Executive Summary

Q1 2022 produced a small net loss of $0.06M (–$0.01 diluted EPS) versus net income of $0.52M ($0.11 diluted EPS) in Q1 2021, driven by a sharp decline in mortgage banking-related noninterest income despite solid net interest margin expansion .
Net interest income rose 12.2% YoY to $3.55M, with net interest margin improving 18 bps to 2.85% as deposit costs fell; however, noninterest income fell 75.7% YoY to $0.39M due to lower loan sale gains/servicing fees and deferred comp market impacts .
Balance sheet repositioning accelerated: available-for-sale securities increased $20.3M QoQ while cash declined $16.2M; equity fell $5.7M QoQ, largely from unrealized losses in the AFS portfolio amid rate moves .
No formal guidance or earnings call transcript was provided; near-term stock reaction catalysts center on mortgage volume trends, rate-driven NIM trajectory, and AFS marks through OCI .

What Went Well and What Went Wrong

Net interest income and margin expanded: NII +$384K YoY to $3.55M; net interest margin rose to 2.85% on lower deposit costs and securities deployment strategy .
Strategic redeployment of excess liquidity: “the Company’s strategy to deploy excess liquidity into securities” lifted interest income, with taxable securities income +$281K YoY and AFS balances +$73.7M YoY .
Operating discipline: noninterest expense decreased 3.5% YoY (–$143K), primarily from lower salaries/benefits tied to deferred comp market value movements, partially offset by higher bonus accruals .

Severe mortgage banking slowdown: noninterest income fell 75.7% YoY to $0.39M, led by a $489K drop in loan sale gains and a $397K decline in servicing fees; mortgage loans sold decreased from $40.4M to $6.8M YoY .
Mark-to-market headwinds: “a $341,000 decline in the market value of marketable equity securities” in deferred comp weighed on both noninterest income and compensation expense .
Provision normalized: $105K provision in Q1 2022 vs. zero in Q1 2021, modestly offsetting NII gains, amid a loan book that was broadly flat QoQ .

Metric (USD Thousands, except EPS and %)	Q1 2021	Q3 2021	Q1 2022
Total interest and dividend income	3,617	3,381	3,886
Total interest expense	456	349	341
Net interest income	3,161	3,032	3,545
Provision for loan losses	0	30	105
Noninterest income	1,610	628	391
Noninterest expense	4,089	3,802	3,946
(Loss) income before income taxes	682	(172)	(115)
Income tax (expense) benefit	161	(57)	(60)
Net (loss) income	521	(115)	(55)
Diluted EPS ($)	0.11	(0.02)	(0.01)

Note: Q4 2021 quarter-specific P&L was not disclosed in the March 11, 2022 press release, which provided annual results only .

Balance Sheet (USD Thousands)	Mar 31, 2021	Dec 31, 2021	Mar 31, 2022
Cash and cash equivalents	83,481	66,803	50,586
Available-for-sale securities (fair value)	67,940	112,440	132,722
Loans, net	327,565	323,789	323,686
Deposits	377,658	384,501	390,953
FHLB advances	67,912	55,442	58,449
Stockholders’ equity	59,999	90,893	85,202
Total assets	517,116	539,639	546,285

KPIs

KPI	Q1 2021	Q1 2022
Net interest margin (%)	2.67%	2.85%
Net interest spread (%)	2.53%	2.71%
Nonaccrual loans / total loans (%)	0.38%	0.29%
ALLL / total loans (%)	0.82%	0.93%
Mortgage loans sold ($)	40,400	6,800

Metric	Period	Previous Guidance	Current Guidance	Change
Formal financial guidance	N/A	Not provided	Not provided	Maintained (no guidance)

The company did not issue formal guidance in the Q1 2022 press release .

Note: No Q1 2022 earnings call transcript was available; themes derived from press releases .

Topic	Q3 2021 (Oct 29, 2021)	Q4 2021 (Mar 11, 2022, annual)	Q1 2022 (May 11, 2022)	Trend
Mortgage banking activity	Lower loan sale gains and reduced mortgage activity; noninterest income pressured	Net gain on sale of loans down YoY; mortgage originations/sales decreased	Loan sale gains down $489K; mortgage loans sold fell to $6.8M; servicing fees down $397K	Worsening through Q1 2022
Interest rate environment and deposit costs	Lower rates compressed NII; still partially offset by lower interest expense	Continued low-rate environment reduced asset yields and liability costs	Cost of interest-bearing deposits decreased to 0.24% from 0.37%; NIM +18 bps YoY	Improving NIM; lower funding costs
Securities deployment	—	AFS securities +$53.7M YoY; strategy to invest excess liquidity	Taxable securities income +$281K; AFS securities +$20.3M QoQ	Increasing use of AFS to drive income
Equity/OCI sensitivity	—	Capital ratios strong post-2021 raise	Equity –$5.7M QoQ, driven by higher gross unrealized AFS losses (–$7.1M gross)	Greater OCI volatility with rates
Credit quality	—	Nonaccrual loans 0.31% at 12/31/2021	Nonaccrual 0.29%; ALLL/loans 0.93%	Stable to slightly improving

“This increase was primarily due to the Company’s strategy to deploy excess liquidity into securities” (referring to interest income growth and securities balance expansion) .
“Interest expense decreased… primarily due to a decline in the cost of our interest-bearing deposits, which decreased 13 basis points” .
“Non-interest income decreased… primarily the result of a $489,000 decrease in net gain on sale of loans, a $397,000 decrease in loan servicing fees and a $341,000 decline in the market value of marketable equity securities” .
“Available-for-Sale Securities increased $20.3 million… purchases consisted primarily of government-sponsored mortgage-backed securities and U.S. Treasury notes” .

No earnings call transcript was available; the Q1 2022 8-K press release did not include call details .

S&P Global consensus estimates for Q1 2022 EPS and revenue were unavailable during this session; therefore, no comparison to Street expectations can be provided. Values retrieved from S&P Global.*

Earnings pressure came from the mortgage banking slowdown and servicing fee headwinds; despite NIM expansion, the steep drop in noninterest income drove a small net loss .
Balance sheet repositioning into AFS securities is boosting interest income but increases OCI sensitivity; equity fell $5.7M QoQ on unrealized AFS losses as rates moved .
Funding cost discipline remains a positive: deposit costs fell to 0.24%, supporting NIM uplift to 2.85% even as loan growth was flat QoQ .
Credit remains stable: nonaccruals declined YoY and ALLL coverage improved; provision resumed at a modest $105K .
Near-term trading implications: watch mortgage volumes and secondary market conditions for loan sale gains; rates/curve will drive NIM and AFS marks, creating P&L and equity volatility .
Medium-term thesis: if mortgage banking remains subdued, earnings mix leans to NII; continued securities deployment can support income but elevates OCI swings—focus on duration/hedging and deposit mix .
No formal guidance/call leaves the narrative anchored to reported metrics; monitor subsequent quarters for signs of sustained NIM expansion and stabilization in fee income .