Eureka Homestead Bancorp, Inc. - Quarter Report: 2019 September (Form 10-Q)

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2019

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______________ to _______________

Commission File No. 000‑56071

Eureka Homestead Bancorp, Inc.

(Exact name of registrant as specified in its charter)


Maryland		83-4051300
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

1922 Veterans Memorial Boulevard
Metairie, Louisiana		70005
(Address of Principal Executive Offices)		(Zip Code)

(504) 834‑0242

(Registrant’s telephone number)

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

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

YES ☐ NO ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES ☐ NO ☒

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


Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☒

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b‑2 of the Act). YES ☐ NO ☒

As of November 13, 2019, 1,429,676 shares of the Company’s common stock, par value $0.01 per share, were issued and outstanding.

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Eureka Homestead Bancorp, Inc.

Form 10‑Q

Index


		Page
	Part I. Financial Information

Item 1.	Consolidated Financial Statements

	Consolidated Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018 (audited)	3

	Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, 2019 and 2018 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the Three Months and Nine Months Ended September 30, 2019 and 2018 (unaudited)	5

	Consolidated Statements of Changes in Shareholders’ Equity for the Nine Months Ended September 30, 2019 and 2018 (unaudited)	6

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30

Item 4.	Controls and Procedures	30

	Part II. Other Information

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

	Signature Page	32

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Part I. – Financial Information

Item 1.Consolidated Financial Statements

EUREKA HOMESTEAD BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2019 AND DECEMBER 31, 2018

(in thousands)


	September 30,		December 31,
	2019		2018
	(Unaudited)		(Audited)

ASSETS

Cash and Cash Equivalents	$	9,621	$	3,090
Interest-Bearing Deposits		1,998		750
Investment Securities		6,823		5,781
Loans Receivable, Net		80,520		81,072
Loans Held-for-Sale		2,702		533
Accrued Interest Receivable		337		337
Federal Home Loan Bank Stock		1,408		1,376
Premises and Equipment, Net		722		767
Cash Surrender Value of Life Insurance		4,020		3,950
Deferred Tax Asset		241		280
Prepaid Expenses and Other Assets		235		134
Total Assets	$	108,627	$	98,070

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Deposits	$	58,340	$	56,183
Advances from Federal Home Loan Bank		23,584		26,030
Advance Payments by Borrowers for Taxes and Insurance		1,447		1,447
Accrued Expenses and Other Liabilities		790		2,171
Total Liabilities		84,161		85,831

Commitments and Contingencies (Note 7)

Shareholders' Equity:
Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no shares issued		—		—
Common Stock, $0.01 par value, 9,000,000 shares authorized, 1,429,676 shares issued and outstanding		14		—
Additional Paid-in Capital		13,115		—
Unallocated Common Stock Held by:
Employee Stock Ownership Plan (ESOP)		(1,116)		—
Recognition and Retention Plan (RRP)		—		—
Retained Earnings		12,455		12,335
Accumulated Other Comprehensive Loss		(2)		(96)
Total Shareholders' Equity		24,466		12,239
Total Liabilities and Shareholders' Equity	$	108,627	$	98,070

The accompanying notes are an integral part of these financial statements.

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EUREKA HOMESTEAD BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (Unaudited)

(in thousands except for Earnings Per Share )


	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Interest Income:
Loans Receivable	$	865	$	896	$	2,622	$	2,581
Investment Securities		45		26		123		81
Interest-Bearing Deposits		69		26		105		48
Total Interest Income		979		948		2,850		2,710
Interest Expense:
Deposits		333		245		944		647
Advances from Federal Home Loan Bank		167		201		519		551
Total Interest Expense		500		446		1,463		1,198
Net Interest Income		479		502		1,387		1,512

Provision (Credit) for Loan Losses		—		—		(9)		(11)
Net Interest Income After Provision (Credit) for Loan Losses		479		502		1,396		1,523

Non-Interest Income:
Service Charges and Other Income		28		21		74		75
Fees on Loans Sold		236		140		405		243
Income from Life Insurance		23		24		71		82
Total Non-Interest Income		287		185		550		400

Non-Interest Expenses:
Salaries and Employee Benefits		475		367		1,162		1,093
Occupancy Expense		60		55		195		154
FDIC Deposit Insurance Premium and Examination Fees		5		20		42		59
Data Processing		34		29		94		85
Accounting and Consulting		50		22		98		79
Other Real Estate Expense		—		—		—		1
Insurance		20		18		57		52
Legal fees		8		7		9		7
Other		53		52		155		153
Total Non-Interest Expenses		705		570		1,812		1,683
Income Before Income Tax Expense		61		117		134		240
Income Tax Expense		8		18		14		36
Net Income	$	53	$	99	$	120	$	204

Earnings Per Share: Basic	$	0.04		N/A	$	0.09		N/A

The accompanying notes are an integral part of these financial statements.

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EUREKA HOMESTEAD BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (Unaudited)

(in thousands)


	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Net Income	$	53	$	99	$	120	$	204

Other Comprehensive Income (Loss):
Unrealized Gain on Investment Securities		2		(25)		119		(108)
Income Tax Effect		(1)		5		(25)		23
Other Comprehensive Income (Loss), Net of Taxes		1		(20)		94		(85)
Comprehensive Income	$	54	$	79	$	214	$	119

The accompanying notes are an integral part of these financial statements.

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EUREKA HOMESTEAD BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (Unaudited)

(in thousands)


									Accumulated
			Additional		Unallocated				Other
	Common		Paid-in		ESOP		Retained		Comprehensive
	Stock		Capital		Shares		Earnings		Income/(Loss)		Total
Balance, January 1, 2018	$	—	$	—	$	—	$	12,040	$	(103)	$	11,937
Net Income		—		—		—		204		—		204
Other Comprehensive (Loss)		—		—		—		—		(85)		(85)
Balance, September 30, 2018	$	—	$	—	$	—	$	12,244	$	(188)	$	12,056

Balance, January 1, 2019	$	—	$	—	$	—	$	12,335	$	(96)	$	12,239
Proceeds from Issuance of Common Stock		14		13,102		(1,144)		—		—		11,972
ESOP shares earned		—		13		28		—		—		41
Net Income		—		—		—		120		—		120
Other Comprehensive Income		—		—		—		—		94		94
Balance, September 30, 2019	$	14	$	13,115	$	(1,116)	$	12,455	$	(2)	$	24,466

The accompanying notes are an integral part of these financial statements.

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EUREKA HOMESTEAD BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (Unaudited)

(in thousands)


	2019		2018
Cash Flows from Operating Activities:
Net Income	$	120	$	204
Adjustments to Reconcile Net Income to Net Cash (Used in) Provided by Operating Activities:
Provision (Credit) for Loan Losses		(9)		(11)
Depreciation Expense		64		30
Amortization of FHLB Advance Prepayment Penalty		54		54
Provision for Deferred Income Taxes		55		—
Net Amortization of Premium/Discount on Mortgage-Backed Securities		10		11
Stock Dividend on Federal Home Loan Bank Stock		(32)		(24)
Non-cash Compensation for ESOP		41		—
Net decrease (increase) in Loans Held-for-Sale		(2,169)		(161)
Changes in Assets and Liabilities:
Decrease (increase) in Accrued Interest Receivable		—		(1)
(Increase) in CSV of Life Insurance		(70)		(70)
(Increase) decrease in Prepaid Expenses and Other Assets		(101)		71
(Decrease) increase in Accrued Expenses and Other Liabilities		(1,416)		140
Net Cash (Used in) Provided by Operating Activities		(3,453)		243

Cash Flows from Investing Activities:
Net decrease (increase) in Loans		552		(2,181)
Purchases of Interest-Bearing Deposits		(1,748)		(1,000)
Proceeds from Maturities of Interest-Bearing Deposits		500		1,000
Purchases of Investment Securities		(1,991)		(1,976)
Proceeds from Sales, Calls and Principal Repayments of Investment Securities		1,061		909
Purchases of Premises and Equipment		(19)		(43)
Net Cash (Used in) Investing Activities		(1,645)		(3,291)

Cash Flows from Financing Activities:
Net Increase in Deposits		2,157		5,776
Proceeds from Stock Offering		13,116		—
Loan to ESOP for Purchase of Stock		(1,144)		—
Advances from Federal Home Loan Bank		5,000		11,500
Payments on Advances from Federal Home Loan Bank		(7,500)		(12,544)
Net (Decrease) in Advance Payments by Borrowers for Taxes and Insurance		—		126
Net Cash Provided by Financing Activities		11,629		4,858
Net (Decrease) Increase in Cash and Cash Equivalents		6,531		1,810

Cash and Cash Equivalents at Beginning of Period		3,090		713
Cash and Cash Equivalents at End of Period	$	9,621	$	2,523

Supplemental Disclosures for Cash Flow Information:
Cash Paid for:
Interest	$	1,450	$	1,169

Supplemental Schedule for Noncash Investing and Financing Activities:
Change in the Unrealized Gain/Loss on Investment Securities	$	119	$	175

The accompanying notes are an integral part of these financial statements.

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Eureka Homestead Bancorp, Inc.

Form 10‑Q

EUREKA HOMESTEAD BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019 (Unaudited)

Note 1 – Basis of Presentation -

The accompanying unaudited consolidated financial statements of Eureka Homestead Bancorp, Inc. (the “Company”) were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three month and nine month periods ended September 30, 2019 are not necessarily indicative of the results which may be expected for the entire fiscal year. These statements should be read in conjunction with the Financial Statements and notes thereto for the year ended December 31, 2018 included in the Form S-1 of Eureka Homestead Bancorp, Inc. as filed with the Securities and Exchange Commission (“SEC”). Reference is made to the accounting policies of the Company described in the Notes to the Financial Statements contained in the Form S-1.

In preparing the financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s financial condition, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.

Note 2 – Recent Accounting Pronouncements -

Emerging Growth Company Status

Eureka Homestead Bancorp, Inc. (the “Company”) qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as the Company is an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to other public companies. An emerging growth company may elect to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, but must make such election when the company is first required to file a registration statement. The Company has elected to use the extended transition period described above and intends to maintain its emerging growth company status as allowed under the JOBS Act.

In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers. The provisions of the update requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In March, 2016 the FASB issued ASU 2016‑08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the guidance in determining revenue recognition as principal versus agent. In April 2016, the FASB issued ASU 2016‑10, Identifying Performance Obligations and Licensing, which provides guidance in accounting for immaterial performance obligations and shipping and handling. In May 2016, the FASB issued ASU 2016‑12, Narrow-Scope Improvements and Practical

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Expedients which provides clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for noncash consideration and completed contracts at transition. This ASU also provides a practical expedient for contract modifications. For an emerging growth company, the amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company is currently assessing the amendment but does not anticipate it will have a material impact on the Company’s Consolidated Financial Statements.

In January 2016, the FASB issued ASU No. 2016‑01, Financial Instruments - Overall (Subtopic 825‑ 10), Recognition and Measurement of Financial Assets and Financial Liabilities. The provisions of the update require equity investments to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment. The update also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. It also eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities, and eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet. ASU No. 2016‑01 requires public business entities to use the price notion when measuring the fair value of financial instruments for disclosure purposes. It also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The update requires separate presentation of financial assets and financial liabilities by category and form on the balance sheet or the accompanying notes to the financial statements. In addition, the update clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For an emerging growth company, the amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842), Conforming Amendments Related to Leases. This ASU amends the codification regarding leases in order to increase transparency and comparability. The ASU requires companies to recognize lease assets and liabilities on the balance sheet and disclose key information about leasing arrangements. A lessee would recognize a liability to make lease payments and a right-of-use asset representing its right to use the leased asset for the lease term. For an emerging growth company, the amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The FASB, in July 2019, discussed the issuance of a proposal to delay the effective date of this ASU for Emerging Growth Companies to fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The exposure draft is anticipated to be issued in the third quarter of 2019. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In September 2016, the FASB issued ASU 2016‑13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments introduce an impairment model that is based on current expected credit losses (“CECL”), rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held to maturity securities), including certain off-balance sheet financial instruments (e.g., commitments to extend credit and standby letters of credit that are not unconditionally cancellable). The CECL should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Financial instruments with similar risk characteristics may be grouped together when estimating the CECL. The ASU also amends the current available for sale security impairment model for debt securities whereby credit losses relating to available for sale debt securities should be recorded through an allowance for credit losses. For an emerging growth company, the amendments in this update, as amended through more recent related ASUs, are effective for fiscal years beginning after December 15, 2022, and interim periods within fiscal years beginning after December 15, 2023. The amendments will be applied through a modified retrospective approach, resulting in a cumulative-effect adjustment to retained earnings as of the beginning

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of the first reporting period in which the guidance is effective. The Company is currently planning for the implementation of this accounting standard. It is too early to assess the impact this ASU will have on the Company’s Consolidated Financial Statements.

In August 2016, FASB issued ASU No. 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU clarify the proper classification for certain cash receipts and cash payments, including clarification on debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, among others. For an emerging growth company, the amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company is currently assessing the amendment but does not anticipate it will have a material impact on the Company’s Consolidated Financial Statements.

In September 2018, FASB issued ASU No. 2018‑07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment. The amendments in this ASU expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. For an emerging growth company, the amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company is currently assessing the amendment but does not anticipate it will have a material impact on the Company’s Consolidated Financial Statements.

In August 2018, FASB issued ASU 2018‑13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU modify the disclosure requirements related to fair value. Certain provisions under ASU 2018‑13 require prospective application, while other provisions require retrospective application to all period presented in the financial statements upon adoption. For an emerging growth company, the amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently assessing the amendment but does not anticipate it will have a material impact on the Company’s Consolidated Financial Statements.

Note 3 – Earnings Per Share -

Basic earnings per share (“EPS”) represents income available to common shareholders divided by the weighted average number of common shares outstanding; no dilution for any potentially convertible shares is included in the calculation. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. The potential common shares that may be issued by the Company relate to outstanding stock options.

Earnings per common share were computed based on the following:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(in thousands, except per share data)	2019		2019
Numerator:
Net income available to common shareholders	$	53	$	120

Denominator:
Common shares outstanding (Total issued, less unallocated ESOP shares)		1,318		1,318

Basic earnings per common share	$	0.04	$	0.09

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Note 4 – Investment Securities -

The amortized cost and fair values of investment securities available-for-sale were as follows:


			Gross		Gross
September 30, 2019:	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gains		(Losses)		Value
Mortgage-Backed Securities:
FHLMC	$	3,400	$	—	$	(17)	$	3,383
FNMA		169		1		—		170
GNMA		526		12		—		538
SBA 7a Pools		2,731		7		(6)		2,732
Total Investment Securities Available-for-Sale	$	6,826	$	20	$	(23)	$	6,823


			Gross		Gross
December 31, 2018:	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gains		(Losses)		Value
Mortgage-Backed Securities:
FHLMC	$	3,139	$	—	$	(117)	$	3,022
FNMA		232		—		(2)		230
GNMA		612		8		—		620
SBA 7a Pools		1,920		—		(11)		1,909
Total Investment Securities Available-for-Sale	$	5,903	$	8	$	(130)	$	5,781

All investment securities held on September 30, 2019 and December 31, 2018, were government-sponsored mortgage-backed or SBA pool securities.

The amortized cost and fair values of the investment securities available-for-sale at September 30, 2019, by contractual maturity, are shown below. For mortgage-backed securities and SBA 7a pools, expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Available-for-Sale
September 30, 2019	Amortized		Fair
(in thousands)	Cost		Value
Amounts Maturing:
After One Year through Five Years	$	828	$	829
After Five Years through Ten Years		1,760		1,754
After Ten Years		4,238		4,240
	$	6,826	$	6,823

No investment securities were pledged to secure advances from the FHLB at September 30, 2019 and December 31, 2018.

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Gross unrealized losses in investment securities at September 30, 2019 and December 31, 2018, existing for continuous periods of less than 12 months and for continuous periods of 12 months or more, are as follows:


September 30, 2019
(in thousands)	Less Than 12 Months				12 Months or More				Totals
Security			Unrealized				Unrealized				Unrealized
Description	Fair Value		(Losses)		Fair Value		(Losses)		Fair Value		(Losses)
Mortgage-Backed
Securities:
FHLMC	$	1,231	$	(5)	$	2,152	$	(12)	$	3,383	$	(17)
SBA 7a Pools		—		—		1,754		(6)		1,754		(6)
	$	1,231	$	(5)	$	3,906	$	(18)	$	5,137	$	(23)


December 31, 2018
(in thousands)	Less Than 12 Months				12 Months or More				Totals
Security			Unrealized				Unrealized				Unrealized
Description	Fair Value		(Losses)		Fair Value		(Losses)		Fair Value		(Losses)
Mortgage-Backed
Securities:
FHLMC	$	—	$	—	$	3,022	$	(117)	$	3,022	$	(117)
FNMA		230		(2)		—		—		230		(2)
SBA 7a Pools		1,909		(11)		—		—		1,909		(11)
	$	2,139	$	(13)	$	3,022	$	(117)	$	5,161	$	(130)

Management evaluates securities for other-than temporary impairment on a periodic and regular basis, as well as when economic or market concerns warrant such evaluation. No declines at September 30, 2019 and December 31, 2018, were deemed to be other-than-temporary.

In analyzing an issuer’s financial condition, management considers whether the federal government or its agencies issued the securities, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial statements.

Note 5 – Loans Receivable and the Allowance for Loan Losses -

Loans receivable at September 30, 2019 and December 31, 2018 are summarized as follows:


	September 30,		December 31,
(in thousands)	2019		2018
Mortgage Loans
1-4 Family	$	75,225	$	75,185
Multifamily		3,600		4,117
Commercial real estate		1,131		1,175
Consumer Loans		207		211
		80,163		80,688
Plus (Less):
Unamortized Loan Fees/Costs		1,207		1,234
Allowance for Loan Losses		(850)		(850)
Net Loans Receivable	$	80,520	$	81,072

The performing mortgage loans are pledged, under a blanket lien, as collateral securing advances from the FHLB at September 30, 2019 and December 31, 2018.

Management segregates the loan portfolio into portfolio segments which is defined as the level at which the Company develops and documents a systematic method for determining its allowance for loan losses. The portfolio segments

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are segregated based on loan types and the underlying risk factors present in each loan type. Such risk factors are periodically reviewed by management and revised as deemed appropriate. The following tables set forth, as of September 30, 2019 and December 31, 2018, the balance of the allowance for loan losses by portfolio segment, disaggregated by impairment methodology, which is then further segregated by amounts evaluated for impairment collectively and individually. The allowance for loan losses allocated to each portfolio segment is not necessarily indicative of future losses in any particular portfolio segment and does not restrict the use of the allowance to absorb losses in other portfolio segments.

Allowance for Loan Losses and Recorded Investment in Loans Receivable
September 30, 2019 (in thousands)


					Mortgage-
	Mortgage-		Mortgage-		Commercial
	1-4 Family		Multifamily		Real Estate		Consumer		Total
Allowance for Loan Losses:
Beginning Balance	$	807	$	31	$	12	$	—	$	850
Charge-Offs		—		—		—		—		—
Recoveries		9		—		—		—		9
Provision		(4)		(4)		(1)		—		(9)
Ending Balance	$	812	$	27	$	11	$	—	$	850

Ending Balance:
Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—

Collectively Evaluated for Impairment	$	812	$	27	$	11	$	—	$	850

Loans Receivable:
Ending Balance	$	75,225	$	3,600	$	1,131	$	207	$	80,163

Ending Balance:
Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—

Collectively Evaluated for Impairment	$	75,225	$	3,600	$	1,131	$	207	$	80,163

The allowance for loan losses for Mortgage 1‑4 Family Loans of $812,000 includes an unallocated portion of $431,000 as of September 30, 2019.

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Allowance for Loan Losses and Recorded Investment in Loans Receivable
December 31, 2018 (in thousands)


					Mortgage-
	Mortgage-		Mortgage-		Commercial
	1-4 Family		Multifamily		Real Estate		Consumer		Total
Allowance for Loan Losses:
Beginning Balance	$	813	$	20	$	17	$	—	$	850
Charge-Offs		—		—		—		—		—
Recoveries		11		—		—		—		11
Provision		(17)		11		(5)		—		(11)
Ending Balance	$	807	$	31	$	12	$	—	$	850

Ending Balance:
Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—

Collectively Evaluated for Impairment	$	807	$	31	$	12	$	—	$	850

Loans Receivable:
Ending Balance	$	75,185	$	4,117	$	1,175	$	211	$	80,688

Ending Balance:
Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—

Collectively Evaluated for Impairment	$	75,185	$	4,117	$	1,175	$	211	$	80,688

The allowance for loan losses for Mortgage 1‑4 Family Loans of $807,000 includes an unallocated portion of $433,000 as of December 31, 2018.

Management further disaggregates the loan portfolio segments into classes of loans, which are based on the initial measurement of the loan, risk characteristics of the loan and the method for monitoring and assessing the credit risk of the loan.

At September 30, 2019 and December 31, 2018, loan balances outstanding on non-accrual status amounted to $‑0‑ and $‑0‑, respectively. The Company considers loans more than 90 days past due and on nonaccrual as nonperforming loans.

At September 30, 2019 and December 31, 2018, the credit quality indicators (performing and nonperforming loans), disaggregated by class of loan, are as follows:

Credit Quality Indicators - Credit Risk Profile Based on Payment Activity at September 30, 2019 (in thousands)


			Non-
	Performing		Performing		Total
Mortgage Loans:
1 to 4 Family	$	75,225	$	—	$	75,225
Multifamily		3,600		—		3,600
Commercial real estate		1,131		—		1,131
Non-Mortgage Loans:
Consumer		207		—		207
Total	$	80,163	$	—	$	80,163

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Credit Quality Indicators - Credit Risk Profile Based on Payment Activity at December 31, 2018 (in thousands)


			Non-
	Performing		Performing		Total
Mortgage Loans:
1 to 4 Family	$	75,185	$	—	$	75,185
Multifamily		4,117		—		4,117
Commercial real estate		1,175		—		1,175
Non-Mortgage Loans:
Consumer		211		—		211
Total	$	80,688	$	—	$	80,688

The following tables reflect certain information with respect to the loan portfolio delinquencies by loan class and amount as of September 30, 2019 and December 31, 2018. There were no loans over 90 days past due and still accruing as of September 30, 2019 and December 31, 2018.

Aged Analysis of Past Due Loans Receivable at September 30, 2019 (in thousands)


	30-59		60-89		90 Days or						Total
	Days		Days		Greater		Total				Loans
	Past Due		Past Due		Past Due		Past Due		Current		Receivable
Mortgage Loans:
1 to 4 Family	$	228	$	—	$	—	$	228	$	74,997	$	75,225
Multifamily		—		—		—		—		3,600		3,600
Commercial real estate		—		—		—		—		1,131		1,131
Non-Mortgage Loans:
Consumer		—		—		—		—		207		207
Total	$	228	$	—	$	—	$	228	$	79,935	$	80,163

Aged Analysis of Past Due Loans Receivable at December 31, 2018 (in thousands)


	30-59		60-89		90 Days or						Total
	Days		Days		Greater		Total				Loans
	Past Due		Past Due		Past Due		Past Due		Current		Receivable
Mortgage Loans:
1 to 4 Family	$	227	$	171	$	—	$	398	$	74,787	$	75,185
Multifamily		—		—		—		—		4,117		4,117
Commercial real estate		—		—		—		—		1,175		1,175
Non-Mortgage Loans:
Consumer		—		—		—		—		211		211
Total	$	227	$	171	$	—	$	398	$	80,290	$	80,688

The following is a summary of information pertaining to impaired loans as of September 30, 2019 and December 31, 2018.

Impaired Loans

September 30, 2019

(in thousands)

Unpaid

Average

Interest

Recorded

Principal

Recorded

Income

Investment

Balance

Allowance

Investment

Recognized

Mortgage Loans

1-4 Family

—

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Impaired Loans

December 31, 2018

(in thousands)


			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
Mortgage Loans
1-4 Family	$	—	$	—	$	—	$	197	$	98

The Company seeks to assist customers that are experiencing financial difficulty by renegotiating loans within lending regulations and guidelines. Once modified in a trouble debt restructuring, a loan is generally considered impaired until its contractual maturity. At the time of the restructuring, the loan is evaluated for an asset-specific allowance for credit losses. The Company continues to specifically reevaluate the loan in subsequent periods, regardless of the borrower’s performance under the modified terms. If a borrower subsequently defaults on the loan after it is restructured, the Company provides an allowance for credit losses for the amount of the loan that exceeds the value of the related collateral.

The Company had no troubled debt restructurings as of September 30, 2019 and December 31, 2018 or any that defaulted subsequent to the restructuring through the date the financial statements were issued.

Note 6 – Regulatory Matters -

The Bank is subject to various regulatory capital requirements administered by its primary Federal regulator, the Office of the Comptroller of the Currency (OCC). Failure to meet the minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and the financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory reporting requirements. The Bank’s capital amounts and classification under the prompt corrective action guidelines are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios as of January 1, 2015, of total capital, tier 1 capital, and common equity tier 1 capital to risk-weighted assets (as defined in the regulations), and leverage capital, which is tier 1 capital to adjusted average total assets (as defined). Management believes, as of September 30, 2019 and December 31, 2018, that the Bank meets all the capital adequacy requirements to which it is subject.

As of September 30, 2019 and December 31, 2018, the most recent notifications from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To remain categorized as well capitalized, the Bank will have to maintain minimum total capital, common equity tier 1 capital, tier 1 capital, and leveraged capital ratios as disclosed in the table below. There are no conditions or events since the most recent

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notification that management believes have changed the Bank’s category. The Bank’s actual and required capital amounts and ratios are as follows:


									To be Well
									Capitalized Under
					For Capital				Prompt Corrective
September 30, 2019:	Actual				Adequacy Purposes				Action Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Risk Based Capital
(to Risk Weighted Assets)	$	19,709	38.49	%	$	4,096	8.00	%	$	5,120	10.00	%
Tier 1 Capital
(to Risk Weighted Assets)	$	19,067	37.24	%	$	3,072	6.00	%	$	4,096	8.00	%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)	$	19,067	37.24	%	$	2,304	4.50	%	$	3,328	6.50	%
Tier 1 Leverage Capital
(to Adjusted Total Assets)	$	19,067	17.72	%	$	4,305	4.00	%	$	5,381	5.00	%


									To be Well
									Capitalized Under
					For Capital				Prompt Corrective
December 31, 2018:	Actual				Adequacy Purposes				Action Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Risk Based Capital
(to Risk Weighted Assets)	$	12,961	25.98	%	$	3,992	8.00	%	$	4,990	10.00	%
Tier 1 Capital
(to Risk Weighted Assets)	$	12,335	24.72	%	$	2,994	6.00	%	$	3,992	8.00	%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)	$	12,335	24.72	%	$	2,245	4.50	%	$	3,243	6.50	%
Tier 1 Leverage Capital
(to Adjusted Total Assets)	$	12,335	12.23	%	$	4,035	4.00	%	$	5,044	5.00	%

A reconciliation of the Bank’s capital determined under GAAP to Total Capital, Tier 1 Capital, Common Equity Tier 1 Capital and Tier 1 Leverage Capital for September 30, 2019 and December 31, 2018, is as follows:


(in thousands)	September 30, 2019		December 31, 2018
Total Equity (Bank Only)	$	19,065	$	12,239
Unrealized Losses on Securities
Available for Sale, Net		2		96

Tangible, Tier 1 Capital and Common Equity Tier 1		19,067		12,335
Allowance for Loan Losses Included in Capital		642		626
Total Capital	$	19,709	$	12,961

The specific reserves included in the Allowance for Loan Losses were not significant as of September 30, 2019 and December 31, 2018.

Note 7 – Commitments and Contingencies -

In the normal course of business, the Company has outstanding commitments, such as commitments to extend credit, which are not included in the accompanying financial statements. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making such commitments as it does for instruments that are included in the Balance Sheets.

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Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation.

At September 30, 2019 and December 31, 2018, the Company had $835,000 and $793,000 of outstanding commitments to originate loans, respectively, all of which represents the balance of remaining funds to be disbursed on construction loans in process. In recent years we have sold loans on an industry-standard, servicing-released basis. At September 30, 2019, there were mortgage loans sold to investors with limited recourse for certain periods after the date of sale totaling $6.2 million at the sale date. Recourse would apply if the borrower(s) default on any payment within the first four months of the mortgage loan and it remains in default for a period of 90 days, or if the mortgage loan prepays in full within 180 days of the sale date. Should an early payment default occur, Eureka Homestead shall, at its sole discretion, repurchase such mortgage loan from the purchaser at its current amortized balance plus the service release premium received or indemnify the purchaser by paying the service release premium received plus $5,000. Should a mortgage loan prepay in full within 180 days of the sale date, Eureka Homestead shall refund to the purchaser the servicing release premium paid. There have been mortgage loans sold that had an early payment default or that prepaid in full during the recourse period.

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management and counsel, the disposition or ultimate resolution of such proceedings would not have a material adverse effect on the Company's financial statements.

Note 8 – Fair Values of Financial Instruments -

Fair Value Disclosures

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with FASB ASC 820, Fair Value Measurements, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based on quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments.

In cases where quoted market prices are not available, fair values are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value accounting guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under this guidance are described below.

Level 1 - Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 - Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include the following:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary

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substantially either over time or among market makers (for example, some brokered markets), or in which little information is released publicly (for example, a principal-to principal market);

Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates); and

Inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).

Level 3 - Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Therefore, unobservable inputs shall reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs shall be developed based on the best information available in the circumstances, which might include the reporting entity’s own data.

However, the reporting entity’s own data used to develop unobservable inputs shall be adjusted if information is reasonably available without undue cost and effort that indicates that market participants would use different assumptions.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Recurring Basis

Fair values of investment securities and mortgage-backed securities were primarily measured using information from a third-party pricing service. This pricing service provides information by utilizing evaluated pricing models supported with market data information. Standard inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data from market research publications.

The following tables present the balances of assets measured on a recurring basis as of September 30, 2019 and December 31, 2018. The Company did not record any liabilities at fair value for which measurement of the fair value was made on a recurring basis.


	Fair Value at Reporting Date Using
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
			for Identical		Observable		Unobservable
September 30, 2019:	Fair		Assets		Inputs		Inputs
(in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Mortgage-Backed Securities
FHLMC	$	3,383	$	—	$	3,383	$	—
FNMA		170		—		170		—
GNMA		538		—		538		—
SBA 7a Pools		2,732		—		2,732		—
Total Investment Securities	$	6,823	$	—	$	6,823	$	—

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	Fair Value at Reporting Date Using
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
			for Identical		Observable		Unobservable
December 31, 2018:	Fair		Assets		Inputs		Inputs
(in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Mortgage-Backed Securities
FHLMC	$	3,022	$	—	$	3,022	$	—
FNMA		230		—		230		—
GNMA		620		—		620		—
SBA 7a Pools		1,909		—		1,909		—
Total Investment Securities	$	5,781	$	—	$	5,781	$	—

Non-recurring Basis

The Company has segregated all financial assets and liabilities that are measured at fair value on a non-recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. The Company did not record any liabilities at fair value for which measurement of the fair value was made on a non-recurring basis.

The fair value of the impaired loans is measured at the fair value of the collateral for collateral-dependent loans. Impaired loans are Level 2 assets measured using appraisals from external parties of the collateral less any prior liens. Repossessed assets are initially recorded at fair value less estimated costs to sell. The fair value of repossessed assets is based on property appraisals and an analysis of similar properties available. As such, the Company records repossessed assets as Level 2.

FASB ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments for which it is practicable to estimate fair value, whether or not recognized in the balance sheet. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The derived fair value estimates cannot be substantiated through comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. FASB ASC 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Further, the disclosures do not include estimated fair values for items which are not financial instruments but which represent significant value to the Company, including core deposit intangibles and other fee-generating operations of the business. Reasonable comparability of fair value estimates between financial institutions may not be possible due to the wide range of permitted valuation techniques and numerous assumptions involved. The aggregate fair value amounts presented do not, and are not intended to, represent an aggregate measure of the underlying fair value of the Company.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Cash Equivalents - For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Interest-Bearing Deposits - The carrying amount is a reasonable estimate of fair value.

Investment Securities (including mortgage-backed securities) - For investment securities, including mortgage-backed securities, fair value equals quoted market price, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans - The fair value of loans is estimated using discounted cash flow analyses, using the interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

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Loans Held-for-Sale - The loans held-for sale are recorded at the lower of aggregate cost or market value which is a reasonable estimate of fair value.

FHLB Stock - The carrying amount is a reasonable estimate of fair value.

Cash Surrender Value of Life Insurance - The carrying amount is a reasonable estimate of fair value.

Accrued Interest Receivable and Accrued Interest Payable - The carrying amounts of accrued interest receivable and accrued interest payable approximate the fair values.

Deposits - The fair value of savings accounts and certain money market deposits is the amount payable on demand at the reporting date (carrying value). The fair value of fixed maturity certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities.

Advances from the FHLB - The fair values of the Advances from the FHLB are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Loan Commitments - For commitments to extend credit, fair value considers the difference between current levels of interest rates and the committed rates.

The estimated fair values of the Company’s financial instruments are as follows as of September 30, 2019 and December 31, 2018 (in thousands):


	September 30, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial Assets:
Cash and Cash Equivalents	$	9,621	$	9,621	$	3,090	$	3,090
Interest-Bearing Deposits		1,998		1,998		750		750
Investment Securities		6,823		6,823		5,781		5,781
Loans - Net		80,520		84,025		81,072		81,442
Loans Held-for-Sale		2,702		2,702		533		533
Accrued Interest Receivable		337		337		337		337
FHLB Stock		1,408		1,408		1,376		1,376
Cash Surrender Value of Life Insurance		4,020		4,020		3,950		3,950
Financial Liabilities:
Deposits		58,340		59,344		56,183		55,507
Advances from FHLB		23,584		24,131		26,030		25,907
Accrued Interest Payable		790		790		136		136

The carrying amounts in the preceding table are included in the balance sheet under the applicable captions; accrued interest payable is included in accrued expenses and other liabilities in the balance sheet. The contract or notional amounts of the Company’s financial instruments with off balance sheet risk are disclosed in Note 7.

Note 9 – Change in Corporate Form -

On July 9, 2019, Eureka Homestead (the “Bank”) converted to a federal stock savings and loan association and established a stock holding company, Eureka Homestead Bancorp, Inc. (the “Company”), as parent of the Bank.

The Bank converted to the stock form of ownership, followed by the issuance of all of the Bank’s outstanding stock to the Company. The Bank became the wholly owned subsidiary of the Company, and the Company issued and sold shares of its capital stock pursuant to an independent valuation appraisal of the Bank and the Company. The stock was priced at $10.00 per share. In addition, the Bank’s board of directors adopted an employee stock ownership plan

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(ESOP) which subscribed for 8% of the common stock sold in the offering. The Conversion was completed on July 9, 2019 and resulted in the issuance of 1,429,676 common shares by the Company. The cost of the Conversion and issuing the capital stock totaled $1.2 million and was deducted from the proceeds of the offering.

In accordance with OCC regulations, at the time of the Conversion, the Bank substantially restricted retained earnings by establishing a liquidation account. The liquidation account will be maintained for the benefit of eligible account holders who continue to maintain their accounts at the Bank after the Conversion. The liquidation account will be reduced annually to the extent that eligible holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account. In the event of a complete liquidation by the Bank, and only in such event, each eligible account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held. The Bank may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount.

The Conversion was accounted for as a change in corporate form with the historic basis of the Bank’s assets, liabilities and equity unchanged as a result.

Note 10 – Employee Stock Ownership Plan -

As part of the stock conversion, shares were purchased by the ESOP with a loan from Eureka Homestead Bancorp, Inc. All employees of the Bank meeting certain tenure requirements are entitled to participate in the ESOP. Compensation expense related to the ESOP was $41,000 for the three month period ended September 30, 2019.

The stock price when issued was $10 per share. The fair value of the 112,000 unallocated shares was $1.4 million based on the average price of our common stock for the quarter ended September 30, 2019, of $12.13 per share.

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

General

Management’s discussion and analysis of the financial condition at September 30, 2019 and results of operations and for the three and nine months ended September 30, 2019 and 2018 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing on Part I, Item 1 of this quarterly report on Form 10‑Q.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” 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 asset quality of our loan and investment portfolios; and

estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently 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.

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:

our ability to manage our operations under the economic conditions in our market area;

adverse changes in the financial industry, securities, credit and national and local real estate markets (including real estate values);

significant increases in our loan losses, including as a result of our inability to resolve classified and non-performing assets or reduce risks associated with our loans, and management’s assumptions in determining the adequacy of the allowance for loan losses;

credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and in our allowance for loan losses and provision for loan losses;

the use of estimates in determining fair value of certain of our assets, which may prove to be incorrect and result in significant declines in valuations;

competition among depository and other financial institutions;

our success in increasing our one- to four-family residential real estate lending;

our ability to attract and maintain deposits and to grow our core deposits, and our success in introducing new financial products;

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our ability to maintain our asset quality even as we continue to grow our loan portfolios;

our reliance in part on funding sources, including out-of-market jumbo deposits and borrowings, other than core deposits to support our operations;

changes in interest rates generally, including changes in the relative differences between short term and long term interest rates and in deposit interest rates, that may affect our net interest margin and funding sources;

fluctuations in the demand for loans;

changes in consumer spending, borrowing and savings habits;

declines in the yield on our assets resulting from the current low interest rate environment;

risks related to a high concentration of loans secured by real estate located in our market area;

the results of examinations by our regulators, including the possibility that our regulators may, among other things, have judgments different than management’s, and we may determine to increase our allowance or write down assets as a result of these regulatory examinations; change our regulatory capital position; limit our ability to borrow funds or maintain or increase deposits; or prohibit us from paying dividends, which could adversely affect our dividends and earnings;

changes in the level of government support of housing finance;

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

changes in laws or government regulations or policies affecting financial institutions, including the Dodd-Frank Act and the JOBS Act, which could result in, among other things, increased deposit insurance premiums and assessments, capital requirements, regulatory fees and compliance costs, particularly the new capital regulations, and the resources we have available to address such changes;

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 and the Public Company Accounting Oversight Board;

changes in our compensation and benefit plans, and our ability to retain key members of our senior management team and to address staffing needs in response to product demand or to implement our strategic plans;

loan delinquencies and changes in the underlying cash flows of our borrowers;

our ability to control costs and expenses, particularly those associated with operating as a publicly traded company;

the failure or security breaches of computer systems on which we depend;

the ability of key third-party service providers to perform their obligations to us;

changes in the financial condition or future prospects of issuers of securities that we own; and

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other economic, competitive, governmental, regulatory and operational factors affecting our operations, pricing, products and services.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Critical Accounting Policies

There are no material changes to the critical accounting policies disclosed in Eureka Homestead Bancorp, Inc.’s Prospectus dated May 13, 2019, as filed with the Securities and Exchange Commission pursuant to Securities Act Rule 424(b)(3) on May 20, 2019.

Comparison of Financial Condition at September 30, 2019 and December 31, 2018

Total Assets. Total assets increased $10.6 million, or 10.8%, to $108.6 million at September 30, 2019 from $98.1 million at December 31, 2018. The increase was due primarily to increases of $6.5 million in cash and cash equivalents and $1.2 million in interest-bearing deposits resulting primarily from funds received in the stock offering, and increases of $1.0 million in investment securities available-for-sale and $2.2 million in loans held-for-sale, offset in part by a decrease in net loans of $552,000.

Net Loans. Net loans decreased $552,000, or 0.7%, to $80.5 million at September 30, 2019 from $81.1 million at December 31, 2018. During the nine months ended September 30, 2019, one- to four-family residential real estate loans increased $40,000, or 0.1%, to $75.2 million from $75.2 million at December 31, 2018, multifamily loans decreased $517,000, or 12.6%, to $3.6 million from $4.1 million at December 31, 2018, commercial real estate loans decreased $44,000, or 3.7%, to $1.1 million from $1.2 million at December 31, 2018 and consumer loans decreased $4,000, or 1.9%, to $207,000 from $211,000 at December 31, 2018.

Interest-bearing deposits. Interest-bearing deposits increased $1.2 million, or 166.4%, to $2.0 million at September 30, 2019 from $750,000 million at December 31, 2018 as a result of deposit purchases of $1.7 million exceeding maturities of $500,000 during the nine months ended September 30, 2019.

Securities available-for-sale. Investment securities available-for-sale, consisting of government-sponsored mortgage-backed securities and SBA 7a pools backed by equipment and mortgage loans, increased $1.0 million, or 18.0%, to $6.8 million at September 30, 2019 from $5.8 million at December 31, 2018 as a result of securities purchases of $2.0 million exceeding principal repayments of $1.1 million during the nine months ended September 30, 2019.

Bank-Owned Life Insurance. At September 30, 2019, our investment in bank-owned life insurance was $4.0 million, an increase of $70,000, or 1.8%, from $3.9 million at December 31, 2018. We invest in bank-owned life insurance to provide us with a funding offset for our benefit plan obligations. Bank-owned life insurance also generally provides us noninterest income that is non-taxable.

Prepaid Expenses and Other Assets. Prepaid expenses and other assets increased $101,000, or 75.4%, to $235,000 at September 30, 2019 from $134,000 at December 31, 2018. The increase resulted principally from an increase of $71,000 in fees receivable on loans sold.

Deposits. Deposits increased $2.2 million, or 3.8%, to $58.3 million at September 30, 2019 from $56.2 million at December 31, 2018. Savings accounts and money market accounts decreased $442,000, or 13.9%, to $2.7 million at September 30, 2019 from $3.2 million at December 31, 2018. Certificates of deposit increased $2.6 million, or 4.9%, to $55.6 million at September 30, 2019 from $53.0 million at December 31, 2018. The increase in certificates of deposit resulted primarily from increases in local retail certificates of deposit and certificates of deposit derived from an online service, offset in part by a reduction in deposits from municipalities. We have utilized the non-retail funding sources to fund our loan origination and growth and to replace Federal Home Loan Bank advances as they mature.

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Borrowings. Borrowings, consisting entirely of Federal Home Loan Bank (FHLB) advances, decreased $2.4 million, or 9.4% to $23.6 million at September 30, 2019 from $26.0 million at December 31, 2018.

Accrued Expenses and Other Liabilities. Accrued expenses and other liabilities decreased by $1.4 million, or 63.6%, to $790,000 at September 30, 2019 from $2.2 million at December 31, 2018. The decrease resulted primarily from the payment in July 2019 of $1.4 million to terminate the Supplemental Executive Retirement Plans of the Chief Executive Officer and the President.

Total Equity. Total equity increased $12.2 million, or 99.9%, to $24.5 million at September 30, 2019 from $12.2 million at December 31, 2018. The increase resulted primarily from the $12.0 million net cash proceeds from the issuance of common stock, net income of $120,000 and a reduction in accumulated other comprehensive loss of $94,000 during the nine months ended September 30, 2019.

Comparison of Operating Results for the Three Months Ended September 30, 2019 and 2018

General. We had net income of $53,000 for the three months ended September 30, 2019, compared to $99,000 for the three months ended September 30, 2018, a decrease of $46,000. The decrease in net income resulted from a decrease in net interest income of $23,000, and an increase in noninterest expense of $135,000, offset, in part, by an increase of $102,000 in noninterest income.

Interest Income. Interest income increased $31,000, or 3.3%, to $979,000 for the three months ended September 30, 2019 from $948,000 for the three months ended September 30, 2018. This increase was primarily attributable to a $62,000 increase in interest on other interest-earning assets, offset in part by a $31,000 decrease in interest on loans receivable. The average balance of loans decreased $1.3 million, or 1.6%, to $79.6 million for the three months ended September 30, 2019 from $80.9 million for the three months ended September 30, 2018, and the average yield on loans decreased 8 basis points to 4.35% for the three months ended September 30, 2019 from 4.43% for the three months ended September 30, 2018. The average balance of investment securities increased $1.1 million, or 18.9%, to $7.1 million for the three months ended September 30, 2019 from $6.0 million for the three months ended September 30, 2018, while the average yield on investment securities increased 79 basis points to 2.52% for the three months ended September 30, 2019 from 1.73% for the three months ended September 30, 2018. The average balance of other interest-earning assets increased $7.9 million, or 143.6%, to $13.4 million for the three months ended September 30, 2019 from $5.5 million for the three months ended September 30, 2018, and the average yield on other interest-earning assets increased 17 basis points to 2.06% for the three months ended September 30, 2019 from 1.89% for the three months ended September 30, 2018.

Interest Expense. Total interest expense increased $54,000, or 12.1%, to $500,000 for the three months ended September 30, 2019 from $446,000 for the three months ended September 30, 2018. The increase was primarily due to an increase of $88,000, or 35.9%, in interest expense on deposits. This increase was partially offset by a decrease of $34,000 or 16.9% in interest expense on advances from FHLB. The average balance of interest-bearing deposits increased $7.7 million, or 14.0%, to $63.0 million for the three months ended September 30, 2019 from $55.3 million for the three months ended September 30, 2018, and the average cost of interest-bearing deposits increased 34 basis points to 2.11% for the three months ended September 30, 2019 from 1.77% for the three months ended September 30, 2018, reflecting the higher market interest rate environment. The average balance of FHLB advances decreased $7.0 million, or 23.3%, to $23.1 million for the three months ended September 30, 2019 from $30.1 million for the three months ended September 30, 2018. The average cost of these advances increased 22 basis points to 2.89% for the three months ended September 30, 2019 from 2.67% for the three months ended September 30, 2018.

Net Interest Income. Net interest income decreased $23,000, or 4.6%, to $479,000 for the three months ended September 30, 2019 from $502,000 for the three months ended September 30, 2018. Average net interest-earning assets increased $7.1 million period to period. This increase was due primarily to an increase in the average balance of cash and cash equivalents period to period. The increase in cash and cash equivalents was principally due to funds received in the stock offering. Our interest rate spread decreased to 1.59% for the three months ended September 30, 2019 from 2.01% for the three months ended September 30, 2018, and our net interest margin decreased to 1.91% for the three months ended September 30, 2019 from 2.17% for the three months ended September 30, 2018. The decreases in interest rate spread and net interest margin were primarily the result of an increasing interest rate environment for the three months ended

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September 30, 2019 resulting in our interest-bearing liabilities repricing at a faster rate than the yields on our interest-earning assets, the majority of which are long-term, fixed-rate loans.

Provision for Loan Losses. There were no provisions for loan losses for the three months ended September 30, 2019 and 2018. The allowance for loan losses was $850,000, or 1.06% of total loans, at September 30, 2019, compared to $850,000, or 1.05% of total loans, at December 31, 2018, and $850,000, or 1.05% of total loans, at September 30, 2018. Classified (substandard, doubtful and loss) loans decreased to $570,000 at September 30, 2019 from $580,000 at December 31, 2018 and $793,000 at September 30, 2018. There were no non-performing loans at September 30, 2019 or December 31, 2018 compared to $208,000 at September 30, 2018. There were no charge-offs or recoveries for the three months ended September 30, 2019 and 2018.

Noninterest Income. Noninterest income increased $102,000, or 55.1%, to $287,000 for the three months ended September 30, 2019 from $185,000 for the three months ended September 30, 2018. The increase was primarily due to an increases of $96,000 in fees on loans sold and in service charges and other income of $7,000.

Noninterest Expense. Noninterest expense increased $135,000, or 23.7%, to $705,000 for the three months ended September 30, 2019 from $570,000 for the three months ended September 30, 2018. There was an increase of $108,000, or 29.4%, in salaries and employee benefits. The increase resulted primarily from an increase of $56,000 in commissions paid on higher loan volume period to period and $41,000 of expenses recognized for the equity incentive plan. There was also an increase of $28,000 or 127.3% in accounting and consulting expenses due to increased costs of operating as a public company. These increases were offset in part by a decrease of $15,000, or 75.0%, in FDIC deposit insurance premiums due to a “small bank” assessment credit issued by the FDIC in 2019.

We expect our noninterest expense to increase in future periods because of the anticipated costs associated with operating as a public company, including the expected hiring of additional accounting personnel, and the increased compensation expenses associated with the purchase of shares of common stock by our employee stock ownership plan and the possible implementation of one or more stock-based benefit plans, if approved by our stockholders.

Income Tax Expense. Income tax expense decreased $10,000 to $8,000 for the three months ended September 30, 2019 compared to $18,000 for the three months ended September 30, 2018. The decrease resulted from lower income before income taxes and deferred tax effects. The effective tax rate was 13.11% for the three months ended September 30, 2019 compared to 15.38% for the same quarter in 2018.

Comparison of Operating Results for the Nine months Ended September 30, 2019 and 2018

General. We had net income of $120,000 for the nine months ended September 30, 2019, compared to $204,000 for the nine months ended September 30, 2018, a decrease of $84,000. The decrease in net income resulted from decreases in net interest income of $125,000 and the credit in the provision for loan losses of $2,000, and an increase in noninterest expense of $129,000, offset, in part, by an increase of $150,000 in noninterest income and a decrease in income tax expense of $22,000.

Interest Income. Interest income increased $140,000, or 5.2%, to $2.9 million for the nine months ended September 30, 2019 from $2.7 million for the nine months ended September 30, 2018. This increase was primarily attributable to a $41,000 increase in interest on loans receivable and a $99,000 increase in interest on other interest-earning assets. The average balance of loans increased $47,000, or 0.1%, to $80.3 million for the nine months ended September 30, 2019 from $80.2 million for the nine months ended September 30, 2018, and the average yield on loans increased 7 basis points to 4.35% for the nine months ended September 30, 2019 from 4.28% for the nine months ended September 30, 2018. The average balance of investment securities increased $846,000, or 14.4%, to $6.7 million for the nine months ended September 30, 2019 from $5.9 million for the nine months ended September 30, 2018, while the average yield on investment securities increased 60 basis points to 2.44% for the nine months ended September 30, 2019 from 1.84% for the nine months ended September 30, 2018. The average balance of other interest-earning assets increased $3.1 million, or 83.3%, to $6.8 million for the nine months ended September 30, 2019 from $3.7 million for the nine months ended September 30, 2018, and the average yield on other interest-earning assets increased 34 basis points to 2.07% for the nine months ended September 30, 2019 from 1.73% for the nine months ended September 30, 2018.

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Interest Expense. Total interest expense increased $265,000, or 22.1%, to $1.5 million for the nine months ended September 30, 2019 from $1.2 million for the nine months ended September 30, 2018. The increase was primarily due to an increase of $297,000, or 45.9%, in interest expense on deposits, partially offset by a decrease of $32,000, or 5.8%, in interest expense on FHLB advances. The average balance of interest-bearing deposits increased $5.2 million, or 9.6%, to $59.7 million for the nine months ended September 30, 2019 from $54.5 million for the nine months ended September 30, 2018, and the average cost of interest-bearing deposits increased 53 basis points to 2.11% for the nine months ended September 30, 2019 from 1.58% for the nine months ended September 30, 2018, reflecting the higher market interest rate environment. The average balance of FHLB advances decreased $3.6 million, or 13.1%, to $24.1 million for the nine months ended September 30, 2019 from $27.8 million for the nine months ended September 30, 2018. The average cost of these advances increased 22 basis points to 2.87% for the nine months ended September 30, 2019 from 2.65% for the nine months ended September 30, 2018.

Net Interest Income. Net interest income decreased $125,000, or 8.3%, to $1.4 million for the nine months ended September 30, 2019 from $1.5 million for the nine months ended September 30, 2018. Average net interest-earning assets increased $2.4 million period to period. This increase was due primarily to increases in the average balances of investment securities and cash and cash equivalents period to period. Our interest rate spread decreased to 1.72% for the nine months ended September 30, 2019 from 2.08% for the nine months ended September 30, 2018, and our net interest margin decreased to 1.97% for the nine months ended September 30, 2019 from 2.24% for the nine months ended September 30, 2018. The decreases in interest rate spread and net interest margin were primarily the result of an increasing interest rate environment for the nine months ended September 30, 2019 resulting in our interest-bearing liabilities repricing at a faster rate than the yields on our interest-earning assets, the majority of which are long-term, fixed-rate loans.

Provision for Loan Losses. We recorded a credit in the provision for loan losses of $9,000 for the nine months ended September 30, 2019, compared to a $11,000 credit for the nine months ended September 30, 2018. The allowance for loan losses was $850,000, or 1.06% of total loans, at September 30, 2019, compared to $850,000, or 1.05% of total loans, at December 31, 2018, and $850,000, or 1.05% of total loans, at September 30, 2018. Classified (substandard, doubtful and loss) loans decreased to $570,000 at September 30, 2019 from $580,000 at December 31, 2018 and $793,000 at September 30, 2018. There were no non-performing loans at September 30, 2019 or December 31, 2018 compared to $208,000 at September 30, 2018. Net recoveries for the nine months ended September 30, 2019 and 2018 were $9,000 and $11,000, respectively.

Noninterest Income. Noninterest income increased $150,000, or 37.5%, to $550,000 for the nine months ended September 30, 2019 from $400,000 for the nine months ended September 30, 2018. The increase was primarily due to an increase of $162,000 in fees on loans sold. This increase was partially offset by a decrease in income from life insurance of $11,000.

Noninterest Expense. Noninterest expense increased $129,000, or 7.7%, to $1.8 million for the nine months ended September 30, 2019 from $1.7 million for the nine months ended September 30, 2018. The increase was due primarily to an increase of $69,000, or 6.3%, in salaries and employee benefits. The increase resulted primarily from an increase of $34,000 in commissions paid on higher loan volume period to period and $41,000 of expenses recognized for the equity incentive plan. There was also an increase of $19,000, or 24.1%, in accounting and consulting expenses due to increased costs of operating as a public company. The increase in noninterest expense also resulted from increases of $41,000, or 26.6%, in occupancy expense, $9,000, or 10.6%, in data processing, $5,000, or 9.6%, in insurance expense, $2,000, or 28.6%, in legal fees and $2,000, or 1.3%, in other expenses. These increases were offset, in part, by a decrease of $17,000, or 28.8%, in FDIC deposit insurance premiums due to a “small bank” assessment credit issued by the FDIC in 2019 and by a decrease in other real estate expense of $1,000, or 100.0%.

Income Tax Expense. Income tax expense decreased $22,000 to $14,000 for the nine months ended September 30, 2019 compared to $36,000 for the nine months ended September 30, 2018. The decrease resulted from lower income

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before income taxes and deferred tax effects. The effective tax rate was 10.45% for the nine months ended September 30, 2019 compared to 15.00% for the same quarter in 2018.

Liquidity and Capital Resources. 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 the sale of loans. We also have the ability to borrow from the FHLB. At September 30, 2019, we had $23.6 million outstanding in advances from the FHLB, and had the capacity to borrow approximately an additional $14.9 million from the FHLB and an additional $4.3 million on a line of credit with First National Bankers’ Bank, Baton Rouge, Louisiana at this date.

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. Net cash (used in) provided by operating activities was ($3.5 million) and $243,000 for the nine months ended September 30, 2019 and 2018, respectively. Net cash (used in) investing activities, which consists primarily of net change in loans receivable, net change in interest-bearing deposits and net change in investment securities, was ($1.6 million) and ($3.3 million) for the nine months ended September 30, 2019 and 2018, respectively. Net cash provided by financing activities, consisting primarily of the activity in deposit accounts, FHLB advances and from the stock offering, was $11.6 million and $4.9 million for the nine months ended September 30, 2019 and 2018, respectively.

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.

At September 30, 2019, the Bank exceeded all regulatory capital requirements with a Tier 1 leverage capital level of $19.1 million, or 17.72% of adjusted average total assets, which is above the well-capitalized required level of $5.4 million, or 5.0%; and total risk-based capital of $19.7 million, or 38.49% of risk-weighted assets, which is above the well-capitalized required level of $5.1 million, or 10.0%; and common equity Tier 1 capital of $19.1 million or 37.24% of risk weighted assets, which is above the well-capitalized required level of $3.3 million, or 6.5% of risk weighted assets. Accordingly, Eureka Homestead was categorized as well capitalized at September 30, 2019. Management is not aware of any conditions or events since the most recent notification that would change our category.

Off-Balance Sheet Arrangements. At September 30, 2019 and December 31 2018, the Company had $835,000 and $793,000 of outstanding commitments to originate loans, respectively, all of which represents the balance of remaining funds to be disbursed on construction loans in process. Certificates of deposit that are scheduled to mature in less than one year from September 30, 2019 total $32.7 million at September 30, 2019. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. In recent years we have sold loans on an industry-standard, servicing-released basis. At September 30, 2019, there were mortgage loans sold to investors with limited recourse for certain periods after the date of sale totaling $6.2 million at the sale date. Recourse would apply if the borrower(s) default on any payment within the first four months of the mortgage loan and it remains in default for a period of 90 days, or if the mortgage loan prepays in full within 180 days of the sale date. Should an early payment default occur, Eureka Homestead shall, at its sole discretion, repurchase such mortgage loan from the purchaser at its current amortized balance plus the service release premium received or indemnify the purchaser by paying the service release premium received plus $5,000. Should a mortgage loan prepay in full within 180 days of the sale date, Eureka Homestead shall refund to the purchaser the servicing release premium paid. There have been no mortgage loans sold that had an early payment default or that prepaid in full during the recourse period.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

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

Item 4.Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer 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 September 30, 2019. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Registrant’s disclosure controls and procedures were effective.

During the quarter ended September 30, 2019, 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.

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 Bank’s or the Company’s financial condition or results of operations.

Item 1A.Risk Factors

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

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

(a) There were no sales of unregistered securities during the period covered by this Report.

(b) On May 20, 2019, Eureka Homestead Bancorp, Inc. (the “Company”) filed a Registration Statement on

Form S-1 with the Securities and Exchange Commission in connection with the mutual to stock conversion of Eureka Homestead and the Company’s related offering of common stock. The Registration Statement (File No. 333-230193) was declared effective by the Securities and Exchange Commission on May 13, 2019. The Company registered 1,429,676 shares of common stock, par value $0.01 per share, pursuant to the Registration Statement for an aggregate offering price of $14.3 million. The stock offering commenced on May 21, 2019, and ended on September 19, 2019.

FIG Partners, LLC (“FIG”) was engaged to assist in the marketing of the common stock and records management services.

The stock offering resulted in gross proceeds of $14.3 million, through the sale of 1.43 million shares of common stock at a price of $10 per share. Expenses related to the offering were approximately $1.2 million, including $345,000 paid to FIG. Net proceeds of the offering were approximately $13.1 million.

The Company contributed approximately $6.6 million of the net proceeds of the offering to the Bank. In addition, $1.1 million of the net proceeds were used to fund the loan to the employee stock ownership plan and approximately $5.4 million of the net proceeds were retained by the Company. The net proceeds contributed to the Bank have been invested in cash and short term instruments. Over the long-term, the Bank plans to use the proceeds to increase loan production. The net proceeds retained by the Company have been deposited with the Bank.

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Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

Item 6.Exhibits

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

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

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

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

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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.


		EUREKA HOMESTEAD BANCORP, INC.


Date: November 13, 2019		/s/ Alan T. Heintzen
		Alan T. Heintzen
		Chief Executive Officer


Date: November 13, 2019		/s/ Cecil A. Haskins, Jr.
		Cecil A. Haskins, Jr.
		President and Chief Financial Officer