulated other comprehensive loss ( 4,462,569 ) ( 4,352,997 ) Total equity 8,339,303 8,564,705 Total liabilities and equity $ 147,475,218 $ 155,337,262 The accompanying notes are an integral part of these condensed financial statements. 4 Table of Contents MONROE FEDERAL SAVINGS & LOAN ASSOCIATION. Condensed Statements of Operations (Unaudited) Three Months Ended June 30, 2024 2023 Interest income Loans $ 1,275,644 $ 1,215,627 Investment securities 124,874 136,859 Interest-

Notes to Financial Statements

Notes to Financial Statements June 30, 2024 and 2023 Note 1: Nature of Operations and Summary of Significant Accounting Policies Nature of Operations and Basis of Presentation Monroe Federal Savings and Loan Association (the "Company") is a federally chartered mutual thrift engaged primarily in the business of providing a variety of deposit and lending services to individual customers in western Ohio. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential and commercial mortgages, commercial, home equity lines of credit and installment loans. Its operations are conducted through its four office locations in Tipp City, Vandalia and Dayton, Ohio. The Company faces competition from other financial institutions and is subject to the regulation of certain federal agencies and undergoes periodic examinations by those regulatory authorities. The financial statements included herein as of June 30, 2024, and for the interim three-month periods ended June 30, 2024 and 2023 are unaudited. The unaudited interim financial statements and the notes thereto have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and in the opinion of management, contains all normal recurring adjustments necessary to present fairly the financial position, results of operations, changes in equity and cash flows as of and for the periods presented. Such adjustments are the only adjustments contained in the financial statements. The accompanying unaudited financial statements and related notes should be read in conjunction with the audited annual financial statements and the notes thereto included in the prospectus dated August 9, 2024, as filed by Monroe Federal Bancorp, Inc. with the Securities and Exchange Commission on August 19, 2024. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the Un

Notes to Financial Statements

Notes to Financial Statements June 30, 2024 and 2023 Available-for-sale securities ASC 326 also made changes to the accounting for credit losses on available-for-sale debt securities. For available for sale securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For securities available for sale that do not meet the above criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost and adverse conditions related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of tax. The Company elected to use zero loss estimates for securities issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major agencies and have a long history of no credit losses. Loans The ACL is a valuation allowance that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Management's determin

Notes to Financial Statements

Notes to Financial Statements June 30, 2024 and 2023 executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company. A loan for which the terms have been modified, resulting in a concession and for which the borrower is experiencing financial difficulties, is considered within the determination of the ACL using the same method as all other loans held for investment, except when the value of a concession cannot be measured using a method other than the discounted cash flow method. When the value of a concession is measured using the discounted cash flow method, the ACL is determined by discounting the expected future cash flows at the original interest rate of the loan. Unfunded Commitments The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The ACL on unfunded commitments is adjusted through the provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life consistent with the related ACL methodology. The ACL on unfunded commitments totaled $ 74,000 and $ 56,091 at June 30, 2024 and March 31, 2024 , respectively, and is included in other liabilities on the balance sheet. Recently Adopted Accounting Guidance The Company adopted the FASB's ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) . effective April 1, 2023. ASC 326 replaced the incurred loss impairment methodology with a new "current expected credit loss" (CECL) methodology that reflects expected credit losses over the lives of the credit instruments, including loans, held-to-maturity securities and other receivables at

Notes to Financial Statements

Notes to Financial Statements June 30, 2024 and 2023 The following table illustrates the impact of adopting ASC 326: April 1, 2023 Adoption Pre-Adoption Impact As Reported Assets Real estate loans: Residential $ 360,908 $ 11,949 $ 372,857 Multi-family 13,350 ( 13,350 ) — Commercial 166,345 137,324 303,669 Construction and land 43,631 94,031 137,662 Home equity line of credit (HELOC) 16,034 ( 16,034 ) — Commercial and industrial 34,110 23,741 57,851 Consumer 7,958 24,833 32,791 Total ACL on loans 642,336 262,494 904,830 Liabilities ACL for off-balance sheet exposure — 98,654 98,654 $ 642,336 $ 361,148 $ 1,003,484 The Company has evaluated multi-family real estate loans and home equity line of credit loans within, and under similar risk characteristics as, the residential loan category, upon adoption of the CECL methodology. 12 Table of Contents Monroe Federal Savings and Loan Association

Notes to Financial Statements

Notes to Financial Statements June 30, 2024 and 2023 Note 2: Investment Securities The amortized cost and fair values, together with gross unrealized gains and losses on securities are as follows: Gross Gross Approximate Amortized Unrealized Unrealized Fair Cost Gains Losses Value Available-for-sale Securities: June 30, 2024 U.S. Government agencies $ 3,250,889 $ — $ ( 591,272 ) $ 2,659,617 Mortgage-backed Government Sponsored Enterprises (GSEs) 12,546,009 — ( 2,251,234 ) 10,294,775 13,214,730 — ( 2,707,980 ) 10,506,750 Time deposits 1,246,812 — ( 98,337 ) 1,148,475 $ 30,258,440 $ — $ ( 5,648,823 ) $ 24,609,617 Gross Gross Approximate Amortized Unrealized Unrealized Fair Cost Gains Losses Value Available-for-sale Securities: March 31, 2024 U.S. Government agencies 3,250,909 — ( 590,612 ) 2,660,297 Mortgage-backed Government Sponsored Enterprises (GSEs) 12,949,053 — ( 2,231,211 ) 10,717,842 13,244,761 — ( 2,587,679 ) 10,657,082 Time deposits 1,246,762 — ( 100,622 ) 1,146,140 $ 30,691,485 $ — $ ( 5,510,124 ) $ 25,181,361 The amortized cost and fair value of available-for-sale securities at June 30, 2024, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties: Amortized Fair Cost Value June 30, 2024 Within one year $ 500,000 $ 497,836 One to five years 798,000 706,683 Five to ten years 5,356,001 4,498,182 After ten years 11,058,430 8,612,141 17,712,431 14,314,842 Mortgage-backed GSEs 12,546,009 10,294,775 Totals $ 30,258,440 $ 24,609,617 The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was approximately $ 1,043,

Notes to Financial Statements

Notes to Financial Statements June 30, 2024 and 2023 Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Based on evaluation of available evidence, including recent changes in market interest rates and information obtained from regulatory filings, management believes the declines in fair value for these securities are not credit related. Should the fair value decline of any of these securities be attributed to credit-related reasons, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period identified. The following table shows the number of securities and aggregate fair value depreciation at June 30, 2024 and March 31, 2024. June 30, 2024 March 31, 2024 Number of Aggregate Number of Aggregate

Description of Securities

Description of Securities securities Depreciation securities Depreciation Available for sale U.S. Government agencies 9 ( 18.2 ) % 9 ( 18.2 ) % Mortgage-backed Government Sponsored Enterprises (GSEs) 42 ( 17.9 ) % 42 ( 17.2 ) % 35 ( 20.5 ) % 35 ( 19.5 ) % Time deposits 5 ( 7.9 ) % 5 ( 8.1 ) % Total 91 ( 18.7 ) % 91 ( 18.0 ) % The following tables show the Company's investments' gross unrealized losses and fair value of the Company's investments with unrealized losses, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2024 and March 31, 2024. June 30, 2024 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized

Description of Securities

Description of Securities Value Losses Value Losses Value Losses Available for sale U.S. Government agencies $ — $ — $ 2,659,617 $ ( 591,272 ) $ 2,659,617 $ ( 591,272 ) Mortgage-backed Government Sponsored Enterprises (GSEs) — — 10,294,775 ( 2,251,234 ) 10,294,775 ( 2,251,234 ) — — 10,506,750 ( 2,707,980 ) 10,506,750 ( 2,707,980 ) Time deposits — — 1,148,475 ( 98,337 ) 1,148,475 ( 98,337 ) Total portfolio $ — $ — $ 24,609,617 $ ( 5,648,823 ) $ 24,609,617 $ ( 5,648,823 ) March 31, 2024 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized

Description of Securities

Description of Securities Value Losses Value Losses Value Losses Available for sale U.S. Government agencies $ — $ — $ 2,660,297 $ ( 590,612 ) $ 2,660,297 $ ( 590,612 ) Mortgage-backed Government Sponsored Enterprises (GSEs) — — 10,717,842 ( 2,231,211 ) 10,717,842 ( 2,231,211 ) — — 10,657,082 ( 2,587,679 ) 10,657,082 ( 2,587,679 ) Time deposits — — 1,146,140 ( 100,622 ) 1,146,140 ( 100,622 ) Total portfolio $ — $ — $ 25,181,361 $ ( 5,510,124 ) $ 25,181,361 $ ( 5,510,124 ) 14 Table of Contents Monroe Federal Savings and Loan Association

Notes to Financial Statements

Notes to Financial Statements June 30, 2024 and 2023 U.S.

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