# EDGAR Filing Document

**Accession Number:** 0001967656
**File Stem:** 0001104659-23-031144
**Filing Date:** 2023-3
**Character Count:** 1305878
**Document Hash:** 9c19294eaeb82ec78cc70f41863b05ea
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-031144.hdr.sgml**: 20230310

**ACCESSION NUMBER**: 0001104659-23-031144

**CONFORMED SUBMISSION TYPE**: S-1

**PUBLIC DOCUMENT COUNT**: 62

**FILED AS OF DATE**: 20230310

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** PFS Bancorp, Inc.
- **CENTRAL INDEX KEY:** 0001967656
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** S-1
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-270452
- **FILM NUMBER:** 23723442

**BUSINESS ADDRESS:**
- **STREET 1:** 1730 FOURTH STREET
- **CITY:** PERU
- **STATE:** IL
- **ZIP:** 61354
- **BUSINESS PHONE:** 815-223-4300

**MAIL ADDRESS:**
- **STREET 1:** 1730 FOURTH STREET
- **CITY:** PERU
- **STATE:** IL
- **ZIP:** 61354

**As filed with the Securities and Exchange Commission on March 10, 2023**

**Registration No. 333-________**

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM S-1**

**REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933**

**PFS Bancorp, Inc.**

(Exact Name of Registrant as Specified in Its Charter)

---

| | | |
|:---|:---|:---|
| **Maryland** | **6036** | **Applied for** |
| (State or Other Jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer |
| Incorporation or Organization) | Classification Code Number) | Identification Number) |

---

**1730 Fourth Street**

**Peru, Illinois 61354**

**(815) 223-4300**

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)

**Eric J. Heagy, CPA**

**President, Chief Executive Officer, Chief Financial Officer and Treasurer**

**PFS Bancorp, Inc.**

**1730 Fourth Street**

**Peru, Illinois 61354**

**(815) 223-4300**

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

**<u>Copies to</u>:**

&nbsp;&nbsp; **Kip A. Weissman, Esq.**<br> **Victor L. Cangelosi, Esq.**<br> **Luse Gorman, PC**<br> **5335 Wisconsin Avenue, N.W., Suite 780**<br> **Washington, D.C. 20015**<br> **(202) 274-2028**<br>

**Approximate date of commencement of proposed sale to the public:** As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ⌧

If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ◻

If this Form is a post-effective amendment filed pursuant to Rule 462I under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ◻

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ◻

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

Large accelerated filer ◻ Accelerated filer ◻ <br> Non-accelerated filer ⌧ Smaller reporting company ⌧ <br> 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 7(a)(2)(B) of the Securities Act: ◻

**The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.**

**PROSPECTUS**

![A picture containing text, clipart Description automatically generated](tm238313d1_s1-img01.jpg)

**(Proposed Holding Company for Peru Federal Savings Bank)**

**Up to 2,070,000 Shares of Common Stock**

**(Subject to Increase to up to 2,380,500 Shares)**

PFS Bancorp, Inc., referred to as "PFS Bancorp" throughout this prospectus, is offering shares of its common stock for sale in connection with the conversion of Peru Federal Savings Bank, referred to as "Peru Federal" throughout this prospectus, from the mutual form of organization to the stock form of organization. In addition to the shares of common stock offered for sale in the stock offering, we intend to contribute 40,000 shares of common stock and $100,000 in cash to a charitable foundation we intend to establish in connection with the conversion and stock offering. There is currently no market for our common stock. We expect our common stock to be quoted on the OTCQB Market operated by OTC Markets Group upon the completion of the conversion and stock offering. We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, referred to as the "JOBS Act" throughout this prospectus.

The shares of common stock are first being offered for sale in a subscription offering to eligible depositors of Peru Federal and to tax-qualified employee benefit plans of Peru Federal. Shares not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given to natural persons (including trusts of natural persons) residing in Bureau, LaSalle and Putnam Counties in Illinois. Any shares of common stock not purchased in the subscription offering or the community offering may be offered for sale to the public through a syndicate of broker-dealers, referred to as the "syndicated community offering" throughout this prospectus. The syndicated community offering, if held, may commence before the subscription offering and the community offering (including any extensions) have expired. However, no shares purchased in the subscription offering or the community offering will be issued until any syndicated community offering is completed. We may sell up to 2,380,500 shares of common stock because of demand for the shares of common stock or changes in market conditions, without resoliciting subscribers. We must sell a minimum of 1,530,000 shares to complete the conversion and stock offering.

The minimum purchase order is 25 shares. Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than 25,000 shares ($250,000) of common stock, and no person or entity, together with associates or persons acting in concert with such person or entity, may purchase more than 40,000 shares ($400,000) of common stock, in all categories of the stock offering combined.

The subscription offering will expire at 1:00 p.m., Central time, on _______, 2023. We expect that the community offering, if held, will expire at the same time. We may extend the expiration date of the subscription offering and any community offering without notice to you until _______, 2023, or longer if the Office of the Comptroller of the Currency, referred to as the "OCC" throughout this prospectus, approves a later date. No single extension may exceed 90 days and the stock offering must be completed by _________, 2025. Once submitted, orders are irrevocable unless the subscription offering and/or the community offering are terminated or extended, with regulatory approval, beyond _________, 2023, or the number of shares of common stock to be sold is increased to more than 2,380,500 shares or decreased to less than 1,530,000 shares. If the subscription offering and any community offering are extended beyond _______, 2023, all subscribers will be notified and given the opportunity to confirm, change or cancel their orders. If you do not respond to the notice of extension, we will promptly return your funds with interest or cancel your deposit account withdrawal authorization. If the number of shares to be sold in the stock offering is increased to more than 2,380,500 shares or decreased to less than 1,530,000 shares, we will resolicit subscribers, and all funds delivered to us to purchase shares of common stock in the subscription offering and any community offering will be returned promptly with interest. Funds received in the subscription offering and any community offering will be held in a segregated account at Peru Federal and will earn interest at 0.10% per annum until completion or termination of the stock offering.

Keefe, Bruyette & Woods, Inc., A Stifel Company, referred to as "KBW" throughout this prospectus, will assist us in selling our shares of common stock on a best efforts basis in the subscription offering and any community offering, and will serve as sole manager for any syndicated community offering. KBW is not required to purchase any shares of common stock we are offering for sale.

**OFFERING SUMMARY**

**Price: $10.00 per share**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Minimum** | **Midpoint** | **Maximum** | **Adjusted<br> Maximum** |
| Number of shares | 1530000 | 1800000 | 2070000 | 2380500 |
| Gross offering proceeds | $15300000 | $18000000 | $20700000 | $23805000 |
| Estimated offering expenses, excluding selling agent fees and expenses <sup>(1) (2)</sup> | $1070000 | $1070000 | $1070000 | $1070000 |
| Selling agent fees and expenses <sup>(1)</sup> | $430000 | $430000 | $430000 | $430000 |
| Estimated net proceeds | $13800000 | $16500000 | $19200000 | $22305000 |
| Estimated net proceeds per share <sup>(1)</sup> | $9.02 | $9.17 | $9.28 | $9.37 |

---

<sup>(1)</sup> See "The Conversion and Stock Offering – Plan of Distribution; Selling Agent and Underwriter Compensation" for a discussion of KBW's compensation for the stock offering including any compensation to be received by KBW and other broker-dealers for any syndicated community offering.

<sup>(2)</sup> Excludes records agent fees and expenses payable to KBW, which are included in estimated offering expenses. See "The Conversion and Stock Offering – Records Management."

**This investment involves a degree of risk, including the possible loss of principal.**

**See "Risk Factors" beginning on page 13.**

*These securities are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. None of the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System or any state securities regulator has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.*

![](tm238313d1_s1-img07.jpg)

For assistance, contact the Stock Information Center at 1-(877) _______ (toll-free).

The date of this prospectus is May ___, 2023.

![](tm238313d1_s1-img02.jpg)

**TABLE OF CONTENTS**

<u>Page</u>

---

| | |
|:---|:---|
| [**SUMMARY**](#pros_001) | [**1**](#pros_001) |
| [**RISK FACTORS**](#pros_002) | [**13**](#pros_002) |
| [**SELECTED FINANCIAL AND OTHER DATA OF PERU FEDERAL**](#pros_003) | [**25**](#pros_003) |
| [**FORWARD-LOOKING STATEMENTS**](#pros_004) | [**27**](#pros_004) |
| [**HOW WE INTEND TO USE THE PROCEEDS FROM THE STOCK OFFERING**](#pros_005) | [**29**](#pros_005) |
| [**OUR DIVIDEND POLICY**](#pros_006) | [**30**](#pros_006) |
| [**MARKET FOR THE COMMON STOCK**](#pros_007) | [**31**](#pros_007) |
| [**HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE**](#SP_001) | [**32**](#SP_001) |
| [**CAPITALIZATION**](#SP_002) | [**33**](#SP_002) |
| [**PRO FORMA DATA**](#SP_003) | [**35**](#SP_003) |
| [**COMPARISON OF INDEPENDENT VALUATION AND PRO FORMA INFORMATION WITH AND WITHOUT THE CHARITABLE FOUNDATION**](#SP_004) | [**39**](#SP_004) |
| [**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**](#SP_005) | [**41**](#SP_005) |
| [**BUSINESS OF PFS BANCORP**](#SP_006) | [**53**](#SP_006) |
| [**BUSINESS OF PERU FEDERAL**](#SP_007) | [**53**](#SP_007) |
| [**REGULATION AND SUPERVISION**](#SP_008) | [**67**](#SP_008) |
| [**TAXATION**](#pros_008) | [**76**](#pros_008) |
| [**MANAGEMENT**](#pros_009) | [**77**](#pros_009) |
| [**SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS**](#pros_010) | [**86**](#pros_010) |
| [**THE CONVERSION AND STOCK OFFERING**](#pros_011) | [**87**](#pros_011) |
| [**PERU FEDERAL SAVINGS CHARITABLE FOUNDATION, INC.**](#pros_012) | [**107**](#pros_012) |
| [**RESTRICTIONS ON ACQUISITION OF PFS BANCORP**](#pros_013) | [**110**](#pros_013) |
| [**DESCRIPTION OF CAPITAL STOCK OF PFS BANCORP**](#pros_014) | [**116**](#pros_014) |
| [**TRANSFER AGENT**](#pros_015) | [**117**](#pros_015) |
| [**EXPERTS**](#pros_016) | [**117**](#pros_016) |
| [**CHANGE IN AUDITOR**](#pros_017) | [**117**](#pros_017) |
| [**LEGAL MATTERS**](#pros_018) | [**118**](#pros_018) |
| [**WHERE YOU CAN FIND ADDITIONAL INFORMATION**](#pros_019) | [**118**](#pros_019) |
| [**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF PERU FEDERAL SAVINGS BANK**](#pros_020) | [**120**](#pros_020) |

---

i

**SUMMARY**

*The following summary provides material information about Peru Federal's mutual-to-stock conversion and the related offering of common stock by PFS Bancorp. It may not contain all of the information that is important to you. For additional information, you should read this entire document carefully, including the consolidated financial statements and the related notes and the section entitled "Risk Factors," before making an investment decision.*

**PFS Bancorp, Inc.**

PFS Bancorp, a newly formed Maryland corporation, is offering for sale shares of its common stock in connection with the conversion of Peru Federal from a mutual savings bank (meaning it has no stockholders) to a stock savings bank. As a mutual savings bank, all depositors are members of and have voting rights in Peru Federal as to all matters requiring a vote of members. The following diagram depicts Peru Federal's current organizational structure:

![](tm238313d1_s1-img03.jpg)

Upon completion of the conversion and stock offering, PFS Bancorp will be 100% owned by its stockholders and Peru Federal will be 100% owned by PFS Bancorp. Peru Federal will cease to have members and its former members will no longer have voting rights in Peru Federal. All voting rights in Peru Federal will be vested in PFS Bancorp as the sole stockholder of Peru Federal. The stockholders of PFS Bancorp will possess exclusive voting rights with respect to PFS Bancorp common stock. The following diagram depicts PFS Bancorp's and Peru Federal's organizational structure after the completion of the conversion and stock offering:

![](tm238313d1_s1-img04.jpg)

PFS Bancorp was incorporated on February 23, 2023, and has not engaged in any business to date. Upon completion of the conversion and stock offering, PFS Bancorp will register as a savings and loan holding company and will be subject to comprehensive regulation and examination by the Board of Governors of the Federal Reserve System, referred to as the "Federal Reserve Board" throughout this prospectus.

PFS Bancorp's principal office is located at 1730 Fourth Street, Peru, Illinois 61354, and the telephone number at that address is (815) 223-4300.

**Peru Federal Savings Bank**

Originally chartered in 1887, Peru Federal is a federally-chartered mutual savings bank headquartered in Peru, Illinois. We conduct our operations from our main office and a branch office, both located in Peru, Illinois. Peru is located on the western border of LaSalle County and within the Illinois Valley formed by the Illinois River. Located near the intersection of Interstates 80 and 39, Peru is located equidistant, approximately 100 miles, between Chicago to the east and the Quad Cities in Iowa to the west and equidistant, approximately 70 miles, between Rockford, Illinois, to the north and Bloomington, Illinois, to the south.

We consider our primary market area for loan originations and deposit gathering to be LaSalle County, and contiguous areas, in northcentral Illinois, generally within a 30- to 35-mile radius from our offices. This radial area encompasses parts of Bureau County and Putnam County, which are adjacent to LaSalle County. In terms of population, based on published statistics, LaSalle County (2020 population approximately 110,000) is the largest of the three counties (Bureau County, 2020 population approximately 33,000; Putnam County, 2020 population approximately 5,600). Our primary market area is predominately rural.

Our business consists primarily of accepting deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family residential mortgage loans secured by properties located in our primary market area. To a significantly lesser extent, we also originate commercial real estate loans, multi-family mortgage loans, construction and land development loans, commercial loans, home equity loans and lines of credit, and consumer loans. In addition, we offer electronic banking services including mobile banking, on-line banking and bill pay, and electronic funds transfer via Zelle<sup>®</sup>.

In recent years, we have increased, at a managed pace and consistent with what we believe to be conservative underwriting standards, our originations of higher yielding commercial real estate loans and commercial loans. We intend to continue that focus after the conversion and stock offering.

Our primary revenue source is interest income earned on loans and investments. Noninterest income is not a significant revenue source.

At December 31, 2022, we had total assets of $174.1 million, total deposits of $152.7 million and total equity capital of $20.2 million. We had net income of $831,000 and $1.0 million for the years ended December 31, 2022 and 2021, respectively.

We are subject to comprehensive regulation and examination by the OCC, our primary federal regulator.

Our main office is located at 1730 Fourth Street, Peru, Illinois 61354, and the telephone number at that address is (815) 223-4300. Our website address is *www.perufederalsavings.com*. Information on our website is not incorporated into this prospectus and should not be considered part of this prospectus.

**Business Strategy**

Our principal objective is to build long-term value for our stockholders by operating a profitable community financial institution dedicated to meeting the banking needs of our customers and community. Highlights of our current business strategy include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· continuing to focus on originating one- to four-family residential mortgage loans primarily for retention in our loan portfolio;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· continuing to seek to grow and diversify our loan portfolio prudently by increasing originations of commercial real estate loans and
commercial loans in an effort to increase loan portfolio yield;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· maintaining our strong asset quality through conservative loan underwriting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· attracting and retaining customers in our market area and growing our low-cost "core" deposit base;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· remaining a community-oriented institution and relying on high quality service to maintain and
build a loyal local customer base; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· continuing to grow primarily through organic growth while also considering branching opportunities
should they arise.

Commercial real estate loans and commercial loans have higher credit risk than one- to four-family residential mortgage loans. See "Risk Factors – Risks Related to Our Lending Activities – Our commercial real estate loans involve credit risks that could adversely affect our financial condition and results of operations" and "Business of Peru Federal – Loan Underwriting Risks."

We expect the strategies outlined above to guide our investment of the net proceeds of the stock offering. We intend to continue to pursue these business strategies after the conversion and the stock offering, subject to any changes necessitated by future market conditions and other factors.

See "Business of Peru Federal" and "Management's Discussion and Analysis of Financial Condition and Results of Operations – Business Strategy" for a further discussion of our business strategy.

**Reasons for the Conversion and Stock Offering**

Consistent with our business strategy, our primary reasons for converting to stock form and raising additional capital through the stock offering are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to increase capital to support future growth and profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to retain and attract qualified personnel by establishing stock-based benefit plans for management and employees; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to offer our customers and employees an opportunity to purchase an equity interest in Peru Federal by purchasing shares of common
stock of PFS Bancorp.

At December 31, 2022, Peru Federal was considered "well capitalized" for regulatory purposes. The proceeds from the stock offering will further improve our capital position to support expected future growth and profitability.

See "The Conversion and Stock Offering" for a more complete discussion of our reasons for conducting the conversion and stock offering.

**Terms of the Stock Offering**

PFS Bancorp is offering for sale between 1,530,000 shares and 2,070,000 shares of common stock to eligible depositors of Peru Federal and to Peru Federal's tax-qualified employee benefit plans in a subscription offering. To the extent shares remain available, we may offer shares for sale in a community offering, with a preference given to natural persons (and trusts of natural persons) residing in Bureau, LaSalle and Putnam Counties in Illinois. We may also offer for sale shares of common stock not purchased in the subscription offering or in any community offering to the general public in a syndicated community offering. The number of shares of common stock to be sold may be increased to up to 2,380,500 shares as a result of demand for the shares of common stock in the stock offering or changes in market conditions. Unless the number of shares of common stock offered for sale is increased to more than 2,380,500 shares or decreased to fewer than 1,530,000 shares, or the stock offering is extended beyond ________, 2023, subscribers will not have the opportunity to change or cancel their stock orders once submitted. If the stock offering is extended beyond _________, 2023, we will resolicit subscribers and you will have the opportunity to confirm, change or cancel your order within a specified period of time. If you do not respond during that period of time, your stock order will be cancelled and your deposit account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly with interest at 0.10% per annum. If the number of shares offered for sale is increased to more than 2,380,500 shares or decreased to less than

1,530,000 shares, all subscribers' stock orders will be cancelled, their deposit account withdrawal authorizations will be cancelled and funds delivered for the purchase of shares of common stock in the stock offering will be returned promptly with interest at 0.10% per annum. We will give these subscribers an opportunity to place new orders for a specified period of time.

The shares of common stock are being offered for sale at a purchase price of $10.00 per share. All investors will pay the same purchase price per share. Investors will not be charged a commission to purchase shares of common stock in the stock offering. KBW, our marketing agent for the stock offering, will use its best efforts to assist us in selling shares of our common stock but is not obligated to purchase any shares of common stock in the stock offering.

**Important Risks in Owning PFS Bancorp's Common Stock**

Before you order shares of our common stock, you should read the "Risk Factors" section beginning on page 13 of this prospectus.

**How We Determined the Offering Range and the $10.00 per Share Purchase Price**

The amount of common stock PFS Bancorp is offering for sale is based on an independent appraisal of the estimated pro forma market value of PFS Bancorp, assuming the conversion and stock offering are completed. Feldman Financial Advisors, Inc., referred to as "Feldman Financial" throughout this prospectus, our independent appraiser, has estimated that, as of February 21, 2023, this market value was $18.4 million (inclusive of the value of the 40,000 shares of common stock to be contributed to the charitable foundation valued at $10.00 per share). Based on OCC regulations, this market value forms the midpoint of a valuation range with a minimum of $15.7 million and a maximum of $21.1 million. Based on this valuation and the $10.00 per share purchase price and excluding the 40,000 shares to be contributed to the charitable foundation, the number of shares of common stock being offered for sale in the stock offering ranges from a minimum of 1,530,000 shares to a maximum of 2,070,000 shares. We may sell up to 2,380,500 shares of common stock because of demand for the shares or changes in market conditions without resoliciting subscribers. The $10.00 per share purchase price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions.

The independent appraisal is based in part on Peru Federal's financial condition and results of operations, the pro forma effect of the additional capital raised by the sale of shares of common stock in the stock offering and an analysis of a peer group of 12 publicly traded thrift holding companies with total assets ranging from $263.3 million to $823.7 million as of September 30, 2022 or December 31, 2022, as applicable, that Feldman Financial considers comparable to PFS Bancorp. See "The Conversion and Stock Offering – Determination of Share Price and Number of Shares to be Issued."

The following table presents a summary of selected pricing ratios for the peer group companies and for PFS Bancorp (on a pro forma basis) utilized by Feldman Financial in its independent appraisal. See "The Conversion and Stock Offering – Determination of Share Price and Number of Shares to be Issued" for information regarding the peer group companies. These ratios are based on PFS Bancorp's book value, tangible book value and core earnings at and for the 12 months ended December 31, 2022. The peer group ratios are based on the latest date for which complete financial data are publicly available and stock prices as of February 21, 2023. Compared to the average pricing of the peer group, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 19.3% on a price-to-core earnings basis and a discount of 39.7% on a price-to-tangible book value basis.

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| | | | |
|:---|:---|:---|:---|
|  | **Price-to-core<br> earnings <br> multiple <sup>(1)</sup>** | **Price-to-book<br> value ratio** | **Price-to-tangible<br> book value ratio** |
| **PFS Bancorp (pro forma basis, assuming completion of the conversion and stock offering):** |  |  |  |
| &nbsp;&nbsp;&nbsp;Adjusted Maximum | 18.87 x | 61.16% | 61.16% |
| &nbsp;&nbsp;&nbsp;Maximum | 16.95 x | 57.27% | 57.27% |
| &nbsp;&nbsp;&nbsp;Midpoint | 15.15 x | 53.36% | 53.36% |
| &nbsp;&nbsp;&nbsp;Minimum | 13.16 x | 48.92% | 48.92% |
| **Valuation of peer group companies, all of which are fully converted (historical basis):** |  |  |  |
| &nbsp;&nbsp;&nbsp;Average | 18.78 x | 88.17% | 88.47% |
| &nbsp;&nbsp;&nbsp;Median | 19.23 x | 84.96% | 84.96% |

---

(1) Price-to-earnings multiples calculated by Feldman Financial for the independent appraisal are based on an estimate of "core"
or recurring earnings. These ratios are different from those presented in "Pro Forma Data."

**The independent appraisal does not indicate trading market value. Do not assume or expect that our valuation as indicated in the appraisal means that after the conversion and stock offering the shares of our common stock will trade at or above the $10.00 per share purchase price. Furthermore, Feldman Financial used the pricing ratios presented in the appraisal to estimate our pro forma appraised value for regulatory purposes and not to compare the relative value of shares of our common stock with the value of the common stock of the institutions in the peer group. The value of the common stock of any company may be affected by a number of factors such as financial performance, asset size and market location.**

For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, see "The Conversion and Stock Offering – Determination of Share Price and Number of Shares to be Issued."

**How We Intend to Use the Proceeds from the Stock Offering**

Peru Federal will receive from PFS Bancorp a capital contribution equal to at least 50% of the net proceeds of the stock offering. Based on this formula, we anticipate that PFS Bancorp will invest approximately $6.9 million, $8.3 million, $9.6 million and $11.2 million at the minimum, midpoint, maximum, and adjusted maximum of the offering range, respectively, of the net proceeds from the stock offering in Peru Federal. From the remaining funds, PFS Bancorp intends to loan funds to Peru Federal's employee stock ownership plan to fund the plan's purchase of shares of common stock in the stock offering and contribute $100,000 in cash to the charitable foundation, and retain the remainder of the net proceeds from the stock offering. Assuming we sell 1,800,000 shares of common stock in the stock offering at the midpoint of the offering range, resulting in net proceeds of $16.5 million, based on the above formula, we anticipate that PFS Bancorp will invest $8.3 million in Peru Federal, loan $1.5 million to Peru Federal's employee stock ownership plan to fund its purchase of shares of common stock in the stock offering, contribute $100,000 to the charitable foundation, and retain the remaining $6.7 million of net proceeds.

PFS Bancorp may use the remaining funds that it retains to repurchase shares of common stock (subject to compliance with regulatory requirements), to pay cash dividends, for investments, or for other general corporate purposes. Peru Federal intends to invest the net proceeds it receives from PFS Bancorp to fund new loans, enhance existing products and services, invest in securities, or for general corporate purposes.

For more information, see "How We Intend to Use the Proceeds from the Stock Offering."

**Persons Who May Order Shares of Common Stock in the Stock Offering**

We are offering the shares of common stock in a subscription offering in the following order of priority:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) First, to depositors with accounts at Peru Federal with aggregate balances of at least $50 as of the close of business on December 31,
2021. 5

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Second, to Peru Federal's tax-qualified employee benefit plans (including its employee stock ownership plan), which will receive,
without payment, nontransferable subscription rights to purchase in the aggregate up to 10% of the sum of the number of shares of common
stock sold in the stock offering and contributed to the charitable foundation. We expect the employee stock ownership plan to purchase
up to 8% of the sum of the shares of common stock sold in the stock offering and contributed to the charitable foundation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Third, to depositors with accounts at Peru Federal with aggregate balances of at least $50 as of the close of business on March 31,
2023. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Fourth, to depositors of Peru Federal as of the close of business on _______, 2023.

Shares of common stock not purchased in the subscription offering may be offered for sale in a community offering, with a preference given to natural persons (and trusts of natural persons) residing in Bureau, LaSalle and Putnam Counties in Illinois. If held, the community offering may begin concurrently with, during or after the subscription offering. We also may offer for sale shares of common stock not purchased in the subscription offering or in any community offering to the general public through a syndicated community offering, which will be managed by KBW. We have the right to accept or reject, in our sole discretion, orders received in any community offering or syndicated community offering. Any determination to accept or reject stock orders in any community offering or syndicated community offering will be based on the facts and circumstances available to management at the time of the determination.

If we receive orders for more shares than we are offering for sale, we may not be able to fill your order, in full or in part. Shares will be allocated first to categories in the subscription offering. A detailed description of the subscription offering, the community offering and the syndicated community offering, as well as a discussion regarding allocation procedures, can be found in the section of this prospectus entitled "The Conversion and Stock Offering."

**Limits on How Much Common Stock You May Purchase**

The minimum number of shares of common stock that may be purchased is 25.

Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than the greater of: (i) 25,000 shares ($250,000) of common stock; (ii) 0.10% of the total number of shares of common stock issued in the stock offering; or (iii) 15 times the number of shares offered multiplied by a fraction of which the numerator is the depositor's total deposit balance (as of the eligibility record date or supplemental eligibility record date, as applicable) and the denominator is the aggregate of all deposits (as of the eligibility record date or supplemental eligibility record date, as applicable), subject to the overall purchase limitations. If any of the following persons purchase shares of common stock, their purchases, in all categories of the stock offering combined, when combined with your purchases, cannot exceed 40,000 shares ($400,000) of common stock:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· your spouse, or relatives of you or your spouse, who reside with you;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· most companies, trusts or other entities in which you are a trustee, have a substantial beneficial interest or hold a senior position;
or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· other persons who may be your associates or who may be acting in concert with you.

Unless we determine otherwise, persons having the same address and persons exercising subscription rights through qualifying accounts registered to the same address will be subject to the overall purchase limitation of 40,000 shares ($400,000). See the detailed definitions of "associate" and "acting in concert" in the section of this prospectus entitled "The Conversion and Stock Offering – Limitations on Common Stock Purchases."

OCC regulations provide that such purchase limitation may be further increased to 9.99%, provided that orders for shares of common stock exceeding 5.0% of the shares of common stock sold in the stock offering do not exceed in the aggregate 10.0% of the total shares of the common stock sold in the stock offering. Any request to purchase additional shares of common stock in the event the purchase limitation is so increased will be determined by our board of directors in its sole discretion.

Subject to OCC approval, we may increase or decrease the purchase limitations at any time. See the detailed description of the purchase limitations in the section of this prospectus entitled "The Conversion and Stock Offering – Limitations on Common Stock Purchases."

**How You May Purchase Shares of Common Stock in the Subscription Offering and in any Community Offering**

In the subscription offering and any community offering, you may pay for your shares only by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· personal check, bank check or money order, from the purchaser, made payable to PFS Bancorp, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· authorizing us to withdraw available funds (without any early withdrawal penalty) from your account(s) maintained with Peru Federal,
other than individual retirement accounts (IRAs); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· cash.

Cash will only be accepted at Peru Federal's main office and will be converted to a bank check. **Please do not submit cash by mail.**

Peru Federal, by law, is not permitted to lend funds to anyone to purchase shares of common stock in the stock offering. Additionally, you may not use any type of third party check to pay for shares of common stock. Wire transfers will not be accepted. You may not submit a Peru Federal line of credit check for payment. You may not designate withdrawal from a Peru Federal account with check-writing privileges; rather, submit a check. If you request a direct withdrawal, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and will immediately withdraw the amount from your checking account(s). You may not authorize direct withdrawal from a Peru Federal individual retirement account, or IRA. See "—Using Individual Retirement Account Funds to Purchase Shares of Common Stock."

You may subscribe for shares of common stock in the subscription and community offerings by delivering a signed and completed original stock order form, together with full payment payable to PFS Bancorp, Inc. or authorization to withdraw funds from one or more of your Peru Federal deposit accounts, provided that the stock order form is *received* before 1:00 p.m., Central time, on __________, 2023, which is the expiration of the subscription offering period. You may submit your stock order form and payment by mail using the stock order reply envelope provided or by paying for overnight delivery to the address listed on the stock order form. You may also hand-deliver stock order forms to our main office, located at 1730 Fourth Street, Peru, Illinois. Hand-delivered stock order forms will be accepted only at this location. We will not accept stock order forms at the other office of Peru Federal. **Do not mail stock order forms to any of Peru Federal's offices.**

See "The Conversion and Stock Offering – Procedure for Purchasing Shares in the Subscription Offering and any Community Offering."

**Using Individual Retirement Account Funds to Purchase Shares of Common Stock**

You may be able to subscribe for shares of common stock using funds in your Peru Federal IRA or other retirement account. If you wish to use some or all of the funds in your Peru Federal IRA or other retirement account, the applicable funds must be first transferred to a self-directed account maintained by an independent custodian or trustee, such as a brokerage firm, and the purchase must be made through that account. If you do not have such an account, you will need to establish one *before* placing your stock order. An annual administrative fee

may be payable to the independent custodian or trustee. Because individual circumstances differ and the processing of retirement fund orders takes additional time, we recommend that you contact our Stock Information Center as soon as possible, *but in no event less than two weeks before the ________, 2023 offering deadline*, for assistance with purchases using funds in your IRA or other retirement account you may have at Peru Federal *or elsewhere*. Whether you may use such funds to purchase shares in the stock offering may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held. See "The Conversion and Stock Offering – Procedure for Purchasing Shares in the Subscription Offering and any Community Offering – Using Individual Retirement Account Funds."

**Purchases by Executive Officers and Directors**

We expect our directors and executive officers, together with their associates, to subscribe for 155,000 shares ($1,550,000) of common stock in the stock offering, representing 9.9% of shares to be outstanding based on the sale of stock at the minimum of the offering range. However, there can be no assurance that any individual director or executive officer, or the directors and executive officers as a group, will purchase any specific number of shares of our common stock. They will pay the same $10.00 per share purchase price that all other persons who purchase shares of common stock in the stock offering will pay. Our directors and executive officers are subject to the same minimum purchase requirements and purchase limitations as other participants in the stock offering as set forth under "– Limits on How Much Common Stock You May Purchase." Purchases by our directors and executive officers and their associates will be included in determining whether the required minimum number of shares have been subscribed for in the stock offering. For more information, see "Subscriptions by Directors and Executive Officers."

**Deadline for Submitting Orders for Shares of Common Stock in the Subscription Offering and any Community Offering**

The deadline for submitting orders to purchase shares of common stock in the subscription offering and in any community offering is 1:00 p.m., Central time, on _________, 2023, unless we extend this deadline. If you wish to purchase shares of common stock, a properly completed and signed original stock order form, together with full payment, must be *received (not postmarked)* by 1:00 p.m., Central time. Although we will make reasonable attempts to provide this prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription rights will expire at 1:00 p.m., Central time, on _______, 2023, whether or not we have been able to locate each person entitled to subscription rights. See "The Conversion and Stock Offering—Procedure for Purchasing Shares in the Subscription Offering and any Community Offering—Expiration Date."

**You May Not Sell or Transfer Your Subscription Rights**

Applicable regulations prohibit you from transferring your subscription rights. If you order shares of common stock in the subscription offering, you will be required to certify that you are purchasing the common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights or the shares that you are purchasing. We intend to take legal action, including reporting persons to federal or state agencies, against anyone who we believe has sold or transferred his or her subscription rights. We will not accept your order if we have reason to believe you have sold or transferred your subscription rights. **On the stock order form, you cannot add the names of others for joint stock registration who do not have subscription rights or who qualify only in a lower subscription rights priority than you do.** Taking this action may jeopardize your subscription rights. In addition, the stock order form requires that you list all deposit accounts, giving all names on each account and the account number at the applicable eligibility date. Failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation.

**Steps We May Take if We Do Not Receive Orders for the Minimum Number of Shares**

If we do not receive valid orders for at least 1,530,000 shares of common stock, we may take additional steps in order to issue the minimum number of shares of common stock in the offering range. Specifically, we may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· increase the purchase limitations; and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· seek regulatory approval to extend the stock offering beyond ________, 2023.

If we extend the stock offering beyond _______, 2023, we will resolicit subscribers and you will have the opportunity to confirm, change or cancel your order within a specified period of time. If you do not respond during that period of time, your stock order will be cancelled and your deposit account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly with interest at 0.10% per annum from the date the stock order was processed.

If one or more purchase limitations are increased we will not resolicit all subscribers, however, subscribers in the subscription offering who ordered the maximum amount and who indicated a desire to be resolicited on the stock order form will be and, in our sole discretion, some other large subscribers may be, given the opportunity to increase their subscriptions up to the newly applicable purchase limit. We may increase the individual or aggregate purchase limitations to an amount generally not to exceed 5.0% of the common stock sold in the stock offering. See "The Conversion and Stock Offering – Limitations on Common Stock Purchases."

**Conditions to Completion of the Conversion and Stock Offering**

The board of directors of Peru Federal has approved the plan of conversion. In addition, the OCC has conditionally approved the plan of conversion and the Federal Reserve Board has conditionally approved PFS Bancorp's application to become the savings and loan holding company of Peru Federal. We cannot complete the conversion and stock offering unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The plan of conversion is approved by a majority of votes eligible to be cast by members of Peru Federal (depositors of Peru Federal).
A special meeting of members to consider and vote upon the plan of conversion has been scheduled for June ____, 2023;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· We sell at least 1,530,000 shares of common stock, which is the minimum of the offering range; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· We receive the final approval required from the OCC to complete the conversion and stock offering and the final approval required
from the Federal Reserve Board with respect to PFS Bancorp's holding company application.

Any approval by the OCC or the Federal Reserve Board does not constitute a recommendation or endorsement of the plan of conversion.

**Our Dividend Policy**

Following completion of the conversion and stock offering, our board of directors will be authorized to declare dividends on our common stock, subject to statutory and regulatory requirements. However, no decision has been made with respect to the amount, if any, and timing of any dividend payments. The payment and amount of any dividend payments will depend upon a number of factors, including the following: regulatory capital requirements; our financial condition and results of operations; our other uses of funds for the long-term value of stockholders; tax considerations; statutory and regulatory limitations; and general economic conditions. See "Our Dividend Policy" for additional information.

**Market for Common Stock**

We anticipate that the common stock sold in the stock offering will be quoted on the OTCQB Market operated by OTC Markets Group upon the completion of the conversion and stock offering. See "Market for the Common Stock." KBW has advised us that it intends to make a market in our common stock following the stock offering, but is under no obligation to do so. See "Market for the Common Stock."

**Delivery of Shares of Stock**

All shares of common stock of PFS Bancorp sold in the stock offering will be issued in book entry form and held electronically on the books of our transfer agent. Stock certificates will not be issued. A statement reflecting ownership of shares of common stock sold in the stock offering will be mailed by our transfer agent to the persons entitled thereto at the address noted by them on their stock order form as soon as practicable following consummation of the stock offering. Shares of common stock sold in any syndicated community offering may be delivered electronically through The Depository Trust Company. We expect trading in the stock to begin on the business day of or on the business day immediately following the completion of the conversion and stock offering. **Until a statement reflecting ownership of shares of common stock is available and delivered to purchasers, it is possible that purchasers may not be able to sell the shares of common stock that they ordered, even though trading in the common stock will have begun.** Your ability to sell the shares of common stock before receiving your statement will depend on arrangements you may make with a brokerage firm.

**Possible Change in the Offering Range**

Feldman Financial will update its independent appraisal before we complete the stock offering. If, as a result of demand for the shares or changes in market conditions, Feldman Financial determines that our pro forma market value has increased, we may sell up to 2,380,500 shares in the stock offering without further notice to you. If our pro forma market value at that time is either below $15.3 million or above $23.8 million, then, after consulting with the OCC, we may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· terminate the stock offering, cancel deposit account withdrawal authorizations and promptly return all funds received in the stock
offering with interest at 0.10% per annum;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· set a new offering range; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· take such other actions as may be permitted by the OCC, the Federal Reserve Board, the Financial Industry Regulatory Authority and
the Securities and Exchange Commission.

If we set a new offering range, we will promptly return funds, with interest at 0.10% per annum, received in the stock offering, cancel deposit account withdrawal authorizations and commence a resolicitation. In a resolicitation, we will notify subscribers of their right to place a new stock order for a specified period of time.

**Possible Termination of the Stock Offering**

We may terminate the stock offering at any time before the special meeting of members of Peru Federal that has been called to vote on the conversion, and at any time after member approval with the concurrence of the OCC. If we terminate the stock offering, we will promptly return funds and cancel deposit withdrawal authorizations, as described above.

**Benefits to Management and Potential Dilution to Stockholders Resulting from the Conversion and Stock Offering**

We expect Peru Federal's employee stock ownership plan, which is a tax-qualified retirement plan for the benefit of all of our employees being established in connection with the conversion and stock offering, to purchase up to 8% of the sum of the shares of common stock that we sell in the stock offering and contribute to the charitable foundation. If we receive orders for more shares of common stock than the maximum of the offering range, the employee stock ownership plan will have first priority to purchase shares over this maximum, up to a total of 8% of the sum of the shares of common stock that we sell in the stock offering and contribute to the charitable foundation. This would reduce the number of shares available for allocation to eligible depositors of Peru Federal. For further information, see "Management – Executive Compensation – Employee Stock Ownership Plan."

Purchases by the employee stock ownership plan in the stock offering will be included in determining whether the required minimum number of shares have been sold in the stock offering. Subject to market conditions

and receipt of regulatory approval, the employee stock ownership plan may instead elect to purchase shares of common stock in the open market following the completion of the stock offering in order to fill all or a portion of its intended subscription.

We also intend to implement a stock-based benefit plan no earlier than six months after completion of the conversion. Stockholder approval of this plan will be required, and the stock-based benefit plan cannot be implemented until at least six months after the completion of the conversion according to applicable OCC regulations. If adopted within 12 months following the completion of the conversion, and provided that upon completion of the stock offering Peru Federal has at least a 10% tangible capital to assets ratio, the OCC conversion regulations would allow for the stock-based benefit plan to reserve a number of shares of common stock equal to not more than 4% of the sum of the number of shares sold in the stock offering and contributed to the charitable foundation, or up to 84,400 shares of common stock at the maximum of the offering range, for restricted stock awards to key employees and directors, at no cost to the recipients. If adopted within 12 months following the completion of the conversion, the stock-based benefit plan will also reserve a number of shares equal to not more than 10% of the sum of the shares of common stock sold in the stock offering and contributed to the charitable foundation, or up to 211,000 shares of common stock at the maximum of the offering range, for the exercise of stock options granted to key employees and directors. If the stock-based benefit plan is adopted after one year from the date of the completion of the conversion, the 4% and 10% limitations described above will no longer apply, and we may adopt a stock-based benefit plan encompassing more than 295,400 shares of our common stock assuming the maximum of the offering range. We have not yet determined whether we will present this plan for stockholder approval within 12 months following the completion of the conversion or whether we will present this plan for stockholder approval more than 12 months after the completion of the conversion.

The following table summarizes the number of shares of common stock and aggregate dollar value of grants (valuing each share granted at the offering price of $10.00) that would be available under a stock-based benefit plan if such plan is adopted within one year following the completion of the conversion and stock offering and Peru Federal has at least a 10% tangible capital to assets ratio at that time. The table shows the dilution to stockholders if all these shares are issued from authorized but unissued shares, instead of shares purchased in the open market. The table also sets forth the number of shares of common stock to be acquired by the employee stock ownership plan for allocation to all employees. A portion of the stock grants shown in the table below may be made to non-management employees.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Number of Shares to be Granted or Purchased <sup>(1)</sup>** | **Number of Shares to be Granted or Purchased <sup>(1)</sup>** | **Number of Shares to be Granted or Purchased <sup>(1)</sup>** | | **Value of Grants <sup>(2)</sup>** | **Value of Grants <sup>(2)</sup>** |
|  | **At<br> Minimum <br> of Offering<br> Range** | **At <br> Maximum <br> of Offering<br> Range** | **As a <br> Percentage <br> of Common <br> Stock to be<br> Issued** | **Dilution<br> Resulting**<br>**From <br> Issuance of <br> Shares for <br> Stock Benefit<br> Plans** | **At <br> Minimum <br> of Offering <br> Range** | **At <br> Maximum <br> of Offering <br> Range** |
| Employee stock ownership plan | 125600 | 168800 | 8.00% | n/a<sup>(3)</sup> | $1256000 | $1688000 |
| Stock awards | 62800 | 84400 | 4.00 | 3.85% | 628000 | 844000 |
| Stock options | 157000 | 211000 | 10.00 | 9.09% | 638990 | 858770 |
| Total | 345400 | 464200 | 22.00% | 12.28% | $2522990 | $3390770 |

---

(1) The stock-based benefit plan may award a greater number of options and shares, respectively, if the plan is adopted more than 12 months
after the completion of the conversion.

(2) The actual value of restricted stock grants will be determined based on their fair value as of the date grants are made. For purposes
of this table, fair value is assumed to be the same as the offering price of $10.00 per share. The fair value of stock options has been
estimated at $4.07 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date share price and
option exercise price of $10.00; dividend yield of 0%; an expected option life of 10 years; a risk-free interest rate of 3.88%; and a
volatility rate of 20.27%. The actual expense of stock options granted under a stock-based benefit plan will be determined by the grant-date
fair value of the options, which will depend on a number of factors, including the valuation assumptions used in the option pricing model
ultimately adopted, which may or may not be the Black-Scholes model.

(3) Represents the dilution of stock ownership interest. No dilution is reflected for the employee stock ownership plan because these
shares are assumed to be purchased in the stock offering.

**Income Tax Consequences**

PFS Bancorp and Peru Federal have received an opinion from their counsel, Luse Gorman, PC, regarding the material federal income tax consequences of the conversion, including an opinion that it is more likely than not

that the fair market value of the nontransferable subscription rights to purchase the common stock will be zero and, accordingly, no gain or loss will be recognized by depositors of Peru Federal upon the distribution to them of the nontransferable subscription rights to purchase the common stock and no taxable income will be realized by them as a result of the exercise of the nontransferable subscription rights. PFS Bancorp and Peru Federal have also received an opinion of Wipfli LLP, tax advisors to PFS Bancorp and Peru Federal, regarding the material Illinois state income tax consequences of the conversion. As a general matter, the conversion will not be a taxable transaction for purposes of federal or state income taxes to PFS Bancorp, Peru Federal, or persons eligible to subscribe for shares of common stock in the subscription offering. For additional information, see "Taxation."

**Our Contribution of Cash and Shares of Common Stock to the Peru Federal Savings** **Charitable Foundation, Inc.**

To further our commitment to our local community, we intend to establish and fund a charitable foundation, known as the Peru Federal Savings Charitable Foundation, Inc., as part of the conversion and stock offering. Assuming we receive both regulatory approval and the approval of the members of Peru Federal, we intend to contribute to the charitable foundation 40,000 shares of common stock and $100,000 in cash, for an aggregate contribution of $500,000 based on the $10.00 per share purchase price.

The charitable foundation will be dedicated exclusively to supporting charitable causes and community development activities in the communities in which we operate. The contribution of common stock and cash to the charitable foundation will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· with respect to the contribution of shares of common stock, dilute the voting interests of purchasers of shares of our common stock
in the stock offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· result in an expense, and a reduction in capital, during the quarter in which the contribution is made, equal to the full amount of
the contribution to the charitable foundation, which we expect to be offset in part by a corresponding tax benefit. As a result of the
contribution, we expect to record an after-tax expense of approximately $358,000 during the quarter in which the conversion and stock
offering is completed.

The amount of common stock that we would offer for sale would be greater if the conversion and stock offering were to be completed without the establishment and funding of the charitable foundation. For a further discussion of the financial impact of the charitable foundation, including its effect on those who purchase shares in the stock offering, see "Risk Factors – Risks Related to the Charitable Foundation – The contribution to the charitable foundation will dilute your ownership interest and adversely affect net income in 2023," and "Risk Factors – Risks Related to the Charitable Foundation – Our contribution to the charitable foundation may not be tax deductible, which could reduce our profits."

**How You Can Obtain Additional Information – Stock Information Center**

Our banking personnel may not, by law, assist with investment-related questions about the stock offering. If you have questions regarding the conversion and stock offering, call our Stock Information Center at 1-(877) ____________ (toll-free). The Stock Information Center is accepting telephone calls Monday through Friday between 9:00 a.m. and 3:00 p.m., Central time, excluding bank holidays.

**RISK FACTORS**

***You should carefully consider the following risk factors, in addition to all other information in this prospectus, in evaluating an investment in the shares of common stock.***

**<u>Risks Related to Our Lending Activities</u>**

**Our commercial real estate loans and agricultural real estate loans involve credit risks that could adversely affect our financial condition and results of operations.**

At December 31, 2022, commercial real estate loans totaled $17.9 million, or 20.9% of our loan portfolio, of which $1.6 million were agricultural real estate loans. Given their larger balances and the complexity of the underlying collateral, commercial real estate loans generally have more risk than the one- to four-family residential real estate loans we originate. Because the repayment of commercial real estate loans depends on the successful management and operation of the borrower's properties or related businesses, their repayment can be affected by adverse conditions in the local real estate market or economy. A downturn in the real estate market or the local economy could adversely impact the value of properties securing the loan or the revenues from the borrower's business, thereby increasing the risk of non-performing loans. Agricultural real estate loans have risks similar to commercial real estate loans in that their repayment depends primarily on the successful operation of the underlying farm. We intend to increase our commercial real estate and agricultural real estate loan portfolios and as they increase, the corresponding risks and potential for losses from these loans may also increase.

**Our construction and land development loans involve credit risks that could adversely affect our financial condition and results of operations.**

At December 31, 2022, construction and land development loans totaled $1.5 million, or 1.8% of our loan portfolio. Construction lending involves additional risks when compared with permanent finance lending because funds are advanced upon the security of the project, which is of uncertain value before its completion. Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to accurately evaluate the total funds required to complete a project and the related loan-to-value ratio. In addition, generally during the term of a construction loan, interest may be funded by the borrower or disbursed from an interest reserve set aside from the construction loan budget. These loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. If the appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss. Land development loans have substantially similar risks to speculative construction loans. As our construction and land loan portfolio increases, the corresponding risks and potential for losses from these loans may also increase.

**If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings could decrease.**

We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for loan losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. If our assumptions or the results of our analyses are incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in additions to our allowance. In addition, our emphasis on loan growth and on increasing our portfolios of commercial real estate and commercial business loans, as well as any future credit deterioration, could require us to increase our allowance for loan losses in the future. Material additions to our allowance would materially decrease our net income.

Effective January 1, 2023, the Current Expected Credit Loss, referred to as "CECL" throughout this prospectus, accounting standard became effective for Peru Federal and other financial institutions. CECL requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans and recognize the

expected credit losses as allowances for credit losses. CECL will require us to change the current method of providing allowances for loan losses that are incurred or probable, which will likely require us to increase our allowance for loan losses and increase the types of data we will need to collect and review to determine the appropriate level of the allowance for loan losses.

In addition, bank regulators periodically review our allowance for loan losses and, as a result of such reviews, we may decide to increase our provision for loan losses or recognize further loan charge-offs. Any increase in our allowance for loan losses or loan charge-offs as a result of such review or otherwise may have a material adverse effect on our financial condition and results of operations.

**We are subject to environmental liability risk associated with lending activities or properties we own.**

A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties, or with respect to properties that we own in operating our business. During the ordinary course of business, we may foreclose on and take title to properties securing defaulted loans and, in doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous conditions or toxic substances are found on these properties, we may be liable for remediation costs, as well as for personal injury and property damage, civil fines and criminal penalties regardless of when the hazardous conditions or toxic substances first affected any particular property. Environmental laws may require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property's value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Our policies, which require us to perform an environmental review before initiating any foreclosure action on non-residential real property, may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us.

**<u>Risks Related to Market Interest Rates</u>**

**The reversal of the historically low interest rate environment is likely to adversely affect our net interest income and profitability.**

The Federal Reserve Board decreased benchmark interest rates significantly, to near zero, in response to the COVID-19 pandemic. The Federal Reserve Board has reversed its policy of near zero interest rates given the rise in inflation. As discussed below, the increase in market interest rates is expected to have an adverse effect on our net interest income and profitability.

**Future changes in interest rates could reduce our profits and asset values.**

Net income is the amount by which net interest income and non-interest income exceed non-interest expense and the provision for loan losses. Net interest income makes up a majority of our income and is based on the difference between:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the interest income we earn on interest-earning assets, such as loans and securities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the interest expense we pay on interest-bearing liabilities, such as deposits and borrowings.

A substantial portion of our loans are fixed-rate loans. Furthermore, the rates we earn on our other interest-earning assets and the rates we pay on our interest-bearing liabilities are generally fixed for a contractual period of time. Like many savings institutions, our interest-bearing liabilities generally have shorter contractual maturities than our interest-earning assets. This imbalance can create significant earnings volatility because market interest rates change over time. Generally, in a period of rising interest rates, the interest income we earn on our assets may not increase as rapidly as the interest we pay on our liabilities. Generally, in a period of declining interest rates, the interest income we earn on our assets may decrease more rapidly than the interest we pay on our liabilities, as borrowers prepay mortgage loans, and mortgage-backed securities and callable investment securities are called, requiring us to reinvest those cash flows at lower, prevailing interest rates.

Furthermore, the historically low interest rate environment in recent periods has contributed significantly to our loan growth, particularly in one- to four-family residential mortgage loans where refinance volume has been relatively high. The increase in market interest rates that we are now experiencing is likely to reduce our loan origination volume, particularly refinance volume, and/or reduce our interest rate spread, which would have a material adverse effect on our profitability and results of operations.

In addition, changes in interest rates can affect the average life of loans and mortgage-backed and related securities. A decline in interest rates results in increased prepayments of loans and mortgage-backed and related securities as borrowers refinance their debt to reduce their borrowing costs. This creates reinvestment risk, which is the risk that we may not be able to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities. Furthermore, an inverted interest rate yield curve, where short-term interest rates (which are usually the rates at which financial institutions borrow funds) are higher than long-term interest rates (which are usually the rates at which financial institutions lend funds for fixed-rate loans) can reduce a financial institution's net interest margin and create financial risk for financial institutions that originate longer-term, fixed rate mortgage loans.

Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition, liquidity and results of operations. Changes in the level of interest rates may also negatively affect the value of our assets, including the value of our available-for-sale investment securities which generally decreases when market interest rates rise, and ultimately affect our earnings. During the year ended December 31, 2022, we incurred $5.2 million in net unrealized losses on available-for-sale investment securities caused by the increase in market interest rates during the period.

We monitor interest rate risk through the use of simulation models, including estimates of the amounts by which the fair value of our assets and liabilities (our economic value of equity, or "EVE") and our net interest income would change in the event of a range of assumed changes in market interest rates. At December 31, 2022, in the event of an instantaneous 200 basis point increase in interest rates, we estimate that we would experience a 19.01% decrease in EVE and a 3.27% increase in net interest income. For further discussion of how changes in interest rates could impact us, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Management of Market Risk."

**<u>Risks Related to Laws and Regulations</u>**

**Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations.**

Peru Federal is subject to extensive regulation, supervision and examination by the OCC. PFS Bancorp will be subject to extensive regulation, supervision and examination by the Federal Reserve Board. Such regulation and supervision govern the activities in which an institution and its holding company may engage and is intended primarily for the protection of the federal deposit insurance fund and the depositors of Peru Federal rather than the protection of PFS Bancorp's stockholders. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the adequacy of the level of our allowance for loan losses. These regulations, along with existing tax, accounting, securities, insurance and monetary laws, rules, standards, policies, and interpretations, control the methods by which financial institutions conduct business, implement strategic initiatives and tax compliance, and govern financial reporting and disclosures. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. Further, changes in accounting standards can be both difficult to predict and involve judgment and discretion in their interpretation by us and our independent accounting firm. These changes could materially impact, potentially even retroactively, how we report our financial condition and results of operations.

**Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.**

The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are suspected,

financial institutions are obligated to file suspicious activity reports with the U.S. Treasury's Office of Financial Crimes Enforcement Network. These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Failure to comply with these regulations could result in fines or sanctions, including restrictions on pursuing any acquisitions or establishing or acquiring new branches. The policies and procedures we have adopted that are designed to assist in compliance with these laws and regulations may not be effective in preventing violations of these laws and regulations. Furthermore, these rules and regulations continue to evolve and expand. We have not been subject to fines or other penalties, or have suffered business or reputational harm, as a result of money laundering activities in the past.

**Monetary policies and regulations of the Federal Reserve Board could adversely affect our business, financial condition and results of operations.**

In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve Board. An important function of the Federal Reserve Board is to regulate the money supply and credit conditions. Among the instruments used by the Federal Reserve Board to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks' reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits. The monetary policies and regulations of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future. The effects of such policies upon our business, financial condition and results of operations cannot be predicted.

**We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.**

PFS Bancorp qualifies as an "emerging growth company" under the JOBS Act. For as long as it continues to be an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to public companies that are not available to emerging growth companies, including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation. As an emerging growth company, PFS Bancorp also will not be subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require that our independent auditors audit our internal control over financial reporting. In addition, as an emerging growth company, we have elected to take advantage of the extended transition periods for adopting new or revised financial accounting standards until the date they are required to be adopted by private companies (however, if any new or revised financial accounting standards would not apply to private companies, we would not be able to delay their adoption). Accordingly, our financial statements may not be comparable to those of public companies that adopt new or revised financial accounting standards as of an earlier date. Investors may find our common stock less attractive since we have chosen to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

**We are also a smaller reporting company, and even if we no longer qualify as an emerging growth company, any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to smaller reporting companies could make our common stock less attractive to investors.**

In addition to qualifying as an emerging growth company, PFS Bancorp qualifies as a "smaller reporting company" under the federal securities laws. For as long as it continues to be a smaller reporting company, it may choose to take advantage of exemptions from various reporting requirements applicable to public companies that are not available to companies that are not smaller reporting companies, including, but not limited to, reduced financial disclosure obligations and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

**<u>Risks Related to Economic Conditions</u>**

**Inflation can have an adverse impact on our business and on our customers.**

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Recently, there have been market indicators of a pronounced rise in inflation and the Federal Reserve Board has indicated its intention to raise certain benchmark interest rates in an effort to combat inflation. As inflation increases, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.

**We have a high concentration of loans secured by real estate in our market area. Adverse economic conditions, both generally and in our market area, could adversely affect our financial condition and results of operations.**

We have relatively few loans outside of our market area, which is predominately rural. Consequently, we have a greater risk of loan defaults and losses in the event of a further economic downturn in our market area, as adverse economic conditions may have a negative effect on the ability of our borrowers to make timely payments of their loans. A return of recessionary conditions and/or negative developments in the domestic and international credit markets may significantly affect the markets in which we do business, the value of our loans, investments, and collateral securing our loans, and our ongoing operations, costs and profitability. Any of these negative events may result in higher than expected loan delinquencies, increase our levels of nonperforming and classified assets, and reduce demand for our products and services, which may cause us to incur losses and may adversely affect our capital, liquidity and financial condition. According to published data, our market area has not experienced any material declines in real estate values during the last year or any material increase in the number of foreclosure proceedings.

**A worsening of economic conditions could reduce demand for our products and services and/or increase our level of non-performing loans, which could adversely affect our financial condition and results of operations.**

Unlike larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions in our primary market area. In addition to local economic conditions, which could have a significant impact on ability of our borrowers to repay their loans and on the value of the collateral securing their loans, deterioration in general economic conditions could result in the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· demand for our products and services may decline;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· loan delinquencies, problem assets and foreclosures may increase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· collateral for loans, especially real estate, may decline in value, reducing customers' future borrowing power and the value
of assets and collateral associated with existing loans; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us.

Moreover, a significant decline in general economic conditions, caused by inflation, recession, tariffs and international trade disputes, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, unemployment or other factors beyond our control could further impact these local economic conditions and could further negatively affect the financial results of our banking operations. In addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our

business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance.

**<u>Risks Related to Competitive Matters</u>**

**Strong competition within our market area may limit our growth and profitability.**

Competition in the banking and financial services industry is intense. We compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking firms and unregulated or less regulated non-banking entities. Many of these competitors are substantially larger than us and have substantially greater resources and higher lending limits than we have and offer certain services that we do not or cannot provide. In addition, some of our competitors offer loans with lower interest rates and/or more attractive terms than loans we offer. Competition also makes it increasingly difficult and costly to attract and retain qualified employees. We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Our profitability depends upon our continued ability to successfully compete for business and qualified employees in our market area. The greater resources and deposit and loan products offered by some of our competitors may limit our ability to increase our interest-earning assets. See "Business of Peru Federal – Competition."

**Our small size makes it more difficult for us to compete.**

Our small asset size makes it more difficult to compete with other financial institutions that are larger and can more easily afford to invest in the marketing and technologies needed to attract and retain customers. Because our principal source of income is the net interest income we earn on our loans and investments after deducting interest paid on deposits and other sources of funds, our ability to generate the revenues needed to cover our expenses and finance such investments is limited by the size of our loan and investment portfolios. Accordingly, we are not always able to offer new products and services as quickly as our competitors. Our lower earnings may also make it more difficult to offer competitive salaries and benefits. In addition, our smaller customer base may make it difficult to generate meaningful non-interest income from such activities as securities and insurance brokerage. Finally, as a smaller institution, we are disproportionately affected by the continually increasing costs of compliance with new banking and other regulations.

**<u>Risks Related to Operational Matters</u>**

**We face significant operational risks because of our reliance on technology. Our information technology systems may be subject to failure, interruption or security breaches.**

Information technology systems are critical to our business. Our business requires us to collect, process, transmit and store significant amounts of confidential information regarding our customers, employees and our own business, operations, plans and business strategies. We use various technology systems to manage our customer relationships, general ledger, securities investments, deposits, and loans. Our computer systems, data management and internal processes, as well as those of third parties, are integral to our performance. Our operational risks include the risk of malfeasance by employees or persons outside our company, errors relating to transaction processing and technology, systems failures or interruptions, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery. There have been increasing efforts by third parties to breach data security at financial institutions. Such attacks include computer viruses, malicious or destructive code, phishing attacks, denial of service or information or other security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information, damages to systems, or other material disruptions to network access or business operations. Although we take protective measures and believe that we have not experienced any of the data breaches described above, the security of our computer systems, software, and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code and cyber-attacks that could have an impact on information security. Because the techniques used to cause security breaches change frequently, we may be unable to proactively address these techniques or to implement adequate preventative measures.

If there is a breakdown in our internal control systems, improper operation of systems or improper employee actions, or a breach of our security systems, including if confidential or proprietary information were to be mishandled, misused or lost, we could suffer financial loss, loss of customers and damage to our reputation, and face regulatory action or civil litigation. Any of these events could have a material adverse effect on our financial condition and results of operations. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits.

In addition, we outsource a majority of our data processing requirements to third-party providers. Accordingly, our operations are exposed to risk that these vendors will not perform according to our contractual agreements with them, or we also could be adversely affected if such an agreement is not renewed by the third-party vendor or is renewed on terms less favorable to us. If our third-party providers encounter difficulties, or if we have difficulty communicating with those service providers, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected, which could have a material adverse effect on our financial condition and results of operations. Threats to information security also exist in the processing of customer information through various other vendors and their personnel. To our knowledge, the services and programs provided to us by third parties have not experienced any material security breaches. However, the existence of cyber-attacks or security breaches at third parties with access to our data, such as vendors, may not be disclosed to us in a timely manner.

**We depend on our management team to implement our business strategy and execute successful operations and we could be harmed by the loss of their services.**

We depend on the services of the members of our senior management team who direct our strategy and operations, particularly our President and Chief Executive Officer who also serves as our Chief Financial Officer. Our executive officers and lending personnel possess substantial expertise, extensive knowledge of our markets and key business relationships. Our loss of these persons, or our inability to hire additional qualified personnel, could impact our ability to implement our business strategy and could have a material adverse effect on our results of operations and our ability to compete in our markets. We do not maintain "key-person" life insurance on any member of our senior management team. See "Management."

**We are a community bank and our ability to maintain our reputation is critical to the success of our business. The failure to do so may materially adversely affect our performance.**

We are a community bank, and our reputation is one of the most valuable components of our business. A key factor in implementing our business strategy is our reputation for customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market area and contiguous areas. Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, cybersecurity incidents and questionable or fraudulent activities of our customers. Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers and employees, costly litigation and increased governmental regulation, all of which could adversely affect our business and operating results.

**Our funding sources may prove insufficient to replace deposits at maturity and support our future growth.**

We must maintain sufficient funds to respond to the needs of depositors and borrowers. As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments. As we continue to grow, we are likely to depend more on these sources, which may include Federal Home Loan Bank of Chicago advances, federal funds purchased and brokered certificates of deposit. Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates. If we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs. In this case, our operating margins and profitability would be adversely affected.

**<u>Risks Related to Accounting Matters</u>**

**Changes in management's** **estimates and assumptions may have a material impact on our consolidated financial statements and our financial condition or operating results.**

In preparing this prospectus, as well as in preparing the periodic reports PFS Bancorp will be required to file under the Securities Exchange Act of 1934, as amended, upon the completion of the conversion and stock offering, including PFS Bancorp's consolidated financial statements, our management is and will be required under applicable rules and regulations to make estimates and assumptions as of a specified date. These estimates and assumptions are based on management's best estimates and experience as of that date and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known. Areas requiring significant estimates and assumptions by management include our evaluation of the adequacy of our allowance for loan losses, the valuation of mortgage servicing rights, and the fair value of financial instruments.

**Changes in accounting standards could affect reported earnings.**

The bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our consolidated financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.

**<u>Risks Related to the Stock Offering</u>**

**We will have a relatively high capital level after the completion of the stock offering. We expect our return on equity to be low following the conversion and stock offering, which could negatively affect the trading price of our shares of common stock.**

Net income divided by average stockholders' equity, known as "return on equity," is a ratio many investors use to compare the relative performance of financial institutions. Our return on average equity was 3.99% for the year ended December 31, 2022 and 4.29% for the year ended December 31, 2021. Our average equity to average assets was 11.49% for the year ended December 31, 2022, and 12.98% for the year ended December 31, 2021. Our total equity capital was $20.1 million at December 31, 2022. Assuming the completion of the conversion and stock offering, our pro forma consolidated stockholders' equity at December 31, 2022 is estimated to be between $32.1 million at the minimum of the offering range and $39.6 million at the adjusted maximum of the offering range. We expect our return on equity to be lower than our peers unless and until we are able to leverage our capital including the additional capital from the stock offering. Our return on equity also will be negatively affected by added expenses associated with our employee stock ownership plan and the stock-based benefit plans we intend to adopt after the completion of the conversion and stock offering. Our ability to increase earnings organically is relatively limited primarily given our small size and the demographics of our market area. Unless and until we can increase our earnings and leverage our capital including the capital raised in the stock offering, we expect that our return on equity will be low, which may reduce the trading price of our shares of common stock.

**The future price of our shares of common stock may be less than the $10.00 purchase price per share in the stock offering.**

If you purchase shares of common stock in the stock offering, you may not be able to sell them later at or above the $10.00 purchase price. In many cases, shares of common stock issued by newly converted savings institutions have traded below the initial offering price. The aggregate purchase price of the shares of common stock sold in the stock offering will be based on an independent appraisal. The independent appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock. The independent appraisal is based on certain estimates, assumptions and projections, all of which are subject to change from time to time. After the shares begin trading, the trading price of our common stock will be determined by the marketplace, and may be influenced by many factors, including prevailing interest rates, the overall performance of the economy, changes in federal tax laws, new regulations, investor perceptions of PFS

Bancorp and the outlook for the financial services industry in general. Price fluctuations in our common stock may be unrelated to our operating performance.

**There will be a limited trading market in our common stock, which could hinder your ability to sell our common stock and may lower the market price of the stock.**

We have never issued stock and, therefore, there is no current trading market for the shares of common stock. Upon completion of the conversion and stock offering, we expect our common stock will be quoted on the OTCQB Market. We expect that our "public float," which is the total number of our outstanding shares of common stock less the number of shares held by our employee stock ownership plan, by our directors and executive officers and by the charitable foundation, and which is used as a measure of shares available for trading, will be limited. The limited trading market could also result in a wider spread between the "bid" and "ask" prices for the common stock, which could make it more difficult to sell a large number of shares at one time and could mean a sale of a large number of shares at one time could depress the market price.

**A significant percentage of our common stock will be held by our directors and executive officers and benefit plans.**

We expect that our directors and executive officers, together with their associates, will subscribe for 155,000 shares of common stock in the stock offering. In addition, we intend to establish an employee stock ownership plan that will purchase an amount of shares equal to 8.0% of the sum of the shares sold in the stock offering and contributed to the charitable foundation. As a result, upon consummation of the conversion and stock offering, an aggregate up to 280,600 shares, or 17.9%, and 323,800 shares, or 15.4%, of our outstanding common stock would be held by our directors and executive officers and their associates and by our employee stock ownership plan based on the minimum and maximum of the offering range, respectively. Further, additional shares would be held by management following the implementation of an equity incentive plan, which we intend to implement no earlier than six months following the completion of the conversion and stock offering following the receipt of stockholder approval. The articles of incorporation and bylaws of PFS Bancorp contain supermajority voting provisions that require that the holders of at least 80% of PFS Bancorp's outstanding shares of voting stock approve certain actions including, but not limited to, the amendment of certain provisions of PFS Bancorp's articles of incorporation and bylaws. If our directors and executive officers and their associates and benefit plans hold more than 20% of our outstanding common stock following the completion of the conversion and stock offering, the shares held by these individuals and benefit plans could be voted in a manner that would ensure that the 80% supermajority needed to approve such action could not be attained. For more information on the restrictions included in the articles of incorporation and bylaws of PFS Bancorp, see "Restrictions on Acquisition of PFS Bancorp."

**Our failure to effectively deploy the net proceeds may have an adverse effect on our financial performance.**

We intend to contribute between $6.9 million and $9.6 million of the net proceeds of the stock offering (or $11.2 million at the adjusted maximum of the offering range) to Peru Federal. We may use the remaining net proceeds to invest in short-term investments and for general corporate purposes, including repurchasing shares of our common stock and paying dividends. We also expect to use a portion of the net proceeds we retain to fund a loan to our employee stock ownership plan to purchase shares of common stock in the stock offering and to contribute cash to the charitable foundation. Peru Federal may use the net proceeds it receives to fund new loans, expand its retail banking franchise by establishing or acquiring new branches or for other general corporate purposes. However, except for funding the loan to the employee stock ownership plan and contributing cash to the charitable foundation, we have not allocated specific amounts of the net proceeds for any of these purposes, and we will have broad discretion in determining the amount of the net proceeds we apply to different uses and when we apply or reinvest such proceeds. Also, certain of these uses, such as establishing or acquiring new branches, may require the approval of our bank regulators. We have not established a timetable for investing the net proceeds, and we cannot predict how long we will require to invest the net proceeds. Our failure to reinvest these funds effectively would reduce our profitability and may adversely affect the value of our common stock.

**The cost of additional finance and accounting systems, procedures, compliance and controls in order to satisfy our new public company reporting requirements will increase our expenses.**

As a result of the completion of the conversion and stock offering, we will become a public reporting company. We expect that the obligations of being a public company, including the substantial public reporting obligations, will require significant expenditures and place additional demands on our management team. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a stand-alone public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. The Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal control over financial reporting, starting with the second annual report that we would expect to file with the Securities and Exchange Commission. Any failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business and stock price. In addition, we may need to hire additional compliance, accounting and financial staff with appropriate public company experience and technical knowledge, and we may not be able to do so in a timely fashion. As a result, we may need to rely on outside consultants to provide these services for us until qualified personnel are hired. These obligations will increase our operating expenses and could divert our management's attention from our operations.

**Our stock-based benefit plans will increase our expenses and reduce our income.**

We intend to adopt one or more new stock-based benefit plans after the conversion and stock offering, subject to stockholder approval, which will increase our annual compensation and benefit expenses related to the stock options and stock awards granted to participants under the new stock-based benefit plans. The actual amount of these new stock-related compensation and benefit expenses will depend on the number of options and stock awards granted under the plans, the fair market value of our stock or options on the date of grant, the vesting period, and other factors which we cannot predict at this time. If we adopt stock-based benefit plans within 12 months following the conversion and stock offering, the shares of common stock reserved for issuance pursuant to awards of restricted stock and grants of options under such plans would be limited to 4% and 10%, respectively, of the sum of the number of shares of our common stock sold in the stock offering and contributed to the charitable foundation. If we adopt stock-based benefit plans more than 12 months after the completion of the conversion and stock offering, we may adopt plans that allow for greater amounts of awards and options and, therefore, we could award restricted shares of common stock or grant options in excess of these amounts, which would further increase costs.

In addition, we will recognize expense for our employee stock ownership plan when shares are committed to be released to participants' accounts, and we will recognize expense for restricted stock awards and stock options over the vesting period of awards made to recipients. The expense in the first year following the conversion and stock offering for our employee stock ownership plan and for our new stock-based benefit plans, assuming such plans had been implemented at the beginning of the year, is estimated to be approximately $468,000 ($376,000 after-tax) at the adjusted maximum of the offering range as set forth in the pro forma financial information under "Pro Forma Data," assuming the $10.00 per share purchase price as fair market value. Actual expenses, however, may be higher or lower, depending on the price of our common stock. For further information, see "Management – Benefits to be Considered Following Completion of the Conversion and Stock Offering."

**The implementation of stock-based benefit plans may dilute your ownership interest. Historically, stockholders have approved these stock-based benefit plans.**

We intend to adopt one or more new stock-based benefit plans following the conversion and stock offering. These plans may be funded either through open market purchases of our common stock or from the issuance of authorized but unissued shares of common stock. Our ability to repurchase shares of our common stock to fund these plans will be subject to many factors, including applicable regulatory restrictions on stock repurchases, the availability of stock in the market, the trading price of our stock, our capital levels, alternative uses for our capital and our financial performance. While our intention is to fund the new stock-based benefit plans through open market purchases, stockholders would experience a 9.09% dilution in ownership interest if newly issued shares of our common stock are used to fund stock options in an amount equal to 10% of the sum of the number of shares sold in the stock offering and contributed to the charitable foundation, and all such stock options are exercised, and a 3.85% dilution in ownership interest if newly issued shares of our common stock are used to fund shares of

restricted common stock in an amount equal to 4% of the sum of the shares sold in the stock offering and contributed to the charitable foundation. Such dilution would also reduce earnings per share. If we adopt the plans more than 12 months following the conversion and stock offering, new stock-based benefit plans would not be subject to these size limitations and stockholders could experience even greater dilution.

The implementation of new stock-based benefit plans is subject to stockholder approval. Historically, the overwhelming majority of stock-based benefit plans adopted by savings institutions and their holding companies following a mutual-to-stock conversion have been approved by stockholders.

**We have not determined when we will adopt one or more new stock-based benefit plans. Stock-based benefit plans adopted more than 12 months following the completion of the conversion may exceed regulatory restrictions on the size of stock-based benefit plans adopted within 12 months, which would further increase our costs.**

If we adopt stock-based benefit plans more than 12 months following the completion of the conversion, then grants of shares of common stock or stock options under our proposed stock-based benefit plans may exceed 4% and 10%, respectively, of the sum of the number of shares of common stock sold in the stock offering and contributed to the charitable foundation. Stock-based benefit plans that provide for awards in excess of these amounts would increase our costs beyond the amounts estimated in "—Our stock-based benefit plans will increase our expenses and reduce our income." Stock-based benefit plans that provide for awards in excess of these amounts could also result in dilution to stockholders in excess of that described in "—The implementation of stock-based benefit plans may dilute your ownership interest. Historically, stockholders have approved these stock-based benefit plans." Although the implementation of stock-based benefit plans would be subject to stockholder approval, the timing of the implementation of such plans will be at the discretion of our board of directors.

**Our stock value may be negatively affected by applicable regulations that restrict stock repurchases.**

Applicable regulations generally restrict us from repurchasing our shares of common stock during the first year following the completion of the conversion and stock offering. Stock repurchases are a capital management tool that can enhance the value of a company's stock, and our inability to repurchase our shares of common stock during the first year following the stock offering may negatively affect our stock price.

**Various factors may make takeover attempts more difficult to achieve.**

Certain provisions of our articles of incorporation and bylaws and federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire control of PFS Bancorp without our board of directors' approval. Under regulations applicable to the conversion, for a period of three years following completion of the conversion, no person may offer to acquire or acquire beneficial ownership of more than 10% of our common stock without prior approval of the Federal Reserve Board. Under federal law, subject to certain exemptions, a person, entity or group must notify the Federal Reserve Board and receive the Federal Reserve Board's non-objection before acquiring control of a bank holding company. There also are provisions in our articles of incorporation and bylaws that we may use to delay or block a takeover attempt, including a provision that prohibits any person from voting more than 10% of our outstanding shares of common stock. Furthermore, shares of restricted stock and stock options that we may grant to employees and directors, stock ownership by our management and directors and other factors may make it more difficult for companies or persons to acquire control of PFS Bancorp without the consent of our board of directors, and may increase the cost of an acquisition. Taken as a whole, these statutory or regulatory provisions and provisions in our articles of incorporation and bylaws could result in our being less attractive to a potential acquirer and therefore could adversely affect the market price of our common stock. For additional information, see "Restrictions on Acquisition of PFS Bancorp" and "Management – Benefits to be Considered Following Completion of the Conversion and Stock Offering."

**Our articles of incorporation provide that, subject to limited exception, state and federal courts in the State of Maryland are the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, and other employees.**

The articles of incorporation of PFS Bancorp provide that, unless PFS Bancorp consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of PFS Bancorp, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of PFS Bancorp to PFS Bancorp or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Maryland General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine will be conducted in a state or federal court located within the State of Maryland, in all cases subject to the court's having personal jurisdiction over the indispensable parties named as defendants. This exclusive forum provision does not apply to claims arising under the federal securities laws. This exclusive forum provision may limit a stockholder's ability to bring a claim in a judicial forum it finds favorable for disputes with PFS Bancorp and its directors, officers, and other employees or may cause a stockholder to incur additional expense by having to bring a claim in a judicial forum that is distant from where the stockholder resides, or both. In addition, if a court were to find this exclusive forum provision to be inapplicable or unenforceable in a particular action, we may incur additional costs associated with resolving the action in another jurisdiction, which could have a material adverse effect on our financial condition and results of operations.

**You may not revoke your decision to purchase PFS Bancorp common stock in the subscription offering or in any community offering after you send us your stock order form.**

Funds submitted or automatic withdrawals authorized in connection with the purchase of shares of common stock in the subscription offering and in any community offering will be held by us until the completion or termination of the conversion and stock offering, including any extension of the expiration date and consummation of any syndicated community offering. Because the completion of the conversion and stock offering will be subject to regulatory approvals and an update of the independent appraisal, among other factors, there may be one or more delays in completing the conversion and stock offering. Orders submitted in the subscription offering and in any community offering are irrevocable, and purchasers will have no access to their funds unless the stock offering is terminated, or extended beyond _________, 2023, or the number of shares to be sold in the stock offering is decreased to fewer than 1,530,000 shares or increased to more than 2,380,500 shares.

**The distribution of subscription rights could have adverse income tax consequences.**

If the subscription rights granted in connection with the stock offering are deemed to have an ascertainable value, receipt of such rights may be taxable in an amount equal to such value. Whether subscription rights are considered to have ascertainable value is an inherently factual determination. We have received an opinion of counsel that it is more likely than not that such rights have no value; however, such opinion is not binding on the Internal Revenue Service.

**<u>Risks Related to the Charitable Foundation</u>**

**The contribution to the charitable foundation will dilute your ownership interest and adversely affect net income in 2023.**

We intend to establish and fund a charitable foundation in connection with the conversion and stock offering. We intend to contribute $100,000 in cash and 40,000 shares of common stock of PFS Bancorp, for an aggregate contribution of $500,000 based on the $10.00 per share purchase price, to the charitable foundation. The contribution will have an adverse effect on our net income for the quarter and year in which we make the issuance and contribution to the charitable foundation. The after-tax expense of the contribution is expected to reduce net income in the year of the contribution by approximately $358,000.

**Our contribution to the charitable foundation may not be tax deductible, which could reduce our profits.**

We may not have sufficient profits to be able to fully use the tax deduction from our contribution to the charitable foundation. Under the Internal Revenue Code, an entity is permitted to deduct up to 10% of its taxable income (generally income before federal income taxes and charitable contributions expense) in any one year for charitable contributions. Any contribution in excess of the 10% limit may be deducted for federal income tax purposes over each of the five years following the year in which the charitable contribution is made. Accordingly, a charitable contribution could, if necessary, be deducted over a six-year period and expires thereafter.

**SELECTED FINANCIAL AND OTHER DATA OF PERU FEDERAL**

The following tables set forth selected historical financial and other data of Peru Federal at the dates and for the periods indicated. The information at and for the years ended December 31, 2022 and 2021 is derived in part from, and should be read together with, the audited financial statements and related notes beginning at page F-1 of this prospectus.

---

| | | |
|:---|:---|:---|
|  | **At December 31,** | **At December 31,** |
|  | **2022** | **2021** |
|  | **(In thousands)** | **(In thousands)** |
| **Selected Financial Condition Data:** |  |  |
| Total assets | $174134 | $185556 |
| Cash and cash equivalents | 12561 | 21542 |
| Available-for-sale debt securities | 63329 | 71705 |
| Held-to-maturity debt securities | 3146 | 3054 |
| Loans, net | 84916 | 80840 |
| Premises and equipment, net | 2150 | 2159 |
| Federal Home Loan Bank stock | 347 | 330 |
| Cash surrender value of bank owned life insurance | 3783 | 3696 |
| Total deposits | 152707 | 155912 |
| Federal Home Loan Bank advances |  | 5000 |
| Total equity capital | 20139 | 23440 |

---

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2022** | **2021** |
|  | **(In thousands)** | **(In thousands)** |
| **Selected Operating Data:** |  |  |
| Total interest and dividend income | $4803 | $4584 |
| Total interest expense | 640 | 611 |
| Net interest income | 4163 | 3973 |
| Provision (credit) for loan losses | 61 | (6) |
| Net interest income after provision (credit) for loan losses | 4102 | 3979 |
| Total noninterest income | 509 | 660 |
| Total noninterest expense | 3625 | 3362 |
| Income before income taxes | 986 | 1227 |
| Provision for income taxes | 155 | 275 |
| Net income | $831 | $1002 |

---

---

| | | |
|:---|:---|:---|
|  | **At or For the Years Ended<br> December 31,** | **At or For the Years Ended<br> December 31,** |
|  | **2022** | **2021** |
| **Performance Ratios:** |  |  |
| Return on average assets | 0.46% | 0.56% |
| Return on average equity | 3.99 | 4.29 |
| Interest rate spread <sup>(1)</sup> | 2.35 | 2.19 |
| Net interest margin <sup>(2)</sup> | 2.42 | 2.28 |
| Noninterest expense as a percentage of average assets | 2.00 | 1.87 |
| Efficiency ratio <sup>(3)</sup> | 78.62 | 72.47 |
| Average interest-earning assets as a percentage of average interest-bearing liabilities | 121.47 | 125.27 |
| **Capital Ratios:** |  |  |
| Average equity as a percentage of average assets | 11.5% | 13.0% |
| Total capital as a percentage of risk-weighted assets | 28.7 | 28.8 |
| Tier 1 capital as a percentage of risk-weighted assets | 28.1 | 28.1 |
| Common equity Tier 1 capital as a percentage of risk-weighted assets | 28.1 | 28.1 |
| Tier 1 capital as a percentage of average assets | 13.8 | 12.6 |
| **Asset Quality Ratios:** |  |  |
| Allowance for loan losses as a percentage of total loans | 0.64% | 0.70% |
| Allowance for loan losses as a percentage of non-performing loans | 87.16 | 72.32 |
| Allowance for loan losses as a percentage of non-accrual loans | 464.10 | 211.57 |
| Non-accrual loans as a percentage of total loans | 0.14 | 0.33 |
| Net recoveries (charge-offs) as a percentage of average outstanding loans | (0.01) |  |
| Non-performing loans as a percentage of total loans | 0.73 | 0.98 |
| Non-performing loans as a percentage of total assets | 0.36 | 0.43 |
| Total non-performing assets as a percentage of total assets | 0.36 | 0.43 |
| **Other Data:** |  |  |
| Number of offices | 2 | 2 |
| Number of full-time employees | 23 | 22 |
| Number of part-time employees | 3 | 3 |

---

(1) Represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing
liabilities.

(2) Represents net interest income as a percentage of average interest-earning assets.

(3) Represents noninterest expenses divided by the sum of net interest income and noninterest income.

**FORWARD-LOOKING STATEMENTS**

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· statements of our goals, intentions and expectations;

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· statements regarding the asset quality of our loan and investment portfolios; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations 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. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this prospectus.

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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· general economic conditions, either nationally or in our market area, which are worse than expected;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance
for loan losses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· our ability to access cost-effective funding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· fluctuations in real estate values and in the conditions of the residential real estate, commercial real estate, and agricultural
real estate markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· demand for loans and deposits in our market area;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· our ability to implement and change our business strategies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· competition among depository and other financial institutions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of our financial instruments,
or our level of loan originations, or increase the level of defaults, losses and prepayments within our loan portfolio;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· adverse changes in the securities markets;

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

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

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· a failure or breach of our operational or information security systems or infrastructure, including cyberattacks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· our ability to manage market risk, credit risk and operational risk;

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· changes in consumer spending, borrowing and savings habits;

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· our ability to retain key employees; and

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

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. See "Risk Factors" beginning on page 13.

**HOW WE INTEND TO USE THE PROCEEDS FROM THE STOCK OFFERING**

Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the stock offering will be until the stock offering is completed, we anticipate that the net proceeds will be between $13.8 million and $19.2 million, or $22.3 million if the offering range is increased by 15%.

We intend to distribute the net proceeds as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Based Upon the Sale at $10.00 Per Share of:** | **Based Upon the Sale at $10.00 Per Share of:** | **Based Upon the Sale at $10.00 Per Share of:** | **Based Upon the Sale at $10.00 Per Share of:** | **Based Upon the Sale at $10.00 Per Share of:** | **Based Upon the Sale at $10.00 Per Share of:** | **Based Upon the Sale at $10.00 Per Share of:** | **Based Upon the Sale at $10.00 Per Share of:** | **Based Upon the Sale at $10.00 Per Share of:** | **Based Upon the Sale at $10.00 Per Share of:** | **Based Upon the Sale at $10.00 Per Share of:** |  |
|  | **1,530,000 Shares** | **1,530,000 Shares** |  | **1,800,000 Shares** | **1,800,000 Shares** |  | **2,070,000 Shares** | **2,070,000 Shares** |  | **2,380,500 Shares <sup>(1)</sup>** | **2,380,500 Shares <sup>(1)</sup>** |  |
|  | **Amount** | **Percent<br> of Net<br> Proceeds** |  | **Amount** | **Percent<br> of Net<br> Proceeds** |  | **Amount** | **Percent<br> of Net<br> Proceeds** |  | **Amount** | **Percent <br> of Net<br> Proceeds** |  |
| | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |  |
| Offering proceeds | $15300 |  |  | $18000 |  |  | $20700 |  |  | $23805 |  |  |
| Less: offering expenses | 1500 |  |  | 1500 |  |  | 1500 |  |  | 1500 |  |  |
| &nbsp;&nbsp;&nbsp;Net offering proceeds <sup>(2)</sup> | $13800 | 100.0 | % | $16500 | 100.0 | % | $19200 | 100.0 | % | $22305 | 100.0 | % |
| Distribution of net proceeds: |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;To Peru Federal | $6900 | 50.0 | % | $8250 | 50.0 | % | $9600 | 50.0 | % | $11153 | 50.0 | % |
| &nbsp;&nbsp;&nbsp;To fund cash contribution to charitable foundation | 100 | 0.7 |  | 100 | 0.6 |  | 100 | 0.5 |  | 100 | 0.4 |  |
| &nbsp;&nbsp;&nbsp;To fund loan to employee stock ownership plan | $1256 | 9.1 |  | $1472 | 8.9 |  | $1688 | 8.8 |  | $1936 | 8.7 |  |
| &nbsp;&nbsp;&nbsp;Retained by PFS Bancorp | $5544 | 40.2 | % | $6678 | 40.5 | % | $7812 | 40.7 | % | $9116 | 40.9 | % |

---

(1) As adjusted to give effect to an increase in the number of shares, which could occur due to a 15% increase in the offering range to
reflect demand for the shares or changes in market conditions following the commencement of the stock offering.

(2) Assumes that all shares of common stock are sold in the subscription offering and any community offering.

Payments for shares of common stock made through withdrawals from deposit accounts at Peru Federal will not result in the receipt of new funds for investment but will reduce Peru Federal's deposits. The net proceeds may vary because total offering expenses may be more or less than our estimates. For example, our expenses would increase if there were a syndicated community offering to sell shares of common stock not purchased in the subscription offering and any community offering.

PFS Bancorp intends to loan funds to the employee stock ownership plan to purchase shares of common stock in the stock offering. It may also use the proceeds it retains from the stock offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to invest in securities consistent with our investment policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to repurchase shares of its common stock, in compliance with applicable regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to pay cash dividends to stockholders; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· for other general corporate purposes.

Except for the loan to the employee stock ownership plan and the cash contribution to the charitable foundation, PFS Bancorp has not quantified its plans for use of the net proceeds of the stock offering for each of the foregoing purposes. Initially, we intend to invest a substantial portion of the net proceeds in investment grade securities, including securities issued by U.S. Government agencies and mortgage-backed securities issued by U.S. Government agencies and U.S. Government-sponsored enterprises.

See "Our Dividend Policy" for a discussion of our expected dividend policy. Under applicable OCC regulations, we may not repurchase shares of our common stock during the first year following the completion of the conversion and stock offering, except when extraordinary circumstances exist and with prior regulatory approval, or except to fund management recognition plans (which would require notification to the OCC) or tax-qualified employee stock benefit plans.

Peru Federal will receive a capital contribution from PFS Bancorp equal to at least 50% of the net offering proceeds. Based on this formula, we anticipate that PFS Bancorp will contribute to Peru Federal $6.9 million, $8.3 million, $9.6 million and $11.2 million of the net offering proceeds at the minimum, midpoint, maximum, and adjusted maximum of the offering range, respectively.

Peru Federal may use the net proceeds it receives from the stock offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to fund new loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to invest in securities consistent with its investment policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to enhance existing products and services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to expand its banking franchise by establishing or acquiring new branches as opportunities arise, although we do not currently have
any understandings or agreements to establish or acquire new branches; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· for other general corporate purposes.

Peru Federal has not quantified its plans for use of the net proceeds of the stock offering for each of the foregoing purposes. Initially, a substantial portion of the net proceeds will be invested in securities issued by U.S. Government agencies and mortgage-backed securities issued by U.S. Government agencies and U.S. Government-sponsored enterprises. The use of the proceeds outlined above may change based on many factors, including, but not limited to, changes in interest rates, equity markets, laws and regulations affecting the financial services industry, our relative position in the financial services industry, the attractiveness of opportunities to expand our operations through establishing or acquiring branches, our ability to receive regulatory approval for any such expansion activities, and overall market conditions.

We expect our return on equity to decrease upon the completion of the conversion and stock offering until we are able to reinvest effectively the additional capital raised in the stock offering. See "Risk Factors – Risks Related to the Stock Offering – Our failure to effectively deploy the net proceeds may have an adverse effect on our financial performance."

**OUR DIVIDEND POLICY**

Following completion of the conversion and stock offering, our board of directors will have the authority to declare dividends on our shares of common stock, subject to statutory and regulatory requirements. However, no decision has been made with respect to the payment of dividends. In determining whether to pay a cash dividend and the amount of such cash dividend, the board of directors is expected to take into account a number of factors, including capital requirements, our financial condition and results of operations, other uses of funds for the long-term value of stockholders, tax considerations, statutory and regulatory limitations and general economic conditions. No assurances can be given that any dividends will be paid or that, if paid, will not be reduced or eliminated in the future. Special cash dividends, stock dividends or returns of capital, to the extent permitted by regulations and policies of the OCC, may be paid in addition to, or in lieu of, regular cash dividends.

PFS Bancorp expects to file a consolidated federal income tax return with Peru Federal. Accordingly, it is anticipated that any cash distributions that we make to our stockholders would be treated as cash dividends and not as a non-taxable return of capital for federal and state income tax purposes. Additionally, according to OCC regulations, during the three-year period following the stock offering, we will not take any action to declare an extraordinary dividend to stockholders that would be treated by recipients as a tax-free return of capital for federal income tax purposes.

PFS Bancorp's articles of incorporation authorized the issuance of preferred stock. No shares of preferred stock will be issued in the conversion and stock offering. If we issue preferred stock in the future, the holders thereof may have a priority over the holders of our shares of common stock with respect to the payment of

dividends. For a further discussion concerning the payment of dividends on our shares of common stock, see "Description of Capital Stock of PFS Bancorp – Common Stock." Any dividends we may declare and pay will depend, in part, upon receipt of dividends from Peru Federal, because dividends from Peru Federal will be our primary source of income. OCC regulations impose limitations on dividends and other capital distributions by savings institutions like Peru Federal. See "Regulation and Supervision – Federal Banking Regulation – Capital Distributions."

Any payment of dividends by Peru Federal to PFS Bancorp that would be deemed to be drawn out of Peru Federal's bad debt reserves, if any, would require Peru Federal to pay taxes at the then-current tax rate on the amount of earnings deemed to be removed from the reserves for such distribution. Peru Federal does not intend to make any distribution to us that would create such a federal tax liability. See "Taxation."

**MARKET FOR THE COMMON STOCK**

PFS Bancorp is a newly formed company and has never issued capital stock. Peru Federal, as a mutual institution, is not authorized to issue capital stock. PFS Bancorp expects that that its common stock will be quoted on the OTCQB Market operated by OTC Markets Group upon the completion of the conversion and stock offering. KBW intends to make a market in our common stock, but is not obligated to do so.

The development of an active trading market depends on the existence of willing buyers and sellers, the presence of which is not within our control, or that of any market maker. The number of active buyers and sellers of the shares of common stock at any particular time may be limited. Furthermore, we cannot assure you that, if you purchase shares of common stock, you will be able to sell them at or above $10.00 per share purchase price. Purchasers of common stock in this stock offering should have long-term investment intent and should recognize that there will be a limited trading market in the common stock. This may make it difficult to sell the common stock after the stock offering and may have an adverse impact on the price at which the common stock can be sold.

**HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE**

At December 31, 2022, Peru Federal exceeded all of the applicable regulatory capital requirements and was considered "well capitalized." The following table sets forth the historical equity capital and regulatory capital of Peru Federal at December 31, 2022, and its pro forma equity capital and regulatory capital after giving effect to the sale of shares of common stock at $10.00 per share. The table assumes Peru Federal receives from PFS Bancorp $6.9 million, $8.3 million, $9.6 million and $11.2 million at the minimum, midpoint, maximum, and adjusted maximum of the offering range, respectively. See "How We Intend to Use the Proceeds from the Stock Offering."

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Peru Federal at** | **Peru Federal at** | **Peru Federal Pro Forma at December 31, 2022 Based Upon the Sale in the Stock Offering of: <sup>(1)</sup>** | **Peru Federal Pro Forma at December 31, 2022 Based Upon the Sale in the Stock Offering of: <sup>(1)</sup>** | **Peru Federal Pro Forma at December 31, 2022 Based Upon the Sale in the Stock Offering of: <sup>(1)</sup>** | **Peru Federal Pro Forma at December 31, 2022 Based Upon the Sale in the Stock Offering of: <sup>(1)</sup>** | **Peru Federal Pro Forma at December 31, 2022 Based Upon the Sale in the Stock Offering of: <sup>(1)</sup>** | **Peru Federal Pro Forma at December 31, 2022 Based Upon the Sale in the Stock Offering of: <sup>(1)</sup>** | **Peru Federal Pro Forma at December 31, 2022 Based Upon the Sale in the Stock Offering of: <sup>(1)</sup>** | **Peru Federal Pro Forma at December 31, 2022 Based Upon the Sale in the Stock Offering of: <sup>(1)</sup>** |
|  | **December 31, 2022** | **December 31, 2022** | **1,530,000 Shares** | **1,530,000 Shares** | **1,800,000 Shares** | **1,800,000 Shares** | **2,070,000 Shares** | **2,070,000 Shares** | **2,380,500 Shares <sup>(2)</sup>** | **2,380,500 Shares <sup>(2)</sup>** |
|  | **Amount** | **Percent of<br> Assets** | **Amount** | **Percent of<br> Assets** | **Amount** | **Percent of<br> Assets** | **Amount** | **Percent of<br> Assets** | **Amount** | **Percent of<br> Assets** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Total equity capital | $20139 | 11.57% | $25155 | 13.94% | $26181 | 14.41% | $27207 | 14.88% | $28388 | 15.40% |
| Tier 1 leverage capital <sup>(3) (4)</sup> | $23828 | 13.81% | $28844 | 16.13% | $29870 | 16.59% | $30896 | 17.04% | $32077 | 17.55% |
| Tier 1 leverage capital requirement | 8627 | 5.00 | 8941 | 5.00 | 9003 | 5.00 | 9065 | 5.00 | 9137 | 5.00 |
| Excess | $15201 | 8.81% | $19903 | 11.13% | $20867 | 11.59% | $21831 | 12.04% | $22940 | 12.55% |
| Tier 1 risk-based capital <sup>(3) (4)</sup> | $23828 | 28.07% | $28844 | 33.48% | $29870 | 34.57% | $30896 | 35.66% | $32077 | 36.90% |
| Tier 1 risk-based capital requirement | 6791 | 8.00 | 6892 | 8.00 | 6912 | 8.00 | 6931 | 8.00 | 6954 | 8.00 |
| Excess | $17037 | 20.07% | $21952 | 25.48% | $22958 | 26.57% | $23965 | 27.66% | $25123 | 28.90% |
| Total risk-based capital <sup>(3) (4)</sup> | $24371 | 28.71% | $29387 | 34.11% | $30413 | 35.20% | $31439 | 36.29% | $32620 | 37.53% |
| Total risk-based capital requirement | 8489 | 10.00 | 8615 | 10.00 | 8639 | 10.00 | 8664 | 10.00 | 8693 | 10.00 |
| Excess | $15882 | 18.71% | $20772 | 24.11% | $21774 | 25.20% | $22775 | 26.29% | $23927 | 27.53% |
| Common equity Tier 1 risk-based capital <sup>(3) (4)</sup> | $23828 | 28.07% | $28844 | 33.48% | $29870 | 34.57% | $30896 | 35.66% | $32077 | 36.90% |
| Common equity Tier 1 risk-based capital requirement | 5518 | 6.50 | 5599 | 6.50 | 5616 | 6.50 | 5632 | 6.50 | 5650 | 6.50 |
| Excess | $18310 | 21.57% | $23245 | 26.98% | $24254 | 28.07% | $25264 | 29.16% | $26427 | 30.40% |
| Reconciliation of capital infused into Peru Federal: | Reconciliation of capital infused into Peru Federal: | Reconciliation of capital infused into Peru Federal: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds to Peru Federal | &nbsp;&nbsp;&nbsp;&nbsp;Proceeds to Peru Federal | &nbsp;&nbsp;&nbsp;&nbsp;Proceeds to Peru Federal | $6900 |  | $8250 |  | $9600 |  | $11153 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Common stock acquired by employee stock ownership plan | &nbsp;&nbsp;&nbsp;&nbsp;Less: Common stock acquired by employee stock ownership plan | &nbsp;&nbsp;&nbsp;&nbsp;Less: Common stock acquired by employee stock ownership plan | (1256) |  | (1472) |  | (1688) |  | (1936) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Common stock acquired by stock-based incentive plan | &nbsp;&nbsp;&nbsp;&nbsp;Less: Common stock acquired by stock-based incentive plan | &nbsp;&nbsp;&nbsp;&nbsp;Less: Common stock acquired by stock-based incentive plan | (628) |  | (736) |  | (844) |  | (968) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Pro forma increase | &nbsp;&nbsp;&nbsp;&nbsp;Pro forma increase | &nbsp;&nbsp;&nbsp;&nbsp;Pro forma increase | $5016 |  | $6042 |  | $7068 |  | $8249 |  |

---

(1) Pro
 forma capital levels assume that the employee stock ownership plan purchases 8% of the sum
 of the shares of common stock sold in the stock offering and contributed to the charitable
 foundation with funds to be lent by PFS Bancorp and that the stock-based equity plan purchases
 4% of the sum of the number of shares of common stock sold in the stock offering and contributed
 to the charitable foundation for restricted stock awards. Pro forma capital calculated under
 U.S. generally accepted accounting principles ("GAAP") and regulatory capital
 have been reduced by the amount required to fund these plans. See "Management"
 for a discussion of the employee stock ownership plan.

(2) As adjusted to give effect to an increase
 in the number of shares which could occur due to a 15% increase in the offering range to
 reflect demand for the shares or changes in market conditions following the commencement
 of the stock offering.

(3) Tier 1 leverage capital levels are shown
 as a percentage of total average assets. Risk-based capital levels are shown as a percentage
 of risk-weighted assets.

(4) Pro forma dollar amounts and percentages
 assume net proceeds are invested in assets with a 20% risk weighting.

**CAPITALIZATION**

The following table presents the historical capitalization of Peru Federal at December 31, 2022 and the pro forma consolidated capitalization of PFS Bancorp at the same date after giving effect to the conversion and stock offering, based upon the assumptions set forth under the section entitled "Pro Forma Data."

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | **PFS Bancorp Pro Forma at December 31, 2022 Based on the Sale in the Stock** | **PFS Bancorp Pro Forma at December 31, 2022 Based on the Sale in the Stock** | **PFS Bancorp Pro Forma at December 31, 2022 Based on the Sale in the Stock** | **PFS Bancorp Pro Forma at December 31, 2022 Based on the Sale in the Stock** |
|  | | **Offering at $10.00 per Share of:** | **Offering at $10.00 per Share of:** | **Offering at $10.00 per Share of:** | **Offering at $10.00 per Share of:** |
|  |<br>**Peru Federal at**<br>**December 31,**<br>**2022** | **1530000**<br>**Shares** | **1800000**<br>**Shares** | **2070000**<br>**Shares** | **2380500**<br>**Shares <sup>(1)</sup>** |
|  | | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** |
| Deposits <sup>(2)</sup> | $152707 | $152707 | $152707 | $152707 | $152707 |
| Borrowings |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Total deposits and borrowings | $152707 | $152707 | $152707 | $152707 | $152707 |
| **Stockholders' equity:** |  |  |  |  |  |
| Preferred stock, $0.01 par value, 1,000,000 shares authorized | $— | $— | $— | $— | $— |
| Common stock, $0.01 par value, 14,000,000 shares authorized; shares to be issued as shown <sup>(3)</sup> |  | 16 | 18 | 21 | 24 |
| Additional paid-in capital <sup>(4)</sup> |  | 14184 | 16882 | 19579 | 22681 |
| Retained earnings <sup>(5)</sup> | 23828 | 23828 | 23828 | 23828 | 23828 |
| Accumulated other comprehensive income (loss) | (3689) | (3689) | (3689) | (3689) | (3689) |
| **Less:** |  |  |  |  |  |
| Stock contribution to charitable foundation (after-tax) |  | (286) | (286) | (286) | (286) |
| Cash contribution to charitable foundation (after-tax) |  | (72) | (72) | (72) | (72) |
| Common stock held by employee stock ownership plan <sup>(6)</sup> |  | (1.256) | (1472) | (1688) | (1936) |
| Common stock to be acquired by stock-based benefit plan <sup>(7)</sup> |  | (628) | (736) | (844) | (968) |
| Total stockholders' equity | $20139 | $32097 | $34473 | $36849 | $39582 |
| **Pro Forma Shares Outstanding:** |  |  |  |  |  |
| Shares sold in stock offering |  | 1530000 | 1800000 | 2070000 | 2380500 |
| Shares contributed to charitable foundation |  | 40000 | 40000 | 40000 | 40000 |
| Total shares outstanding |  | 1570000 | 1840000 | 2110000 | 2420500 |
| Total stockholders' equity as a percentage of total assets <sup>(2)</sup> | 11.57% | 17.25% | 18.29% | 19.31% | 20.45% |
| Tangible equity as a percentage of tangible assets <sup>(2)</sup> | 11.57% | 17.25% | 18.29% | 19.31% | 20.45% |

---

(1) As adjusted to give effect to an increase in the number of shares of common stock that could occur due to a 15% increase in the offering
range to reflect demand for shares or changes in market conditions following the commencement of the subscription and community offerings.

(2) Does not reflect withdrawals from deposit accounts for the purchase of shares of common stock in the conversion and stock offering.
These withdrawals would reduce pro forma deposits and assets by the amount of the withdrawals.

(3) No effect has been given to the issuance of additional shares of PFS Bancorp common stock pursuant to the exercise of options under
a stock-based benefit plan. If the plan is implemented within the first year after the closing of the conversion and stock offering, an
amount up to 10% of the sum of the number of shares of PFS Bancorp common stock sold in the stock offering and contributed to the charitable
foundation will be reserved for issuance upon the exercise of options under the plan.

(4) On a pro forma basis, common stock and additional paid-in capital have been revised to reflect the number of shares of PFS Bancorp
common stock to be outstanding.

(5) The retained earnings of Peru Federal will be substantially restricted after the conversion and stock offering. See "The Conversion
and Stock Offering – Liquidation Rights" and "Regulation and Supervision."

(6) Assumes that 8% of the sum of the shares sold in the stock offering and contributed to the charitable foundation will be acquired
by the employee stock ownership plan and will be financed by a loan from PFS Bancorp. The loan will be repaid principally from Peru Federal's
contributions to the employee stock ownership plan. Since PFS Bancorp will lend the funds to the employee stock ownership plan, this debt
will be eliminated through consolidation and no liability will be reflected on PFS Bancorp's consolidated financial statements.
Accordingly, the amount of shares of common stock acquired by the employee stock ownership plan is shown in this table as a reduction
of total stockholders' equity.

(7) If approved by PFS Bancorp's stockholders, a stock-based benefit plan may purchase an aggregate number of shares of common stock
equal to 4% of the sum of the number of shares of common stock sold in the stock offering and contributed to the charitable foundation
(or possibly a greater percentage if the plan is implemented more than one year after completion of the conversion and stock offering,
or a lesser percentage if Peru Federal were to have a Tier 1 leverage ratio of less than 10.0% within one year of the completion of the
conversion and stock offering). Stockholder approval of the stock-based benefit plan, and purchases by the plan, may not occur earlier
than six months after the completion of the conversion and stock offering. The shares may be acquired directly from PFS Bancorp or through
open market purchases. The funds to be used by the stock-based benefit

plans to purchase the shares will be provided by PFS Bancorp. Assumes a number of shares of common stock equal to 4% of the sum of the number of shares of common stock sold in the stock offering and contributed to the charitable foundation are available for grant under a stock-based benefit plan will be purchased in the open market by PFS Bancorp. The dollar amount of common stock to be purchased is based on the $10.00 per share offering price in the stock offering and represents unearned compensation. This amount does not reflect possible increases or decreases in the value of common stock relative to the offering price. As PFS Bancorp accrues compensation expense to reflect the vesting of shares pursuant to the stock-based benefit plan, the credit to equity will be offset by a charge to noninterest expense.

**PRO FORMA DATA**

The following table summarize historical data of Peru Federal and pro forma data of PFS Bancorp at and for the year ended December 31, 2022. This information is based on assumptions set forth below and in the footnotes to the table, and should not be used as a basis for projections of the market value of the shares of PFS Bancorp common stock following the conversion and stock offering.

The net proceeds in the tables are based upon the following assumptions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· all shares of common stock will be sold in the subscription offering and any community offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· our employee stock ownership plan will purchase 8% of the sum of the shares of common stock sold in the stock offering and contributed
to the charitable foundation, funded by a loan from PFS Bancorp. The loan will be repaid in substantially equal payments of principal
and interest (at the prime interest rate, adjusted annually) over a 25-year period; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· estimated expenses of the stock offering, including fees and expenses to be paid to KBW, are $1.5 million.

Pro forma earnings on net proceeds have been calculated assuming the stock has been sold at the beginning of the period and the net proceeds have been invested at a yield of 3.99%, which is the yield on the five-year U.S. Treasury Note rate as of December 31, 2022. In light of current market interest rates, we consider this rate to reflect the pro forma reinvestment rate more accurately than the arithmetic average of the weighted average yield earned on our interest-earning assets and the weighted average rate paid on our deposits, which is the reinvestment rate generally required by OCC regulations. The pro forma after-tax yield on the net offering proceeds is assumed to be 2.85%, based on an effective tax rate of 28.5%.

We calculated historical and pro forma per share amounts by dividing historical and pro forma amounts of consolidated net income and stockholders' equity by the indicated number of shares of common stock. We adjusted the earnings figures to give effect to the shares of common stock purchased by the employee stock ownership plan. We computed per share amounts for each period as if the shares of common stock were outstanding at the beginning of the period, but we did not adjust per share historical or pro forma stockholders' equity to reflect the earnings on the estimated net proceeds.

The pro forma tables give effect to the implementation of a stock-based benefit plan. Subject to the receipt of stockholder approval, we have assumed that the stock-based benefit plan will acquire for restricted stock awards a number of shares of common stock equal to 4% of the sum of the number of shares of common stock sold in the stock offering and contributed to the charitable foundation at the same price for which they were sold in the stock offering. We assume that shares of common stock are granted under the plan in awards that vest over a five-year period.

We have also assumed that the stock-based benefit plan will grant options to acquire shares of common stock equal to 10% of our outstanding shares of common stock. In preparing the table below, we assumed that stockholder approval was obtained, that the exercise price of the stock options and the market price of the stock at the date of grant were $10.00 per share and that the stock options have a term of ten years and vested over five years. We applied the Black-Scholes option pricing model to estimate a grant-date fair value of $4.07 for each option. In addition to the terms of the options described above, the Black-Scholes option pricing model assumed an estimated volatility rate of 20.27% for the shares of common stock, a dividend yield of zero percent, an expected option life of 10 years, and a risk-free interest rate of 3.99%. Finally, we assumed that 25% of the stock options were non-qualified options granted to directors, resulting in a tax benefit (at an assumed tax rate of 28.5%) for a deduction equal to the grant date fair value of the options.

We may reserve shares for the exercise of stock options and the grant of stock awards under a stock-based benefit plan in excess of 10% and 4%, respectively, of our total outstanding shares if the stock-based benefit plan is adopted more than one year following the stock offering. In addition, we may grant options and award shares that

vest more rapidly than over a five-year period if the stock-based benefit plan is adopted more than one year following the stock offering.

As discussed under "How We Intend to Use the Proceeds from the Stock Offering," PFS Bancorp intends to contribute to Peru Federal $6.9 million, $8.3 million, $9.6 million and $11.2 million of the net offering proceeds at the minimum, midpoint, maximum, and adjusted maximum of the offering range, respectively. PFS Bancorp will retain the remainder of the net offering proceeds and use a portion to make a loan to the employee stock ownership plan and to contribute $100,000 in cash to the charitable foundation, and retain the remainder for future use.

The pro forma table does not give effect to: (i) withdrawals from deposit accounts at Peru Federal to purchase shares of common stock in the stock offering; (ii) PFS Bancorp's results of operations after the conversion and stock offering; or (iii) changes in the market price of the shares of common stock after the conversion and stock offering.

The following pro forma information may not represent the financial effects of the stock offering at the date on which the stock offering actually occurs and you should not use the table to indicate future results of operations. Pro forma stockholders' equity represents the difference between the stated amount of our assets and liabilities, computed according to GAAP. We did not increase or decrease stockholders' equity to reflect the difference between the carrying value of loans and other assets and their market value. Pro forma stockholders' equity is not intended to represent the fair market value of the shares of common stock and may be different than the amounts that would be available for distribution to stockholders if we liquidated. Pro forma stockholders' equity does not give effect to the impact of intangible assets, bad debt reserve or the liquidation account we will establish in the conversion in the unlikely event we are liquidated.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **At or for the Year Ended December 31, 2022 Based on the Sale at $10.00 Per <br> Share of:** | **At or for the Year Ended December 31, 2022 Based on the Sale at $10.00 Per <br> Share of:** | **At or for the Year Ended December 31, 2022 Based on the Sale at $10.00 Per <br> Share of:** | **At or for the Year Ended December 31, 2022 Based on the Sale at $10.00 Per <br> Share of:** |
|  | **1,530,000 Shares** | **1,800,000 Shares** | **2,070,000 Shares** | **2,380,500 Shares <sup>(1)</sup>** |
|  | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** |
| Gross offering proceeds | $15300 | $18000 | $20700 | $23805 |
| Plus: Market value of common stock contributed to charitable foundation | 400 | 400 | 400 | 400 |
| Pro forma market capitalization | 15700 | 18400 | 21100 | 24205 |
| Gross offering proceeds | $15300 | $18000 | $20700 | $23805 |
| Less: Estimated expenses | (1500 | (1500 | (1500 | (1500 |
| &nbsp;&nbsp;&nbsp;Estimated net proceeds | 13800 | 16500 | 19200 | 22305 |
| &nbsp;&nbsp;&nbsp;Less: Cash contribution to charitable foundation | (100) | (100) | (100) | (100) |
| &nbsp;&nbsp;&nbsp;Less: Common stock acquired by ESOP <sup>(2)</sup> | (1256) | (1472) | (1688) | (1936) |
| &nbsp;&nbsp;&nbsp;Less: Common stock acquired by stock-based benefit plans <sup>(3)(4)</sup> | (628 | (736 | (844 | (968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Estimated net proceeds | $11816 | $14192 | $16568 | $19301 |
| **<u>For the Year Ended December 31, 2022</u>** |  |  |  |  |
| Consolidated net income: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Historical | $831 | $831 | $831 | $831 |
| Pro forma adjustments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Income on adjusted net proceeds | 337 | 405 | 473 | 551 |
| &nbsp;&nbsp;&nbsp;Employee stock ownership plan <sup>(2)</sup> | (36) | (42) | (48) | (55) |
| &nbsp;&nbsp;&nbsp;Stock awards <sup>(3)</sup> | (90) | (105) | (121) | (138) |
| &nbsp;&nbsp;&nbsp;Stock options <sup>(4)</sup> | (119 | (139 | (160 | (183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma net income | $923 | $950 | $975 | $1006 |
| Income per share: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Historical | $0.57 | $0.49 | $0.42 | $0.37 |
| Pro forma adjustments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Income on adjusted net proceeds | 0.23 | 0.23 | 0.23 | 0.23 |
| &nbsp;&nbsp;&nbsp;Employee stock ownership plan <sup>(2)</sup> | (0.02) | (0.02) | (0.02) | (0.02) |
| &nbsp;&nbsp;&nbsp;Stock awards <sup>(3)</sup> | (0.06) | (0.06) | (0.06) | (0.06) |
| &nbsp;&nbsp;&nbsp;Stock options <sup>(4)</sup> | (0.08 | (0.08 | (0.08 | (0.08 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma earnings per share | $0.64 | $0.56 | $0.50 | $0.45 |
| Offering price to pro forma net earnings per share | 15.63 | 17.86 | 20.00 | 22.22 |
| Number of shares used in earnings per share calculations | 1449424 | 1698688 | 1947952 | 2234606 |
| **<u>At December 31, 2022</u>** |  |  |  |  |
| Stockholders' equity: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Historical | $20139 | $20139 | $20139 | $20139 |
| &nbsp;&nbsp;&nbsp;Estimated net proceeds | 13800 | 16500 | 19200 | 22305 |
| &nbsp;&nbsp;&nbsp;Shares contributed to charitable foundation | 400 | 400 | 400 | 400 |
| &nbsp;&nbsp;&nbsp;Less: After-tax cost of shares contribution to charitable foundation | (358) | (358) | (358) | (358) |
| &nbsp;&nbsp;&nbsp;Less: Common stock acquired by employee stock ownership plan <sup>(2)</sup> | (1256) | (1472) | (1688) | (1936) |
| &nbsp;&nbsp;&nbsp;Less: Common stock acquired by stock-based benefit plans <sup>(3)(4)</sup> | (628 | (736 | (844 | (968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma stockholders' equity <sup>(5)</sup> | $32097 | $34473 | $36849 | $39582 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma tangible stockholders' equity <sup>(5)</sup> | $32097 | $34473 | $36849 | $39582 |
| Stockholders' equity per share: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Historical | $12.83 | $10.95 | $9.54 | $8.32 |
| &nbsp;&nbsp;&nbsp;Estimated net proceeds | 8.79 | 8.97 | 9.10 | 9.21 |
| &nbsp;&nbsp;&nbsp;Common stock contributed to charitable foundation | 0.25 | 0.22 | 0.19 | 0.17 |
| &nbsp;&nbsp;&nbsp;Less: After-tax cost of contribution to charitable foundation plan <sup>(6)</sup> | (0.23) | (0.20) | (0.17) | (0.15) |
| &nbsp;&nbsp;&nbsp;Less: Common stock acquired by employee stock ownership plan <sup>(2)</sup> | (0.80) | (0.80) | (0.80) | (0.80) |
| &nbsp;&nbsp;&nbsp;Less: Common stock acquired by stock-based benefit plans <sup>(3)(4)</sup> | (0.40 | (0.40 | (0.40 | (0.40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma stockholders' equity per share <sup>(5)</sup> | $20.44 | $18.74 | $17.46 | $16.35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma tangible stockholders' equity per share <sup>(5)</sup> | $20.44 | $18.74 | $17.46 | $16.35 |
| &nbsp;&nbsp;&nbsp;Offering price as percentage of pro forma stockholders' equity per share | 48.92 | 53.36 | 57.27 | 61.16 |
| &nbsp;&nbsp;&nbsp;Offering price as percentage of pro forma tangible stockholders' equity per share | 48.92 | 53.36 | 57.27 | 61.16 |
| &nbsp;&nbsp;&nbsp;Number of shares outstanding for pro forma book value per share calculations | 1570000 | 1840000 | 2110000 | 2420500 |

---

*(footnotes on following page)*

(1) As adjusted to give effect to an increase in the number of shares which could occur due to a 15% increase in the offering range to
reflect demand for the shares or changes in market conditions following the commencement of the stock offering.

(2) Assumes that the employee stock ownership plan will purchase 8% of the sum of the shares of common stock sold in the stock offering
and contributed to the charitable foundation. For purposes of this table, the funds used to acquire these shares are assumed to have been
borrowed by the employee stock ownership plan from PFS Bancorp. Peru Federal intends to make annual contributions to the employee stock
ownership plan in an amount at least equal to the required principal and interest payments on the debt. Peru Federal's total annual
payments on the employee stock ownership plan debt are based upon 25 equal annual installments of principal and interest. Financial Accounting
Standards Board Accounting Standards Codification 718-40, "Employers' Accounting for Employee Stock Ownership Plans"
("ASC 718-40") requires that an employer record compensation expense in an amount equal to the fair value of the shares committed
to be released to employees. The pro forma adjustments assume that the shares are allocated in equal annual installments based on the
number of loan repayment installments assumed to be paid by Peru Federal, the fair value of the common stock remains equal to the subscription
price and the employee stock ownership plan expense reflects an effective tax rate of 28.5%. The unallocated shares are reflected as a
reduction of stockholders' equity. No reinvestment is assumed on proceeds contributed to fund the employee stock ownership plan.
The pro forma net income for the year ended December 31, 2022 assumes that 5,024, 5,888, 6,752 and 7,745 shares were committed to
be released during the period at the minimum, midpoint, maximum, and adjusted maximum of the offering range, respectively. According to
ASC 718-40, only the shares committed to be released during the period were considered outstanding for purposes of income per share calculations.

(3) If approved by PFS Bancorp's stockholders, a stock-based benefit plan may purchase an aggregate number of shares of common stock
equal to 4% of the sum of the number of shares sold in the stock offering and contributed to the charitable foundation (or possibly a
greater percentage if the plan is implemented more than one year after completion of the conversion and stock offering, or a lesser percentage
if Peru Federal were to have a Tier 1 leverage ratio of less than 10.0% within one year of the completion of the conversion and stock
offering). Stockholder approval of the stock-based benefit plan, and purchases by the plan, may not occur earlier than six months after
the completion of the conversion and stock offering. The shares may be acquired directly from PFS Bancorp or through open market purchases.
The funds to be used by the stock-based benefit plans to purchase the shares will be provided by PFS Bancorp. The table assumes that (i) the
stock-based benefit plan acquires the shares through open market purchases at $10.00 per share, (ii) 20% of the amount contributed
to the stock-based benefit plan is amortized as an expense during the period, and (iii) the stock-based benefit plan expense reflects
an effective tax rate of 28.5%. Assuming stockholder approval of the stock-based benefit plan and that shares of common stock equal to
4% of the sum of the number of shares sold in the stock offering and contributed to the charitable foundation are awarded through the
use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately
3.85%.

(4) If approved by PFS Bancorp's stockholders, a stock-based benefit plan may grant options to acquire an aggregate number of shares
of common stock equal to 10% of the sum of the number of shares to be sold in the stock offering and contributed to the charitable foundation
(or possibly a greater percentage if the plan is implemented more than one year after completion of the conversion and stock offering).
Stockholder approval of the stock-based benefit plan may not occur earlier than six months after the completion of the conversion and
stock offering. In calculating the pro forma effect of the stock options to be granted under a stock-based benefit plan, it is assumed
that the exercise price of the stock options and the trading price of the common stock at the date of grant were $10.00 per share, the
estimated grant-date fair value determined using the Black-Scholes option pricing model was $4.07 for each option, and the aggregate grant-date
fair value of the stock options was amortized to expense on a straight-line basis over a five-year vesting period of the options. The
actual expense of the stock options to be granted under the stock-based benefit plan will be determined by the grant-date fair value of
the options, which will depend on a number of factors, including the valuation assumptions used in the option pricing model ultimately
adopted. Under the above assumptions, the adoption of the stock-based benefit plan will result in no additional shares under the treasury
stock method for purposes of calculating earnings per share. There can be no assurance that the actual exercise price of the stock options
will be equal to the offering price pf $10.00 per share. If a portion of the shares to satisfy the exercise of options under the stock-based
benefit plans is obtained from the issuance of authorized but unissued shares, our net income per share and stockholders' equity
per share would decrease. Assuming stockholder approval of the stock-based benefit plan and that shares of common stock used to fund stock
options (equal to 10% of the sum of the number of shares sold in the stock offering and contributed to the charitable foundation) are
awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests
diluted by approximately 9.09%.

(5) The retained earnings of Peru Federal will be substantially restricted after
the conversion. See "Our Dividend Policy," "The Conversion and Stock Offering – Liquidation Rights"
and "Regulation and Supervision." The number of shares used to calculate pro forma stockholders' equity per share is
equal to the total number of shares to be outstanding upon completion of the conversion and stock offering.

**COMPARISON OF INDEPENDENT VALUATION AND PRO FORMA INFORMATION WITH AND WITHOUT THE CHARITABLE FOUNDATION**

As reflected in the table below, if the charitable foundation is not established and funded in connection with the conversion and stock offering, more shares of PFS Bancorp common stock would be sold in the stock offering. At the minimum, midpoint, maximum, and adjusted maximum of the valuation range, the amount of the stock sold in the stock offering is $15.3 million, $18.0 million, $20.7 million and $23.8 million, respectively, with the charitable foundation, compared to $15.9 million, $18.8 million, $21.6 million and $24.8 million, respectively, without the charitable foundation. However, due to the size of the contribution to the charitable foundation, Feldman Financial determined that the additional capital that would be received, assuming the conversion and stock offering is completed without the establishment of the charitable foundation, was immaterial to the pro forma valuation. Accordingly, the pro forma valuation is unchanged with or without the charitable foundation.

For comparative purposes only, set forth below are certain pricing ratios, financial data and ratios at and for the year ended December 31, 2022, at the minimum, midpoint, maximum, and adjusted maximum of the offering range, assuming the conversion and stock offering was completed at the beginning of the period, with and without the charitable foundation.

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| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Minimum of Offering Range** | **Minimum of Offering Range** | **Minimum of Offering Range** |  | **Midpoint of Offering Range** | **Midpoint of Offering Range** | **Midpoint of Offering Range** |  | **Maximum of Offering Range** | **Maximum of Offering Range** | **Maximum of Offering Range** |  | **Adjusted Maximum of Offering<br> Range** | **Adjusted Maximum of Offering<br> Range** | **Adjusted Maximum of Offering<br> Range** |  |
|  | **With<br> Foundation** |  | **Without<br> Foundation** |  | **With<br> Foundation** |  | **Without<br> Foundation** |  | **With<br> Foundation** |  | **Without<br> Foundation** |  | **With<br> Foundation** |  | **Without<br> Foundation** |  |
|  | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** | **(Dollars in thousands, except per share amounts)** |  |
| Estimated offering amount | $15300 |  | $15938 |  | $18000 |  | $18750 |  | $20700 |  | $21563 |  | $23805 |  | $24797 |  |
| Pro forma market capitalization | 15700 |  | 15938 |  | 18400 |  | 18750 |  | 21100 |  | 21563 |  | 24205 |  | 24797 |  |
| Pro forma total assets | 186092 |  | 186659 |  | 188468 |  | 189134 |  | 190844 |  | 191609 |  | 193577 |  | 194455 |  |
| Pro forma total liabilities | 153995 |  | 153995 |  | 153995 |  | 153995 |  | 153995 |  | 153995 |  | 153995 |  | 153995 |  |
| Pro forma stockholders' equity | 32097 |  | 32664 |  | 34473 |  | 35139 |  | 36849 |  | 37614 |  | 39582 |  | 40460 |  |
| Pro forma net income <sup>(1)</sup> | 923 |  | 941 |  | 950 |  | 967 |  | 975 |  | 995 |  | 1006 |  | 1025 |  |
| Pro forma stockholders' equity per share | $20.44 |  | $20.50 |  | $18.74 |  | $18.74 |  | $17.46 |  | $17.44 |  | $16.35 |  | $16.32 |  |
| Pro forma net income per share | $0.64 |  | $0.64 |  | $0.56 |  | $0.56 |  | $0.50 |  | $0.50 |  | $0.45 |  | $0.45 |  |
| **Pro forma pricing ratios:** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Offering price as a percentage of pro forma stockholders' equity per share | 48.92 | % | 48.78 | % | 53.36 | % | 53.36 | % | 57.27 | % | 57.34 | % | 61.16 | % | 61.27 | % |
| Offering price to pro forma net income per share | 15.63 | x | 15.63 | x | 17.86 | x | 17.86 | x | 20.00 | x | 20.00 | x | 22.22 | x | 22.22 | x |
| Offering price to pro forma assets per share | 8.44 | % | 8.54 | % | 9.76 | % | 9.91 | % | 11.06 | % | 11.25 | % | 12.50 | % | 12.75 | % |
| **Pro forma financial ratios:** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Return on assets | 0.50 | % | 0.50 | % | 0.50 | % | 0.51 | % | 0.51 | % | 0.52 | % | 0.52 | % | 0.53 | % |
| Return on equity | 2.88 | % | 2.88 | % | 2.76 | % | 2.75 | % | 2.65 | % | 2.65 | % | 2.54 | % | 2.53 | % |
| Equity to assets | 17.25 | % | 17.50 | % | 18.29 | % | 18.58 | % | 19.31 | % | 19.63 | % | 20.45 | % | 20.81 | % |

---

*(footnote on following page)*

(1) The following table shows the estimated
 after-tax expense associated with the contribution to the charitable foundation, as well
 as pro forma net income, pro forma net income per share, pro forma income on assets and pro
 forma income on stockholders' equity assuming the contribution to the charitable foundation
 was expensed during the year ended December 31, 2022 (dollars in thousands).

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Minimum of <br> Offering Range** | **Midpoint of <br> Offering Range** | **Maximum of<br> Offering Range** | **Adjusted Maximum of <br> Offering Range** |
| After-tax expense of stock and cash contribution to charitable foundation | $(358) | $(358) | $(358) | $(358) |
| Pro forma net income | $565 | $592 | $617 | $648 |
| Pro forma net income per share | $0.39 | $0.35 | $0.32 | $0.29 |
| Offering price to pro forma net income per share | 25.64 | 28.57 | 31.25 | 34.48 |
| Pro forma income as a percentage of total assets | 0.30 | 0.31 | 0.32 | 0.33 |
| Pro forma income as a percentage of stockholders' equity | 1.76 | 1.72 | 1.67 | 1.64 |

---

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

This discussion and analysis reflects our financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from the consolidated financial statements, which appear beginning on page F-1 of this prospectus. You should read the information in this section in conjunction with the business and financial information regarding PFS Bancorp provided in this prospectus.

**Overview**

After the completion of the conversion and stock offering, PFS Bancorp will conduct its operations primarily through Peru Federal. Peru Federal's business consists primarily of accepting deposits from the general public and investing those deposits, together with funds generated from operations, in residential real estate loans and, to a lesser extent, commercial real estate loans, agricultural mortgage loans, construction and land development loans, commercial loans, home equity loans and lines of credit, and consumer loans. We also invest in securities, which have historically consisted primarily of U.S. government and agency securities, mortgage-backed securities and obligations issued by U.S. government sponsored enterprises, and state and municipal securities. We offer a variety of deposit accounts including checking accounts, savings accounts and certificate of deposit accounts. Peru Federal is subject to comprehensive regulation and examination by the OCC.

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations also are affected by our provisions for loan losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of service charges on deposit accounts, other service charges and fees, and income from bank owned life insurance. Non-interest expense currently consists primarily of expenses related to salaries and employee benefits, occupancy and equipment, data processing, contract services, director fees, and other expenses.

We invest in bank owned life insurance to provide us with a funding source to offset some costs of our benefit plan obligations. Bank owned life insurance provides us with non-interest income that is nontaxable. Federal regulations generally limit our investment in bank owned life insurance to 25% of our Tier 1 capital plus our allowance for loan losses. At December 31, 2022, our investment in bank owned life insurance was $3.8 million, which was within this investment limit.

Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

**Business Strategy**

Our principal objective is to build long-term value for our stockholders by operating a profitable community-oriented financial institution dedicated to meeting the banking needs of our customers by emphasizing personalized and efficient customer service. Highlights of our current business strategy include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Continue to focus on originating one- to four-family residential mortgage loans for retention in our portfolio.*** We are primarily a one- to four-family residential mortgage loan lender
 for borrowers in our primary market area. At December 31, 2022, $61.1 million, or 71.5%
 of our total loan portfolio, consisted of residential mortgage loans. We expect that residential
 mortgage lending will remain our primary lending activity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Grow and diversify our loan portfolio prudently by increasing originations of commercial real estate loans and commercial loans*.** Although we intend to continue our historical focus on the origination
 of residential mortgage loans, we intend to prudently increase our originations of commercial
 real estate loans and commercial loans to diversify our loan portfolio and increase yield.
 At December 31, 2022, commercial real estate loans (including agricultural real estate

loans) amounted to $17.9 million, or 20.9% of total loans, and commercial amounted to $2.1 million, or 2.5% of total loans.

Commercial real estate loans and commercial loans have higher credit risk than one- to four-family residential mortgage loans. See "Risk Factors – Risks Related to Our Lending Activities – Our commercial real estate loans and agricultural real estate loans involve credit risks that could adversely affect our financial condition and results of operations" and "Business of Peru Federal – Loan Underwriting Risks."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Maintain our strong asset quality through conservative loan underwriting.*** We intend to maintain strong
 asset quality through what we believe are our conservative underwriting standards and credit
 monitoring processes. At December 31, 2022, our nonperforming assets totaled $623,000,
 or 0.36% of total assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Continue to grow low-cost "core" deposits.*** We consider our core deposits to include all
 deposits other than certificates of deposit. We will continue our efforts to increase our
 core deposits to provide a stable source of funds to support loan growth at costs consistent
 with improving our interest rate spread and net interest margin. Core deposits totaled $104.4
 million, or 68.3% of total deposits, at December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Remain a community-oriented institution and relying on high quality service to maintain and build a loyal local customer base*.** We were established in 1887 and have been
 operating continuously in Peru, Illinois, since that time. Through the goodwill we have
 developed over years of providing timely, efficient banking services, we believe that we
 have been able to attract a loyal base of local retail customers on which we hope to continue
 to build our banking business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Grow organically and through opportunistic branching.*** We intend to grow our balance sheet organically
 on a managed basis, and the capital we are raising in the stock offering will enable us to
 increase our lending and investment capacity. In addition to organic growth, we may also
 consider expansion opportunities in our market area or in contiguous markets that we believe
 would enhance both our franchise value and stockholder returns. These opportunities may include
 establishing loan production offices, establishing new, or de novo, branch offices and/or
 acquiring branch offices. The capital we are raising in the stock offering would help us
 fund any such opportunities that may arise. We have no current plans or intentions regarding
 any such expansion activities.

We expect these strategies to guide our investment of the net proceeds of the stock offering. We intend to continue to pursue these business strategies after the conversion and stock offering, subject to changes necessitated by future market conditions, regulatory restrictions and other factors.

**Anticipated Increase in Noninterest Expense**

Following the completion of the conversion and stock offering, our noninterest expense is expected to increase because of the increased costs associated with operating as a public company 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 a stock-based benefit plan, if approved by our stockholders, no earlier than six months after the completion of the conversion and stock offering. See "Summary – Benefits to Management and Potential Dilution to Stockholders Resulting from the Conversion and Stock Offering;" "Risk Factors – Risks Related to the Stock Offering – Our stock-based benefit plans will increase our expenses and reduce our income;" and "Management – Benefit to be Considered Following Completion of the Conversion and Stock Offering."

**Critical Accounting Policies and Use of Critical Accounting Estimates**

The discussion and analysis of the financial condition and results of operations are based on our financial statements, which are prepared in conformity with GAAP. The preparation of these financial statements requires

management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an "emerging growth company" we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.

The following represent our critical accounting policies:

***Allowance for Loan Losses.*** The allowance for loan losses is the estimated amount considered necessary to cover inherent, but unconfirmed, credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for losses on loans which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of our most critical accounting policies.

Management performs a quarterly evaluation of the allowance for loan losses. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change.

The analysis has two components, specific and general allowances. The specific percentage allowance is for unconfirmed losses related to loans that are determined to be impaired. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. If the fair value of the loan is less than the loan's carrying value, a charge is recorded for the difference. The general allowance, which is for loans reviewed collectively, is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis establishes historical loss percentages and qualitative factors that are applied to the loan groups to determine the amount of the allowance for loan losses necessary for loans that are reviewed collectively. The qualitative component is critical in determining the allowance for loan losses as certain trends may indicate the need for changes to the allowance for loan losses based on factors beyond the historical loss history. Not incorporating a qualitative component could misstate the allowance for loan losses. Actual loan losses may be significantly more than the allowances we have established which could result in a material negative effect on our financial results.

***Deferred Tax Assets.*** We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Determining the proper valuation allowance for deferred taxes is critical in properly valuing the deferred tax asset and the related recognition of income tax expense or benefit. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets.

***Fair Value Measurements*** **.** The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Peru Federal estimates the fair value of a financial instrument and any related asset impairment using a variety of valuation methods. Where financial instruments are actively traded and have quoted market prices, quoted market prices are used for fair value. When the financial instruments are not actively traded, other observable market inputs, such as quoted prices of securities with similar characteristics, may be used, if available, to determine fair value. When observable market prices do not exist, we estimate fair value. These estimates are subjective in nature and imprecision in estimating these factors can impact the amount of gain or loss recorded. For a detailed description of the fair values measured at each level of the fair value hierarchy and the methodology we use, see note 16 of the notes to consolidated financial statements.

**Comparison of Financial Condition at December 31, 2022 and 2021**

***Total Assets.*** Total assets were $174.1 million at December 31, 2022, a decrease of $11.5 million, or 6.2%, compared to $185.6 million at December 31, 2021. This decrease was primarily due to a decrease in deposits of $3.2 million, the payoff of a Federal Home Loan advance of $5 million, and a $4.1 million decrease in the net market value of available-for-sale securities.

***Cash and Due from Banks.*** Cash and due from banks decreased by $8.8 million, or 40.9%, to $12.7 million at December 31, 2022 from $21.5 million at December 31, 2021. The decrease was primarily due to the payoff of a $5.0 million Federal Home Loan bank advance and a decrease in deposits of $3.2 million.

***Available-For-Sale Investment Securities.*** Investment securities decreased $8.4 million, or 11.7%, to $63.3 million at December 31, 2022 from $71.7 million at December 31, 2021. Mortgage-backed securities decreased $3.4 million, or 8.2%, to $38.2 million at December 31, 2022 from $41.6 million at December 31, 2021. U.S. government agency securities decrease by $2.2 million, or 29.4%, to $5.3 million at December 31, 2022 from $7.5 million at December 31, 2021. Municipal securities decreased $2.8 million, or 12.4%, to $19.8 million at December 31, 2022 from $22.6 million at December 31, 2021. Aggregate securities purchases of $18.0 million during the year ended December 31, 2022 were partially offset by sales, calls, maturities and repayments of $19.5 million.

The average yield on investment securities increased to 2.10% for the year ended December 31, 2022 from 1.81% for the year ended December 31, 2021, as a result of the maturity of lower yielding securities and the effects of the rising interest rate environment.

***Loans, Net.*** Loans, net, increased by $4.1 million, or 5.0%, to $84.9 million at December 31, 2022 from $80.8 million at December 31, 2021. During the year ended December 31, 2022, loan originations totaled $19.4 million, comprised of $11.5 million of one-to-four family residential mortgage loans, $5.4 million of commercial real estate loans, $1.1 million of commercial and industrial loans, and $1.4 million of consumer loans.

During the year ended December 31, 2022, one-to-four family residential mortgage loans increased $4.4 million, or 7.7%, to $61.1 million at December 31, 2022 from $56.7 million at December 31, 2021, commercial real estate loans increased $176,000, or 0.99%, to $17.9 million from $17.7 million at December 31, 2021, construction and land development loans decreased $516,000, or 25.4%, to $1.5 million from $2 million at December 31, 2021, commercial loans decreased by $86,000, or 3.9%, to $2.1 million at December 31, 2022 from $2.2 million at December 31, 2021 and consumer loans increased by $75,000, or 2.7%, to $2.8 million at December 31, 2022 from $2.7 million at December 31, 2021.

Increases in loan balances reflect our strategy to grow our loan portfolio, continuing to focus primarily on owner-occupied one-to-four family residential real estate loan and commercial loans. Management intends to continue this strategy in future periods.

***Deposits.*** Deposits decreased by $3.2 million, or 2.1%, to $152.7 million at December 31, 2022 from $155.9 at December 31, 2021. Core deposits (defined as deposits other than certificates of deposit) decreased by $4.5 million, or 4.2%, to $104.4 million at December 31, 2022 from $108.9 million at December 31, 2021.

Certificates of deposit increased $1.3 million, or 2.8%, to $48.3 million at December 31, 2022 from $47.0 million at December 31, 2021. The decline in deposits was primarily due to consumer spending of COVID-related stimulus funds. The increase in certificates of deposit was due to the shift from core deposits to higher yielding certificates of deposit due to the increase in market interest rates.

Management continued its strategy of pursuing growth in demand accounts and lower cost core deposits with market conditions affecting this strategy in the current year. Management intends to continue its efforts to increase core deposits, with an emphasis on growth in consumer and business demand deposits.

***Total Equity Capital.*** Total equity capital decreased by $3.3 million, or 14.1%, to $20.1 million at December 31, 2022 from $23.4 million at December 31, 2021. The decrease resulted from accumulated other comprehensive income (as a result of market value adjustment of available-for-sale securities due to accelerated raising rates during the year) declining $4.1 million partially offset by $831,000 from net income during the year ended December 31, 2022.

***Average Balances and Yields*** **.** The following table sets forth average balance sheets, average yields and costs, and certain other information for the years indicated. No tax-equivalent yield adjustments have been made, as the effects are immaterial. Average balances are calculated using daily average balances. Non-accrual loans are included in average balances only. Average yields include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Net deferred loan fees/costs are immaterial.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
|  | **At December<br> 31,**<br>**2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Weighted<br> Average<br> Yield/Rate** | **Average<br> Outstanding<br> Balance** | **Interest** | **Average<br> Yield/Rate** | **Average<br> Outstanding<br> Balance** | **Interest** | **Average<br> Yield/Rate** |
|  | | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| **Interest-earning assets:** |  |  |  |  |  |  |  |
| Cash and cash equivalents | 4.31% | $16258 | $169 | 1.04% | $17700 | $8 | 0.05% |
| Available-for-sale debt securities | 2.34 | 69006 | 1251 | 1.81 | 71271 | 1108 | 1.55 |
| Held-to-maturity debt securities | 2.82 | 2732 | 64 | 2.34 | 3225 | 65 | 2.02 |
| Equity securities |  | 117 | 2 | 1.70 | 148 |  |  |
| Loans, net | 4.09 | 83163 | 3306 | 3.98 | 81553 | 3395 | 4.16 |
| Federal Home Loan Bank stock |  | 343 | 11 | 3.14 | 310 | 8 | 2.72 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest-earning assets | 3.40 | 171619 | 4803 | 2.80 | 174207 | 4584 | 2.63 |
| Noninterest-earning assets |  | 9182 |  |  | 7646 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total assets |  | $180801 |  |  | $181853 |  |  |
| **Interest-bearing liabilities:** |  |  |  |  |  |  |  |
| Regular savings deposits | 0.09% | $37542 | 70 | 0.19% | $34775 | 68 | 0.20% |
| NOW savings deposits | 0.47 | 26583 | 30 | 0.11 | 24485 | 24 | 0.10 |
| Money market deposits | 0.92 | 29365 | 141 | 0.48 | 27014 | 59 | 0.22 |
| Time deposits | 1.50 | 46021 | 399 | 0.87 | 48208 | 460 | 0.95 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing deposits | 0.83 | 139511 | 640 | 0.46 | 134482 | 611 | 0.45 |
| Federal Home Loan Bank advances |  | 1769 |  |  | 4581 |  |  |
| Other interest-bearing liabilities |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | 0.83 | 141280 | 640 | 0.45 | 139063 | 611 | 0.44 |
| Noninterest-bearing demand deposits |  | 17493 |  |  | 18130 |  |  |
| Other noninterest-bearing liabilities |  | 1261 |  |  | 1214 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities |  | 160034 |  |  | 158407 |  |  |
| Total equity capital |  | 20767 |  |  | 23446 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and equity capital |  | 180801 |  |  | 181853 |  |  |
| Net interest income |  |  | $4163 |  |  | $3973 |  |
| Net interest rate spread <sup>(1)</sup> | 2.57% |  |  | 2.35% |  |  | 2.19% |
| Net interest-earning assets <sup>(2)</sup> |  | $30339 |  |  | $35144 |  |  |
| Net interest margin <sup>(3)</sup> |  |  |  | 2.42% |  |  | 2.28% |
| Average interest-earning assets to interest-bearing liabilities |  | 121.47% |  |  | 125.27% |  |  |

---

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

(2) Net interest-earning assets represent total
 interest-earning assets less total interest-bearing liabilities.

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

**Rate/Volume Analysis**

The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31, 2022 vs. 2021** | **Year Ended December 31, 2022 vs. 2021** | **Year Ended December 31, 2022 vs. 2021** |
|  | **Increase (Decrease) Due to:** | **Increase (Decrease) Due to:** | |
|  | **Volume** | **Rate** | **Total Increase**<br>**(Decrease)** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| **Interest-earning assets:** |  |  |  |
| Cash and cash equivalents | $(1) | $162 | $161 |
| Available-for-sale debt securities | (35) | 178 | 143 |
| Held-to-maturity debt securities | (10) | 9 | (1) |
| Equity securities |  | 2 | 2 |
| Loans, net | 67 | (156) | (89) |
| Federal Home Loan Bank stock | 1 | 2 | 3 |
| &nbsp;&nbsp;&nbsp;Total interest-earning assets | 22 | 197 | 219 |
| **Interest-bearing liabilities:** |  |  |  |
| Regular savings deposits | 5 | (3) | 2 |
| NOW savings deposits | 2 | 4 | 6 |
| Money market deposits | 5 | 77 | 82 |
| Time deposits | (21) | (40) | (61) |
| &nbsp;&nbsp;&nbsp;Total deposits | (9) | 38 | 29 |
| Federal Home Loan Bank advances |  |  |  |
| Other interest-bearing liabilities |  |  |  |
| &nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | (9) | 38 | 29 |
| Change in net interest income | $31 | $159 | $190 |

---

**Comparison of Operating Results for the Years Ended December 31** **, 2022 and 2021**

***General.*** Net income for the year ended December 31, 2022 was $831,000, a decrease of $171,000, or 17.1%, compared to $1.0 million for the year ended December 31, 2021. The decrease in net income was primarily due to an increase in noninterest expense of $263,000, a $221,000 loss on sale of available-for-sale securities and a decrease in other non-interest income of $151,000, partially offset by a $190,000 increase in net interest income.

***Interest Income.*** Interest income increased by $219,000, or 4.8%, to $4.8 million at December 31, 2022 from $4.6 million at December 31, 2021. The increase in interest income is attributed to a $157,000, or 262% increase in other interest income, a $150,000, or 13.5%, increase in interest on investment securities and a $89,000, or 2.6%, decrease in interest on loans.

The average balance on loans during the year ended December 31, 2022 increased by $1.6 million, or 2.0%, from the year ended December 31, 2021. The average yield on loans decreased to 3.98% for the year ended December 31, 2022 from 4.16% for the year ended December 31, 2021 due to less fee income generated as loans originated in 2022 were not sold.

The average balance of available-for-sale investment securities decreased $2.2 million to $69.0 million for the year ended December 31, 2022 from $71.2 million for the year ended December 31, 2021. The average yield on available-for-sale investment securities increased to 1.81% for the year ended December 31, 2022 from 1.55% for the year ended December 31, 2021. The increase in the average yield on available-for-sale investment securities was primarily due to the rising market interest rate environment. Interest income on cash and cash equivalents, comprised primarily of deposits in other financial institutions and overnight deposits, increased by $161,000, or 2,012.5%, for the year ended December 31, 2022, due to a decrease in average balance of $1.4 million and an

increase in the average yield to 1.04% for the year ended December 31, 2022 from 0.05% for the year ended December 31, 2021. The increase in average yield was due to the rise in market interest rates.

***Interest Expense.*** Total interest expense increased $29,000, or 4.7%, to $640,000 for the year ended December 31, 2022 from $611,000 for the year ended December 31, 2021. The increase was primarily due to the increase in the average cost of deposits to 0.46% for the year ended December 31, 2022 from 0.45% for the year ended December 31, 2021, reflecting the rising market interest rate environment. The average balance of deposits increased by $5.0 million, or 3.7%, to $139.5 million for the year ended December 31, 2022 from $134.4 million for the year ended December 31, 2021.

***Net Interest Income.*** Net interest income increased $190,000, or 4.8%, to $4.1 million for the year ended December 31, 2022 compared to $4.0 million for the year ended December 31, 2021. The increase reflects the increase in the interest rate spread to 2.35% for the year ended December 31, 2022 from 2.19% for the year ended December 31, 2021, while average net interest-earning assets increased $420,000 year-to-year. The net interest margin increased to 2.42% for the year ended December 31, 2022 from 2.28% for the year ended December 31, 2021. Both the interest rate spread and net interest margin increased due to the rising interest rate environment.

***Provision (Credit) for Loan Losses.*** The provision for loan losses increased by $67,000, to $61,000 for the year ended December 31, 2022 from a credit of $6,000 for the year ended December 31, 2021. The allowance for loan losses decreased by $24,000, or 4.2%, to $543,000 at December 31, 2022 from $567,000 at December 31, 2021. The allowance for loan losses represented 0.64% of total loans at December 31, 2022 and 0.70% of total loans as of December 31, 2021. The determination of the adequacy of the allowance for loan losses was based primarily on the low balances of nonperforming loans, delinquent loans and net charge offs in both periods.

Total non-performing loans were $623,000 at December 31, 2022, compared to $796,000 at December 31, 2021. Classified loans totaled $1.9 million at December 31, 2022, compared to $2.2 million at December 31, 2021, and total past due greater than 30 days were $1.5 million and $1.2 million at those respective dates. As a percentage of nonperforming loans, the allowance for loan losses was 87.16% at December 31, 2022 compared to 72.32% at December 31, 2021.

The allowance for loan losses reflects the estimate management believes to be appropriate to cover incurred probable losses which were inherent in the loan portfolio at December 31, 2022 and 2021. While management believes the estimates and assumptions used in the determination of the adequacy of the allowance are reasonable, such estimates and assumptions could be proven incorrect in the future, and the actual amount of future provisions may exceed the amount of past provisions, and the increase in future provisions that may be required may adversely impact the Peru Federal's financial condition and results of operations. Furthermore, as an integral part of its examination process, the OCC will periodically review our allowance for loan losses. The OCC may have judgements different than those of management, and we may determine to increase our allowance as a result of these regulatory reviews. Any material increases in the allowance for loan losses may adversely affect our financial condition and results of operations.

***Noninterest Income.*** Noninterest income totaled $509,000 for the year ended December 31, 2022, a decrease of $151,000, or 22.9%, from $660,000 for the year ended December 31, 2021. The decrease was primarily due to a $221,000 loss on available-for-sale securities resulting from a $6.3 million bond swap involving the sale of a lower yielding bond and using the sale proceeds to purchase a higher yielding bond. Other noninterest income increased $48,000 to $116,000 for the year ended December 31, 2022 from $68,000 for the year ended December 31, 2021.

***Noninterest Expense.*** Noninterest expense increased $263,000, or 7.8%, to $3.6 million for the year ended December 31, 2022, compared to the year ended December 31, 2021. The increase was due primarily to a $139,000, or 32.0%, increase in data processing expenses (which included a one-time write-off of $83,000 in prepaid fees), an increase in salaries and employee benefits of $40,000, or 2.0%, and an increase in professional services of $52,000, or 52%.

***Provision for Income Taxes.*** The provision for income taxes decreased by $120,000, or 43.6%, to $155,000 for the year ended December 31, 2022, compared to $275,000 for the year ended December 31, 2021. The

decrease was due primarily to a $291,000, or 22.8%, decrease in pretax income. The effective tax rates were 15.6% and 21.5% for the years ended December 31, 2022 and 2021, respectively. The decrease in the effective tax rate was primarily due to the higher level of tax-exempt income from municipal securities during 2022.

**Management of Market Risk**

***General*** **.** Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. All directors participate in discussions during the regular board meetings evaluating the interest rate risk inherent in our assets and liabilities, and the level of risk that is appropriate. These discussions take into consideration our business strategy, operating environment, capital, liquidity and performance objectives consistent with the policy and guidelines approved by them.

Our asset/liability management strategy attempts to manage the impact of changes in interest rates on net interest income, our primary source of earnings. Among the techniques we are using to manage interest rate risk are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· maintaining capital
 levels that exceed the thresholds for well-capitalized status under federal regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· maintaining a high level
 of liquidity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· growing our core deposit
 accounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· managing our investment
 securities portfolio so as to reduce the average maturity and effective life of the portfolio;
 and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· continuing to diversify
 our loan portfolio by adding more commercial real estate loans and commercial loans, which
 typically have shorter maturities and/or balloon payments.

By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.

We have not engaged in hedging activities, such as engaging in futures or options. We do not anticipate entering into similar transactions in the future.

***Economic Value of Equity*** **.** We compute amounts by which the net present value of our assets and liabilities (economic value of equity or "EVE") would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases instantaneously by 100, 200, 300 and 400 basis point increments or decreases instantaneously by 100 or 200 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

The following table sets forth, as of December 31, 2022, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **At December 31, 2022** | **At December 31, 2022** | **At December 31, 2022** | **At December 31, 2022** | **At December 31, 2022** | **At December 31, 2022** |
| | | **Estimated Increase (Decrease) in<br> EVE** | **Estimated Increase (Decrease) in<br> EVE** | **EVE as a Percentage of Present <br> Value of Assets <sup>(3)</sup>** | **EVE as a Percentage of Present <br> Value of Assets <sup>(3)</sup>** |
| <br>**Change in Interest<br> Rates (basis points) <sup>(1)</sup>** |<br>**Estimated <br> EVE <sup>(2)</sup>** | **Amount** | **Percent** | **EVE Ratio <sup>(4)</sup>** | **Increase<br> (Decrease) <br> (basis points)** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| 400 | $22330 | $(15596) | (41.12)% | 15.80% | (676) |
| 300 | 26791 | (11207) | (29.55) | 18.11 | (445) |
| 200 | 30718 | (7208) | (19.01) | 19.90 | (266) |
| 100 | 34565 | (3361) | (8.86) | 21.47 | (109) |
| Level | 37926 |  |  | 22.56 |  |
| (100) | 39471 | 1545 | 4.07 | 22.68 | 12 |
| (200) | 39355 | 1429 | 3.77 | 21.99 | (57) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Assumes
 an immediate uniform change in interest rates at all maturities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) EVE
 is the discounted present value of expected cash flows from assets, liabilities and off-balance
 sheet contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Present
 value of assets represents the discounted present value of incoming cash flows on interest-earning
 assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) EVE
 Ratio represents EVE divided by the present value of assets.

The table above indicates that at December 31, 2022, we would have experienced a 19.01% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 3.77% increase in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.

The following table sets forth, as of December 31, 2021, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **At December 31, 2021** | **At December 31, 2021** | **At December 31, 2021** | **At December 31, 2021** | **At December 31, 2021** | **At December 31, 2021** | **At December 31, 2021** |
| | | **Estimated Increase (Decrease) in <br> EVE** | **Estimated Increase (Decrease) in <br> EVE** | **EVE as a Percentage of Present <br> Value of Assets <sup>(3)</sup>** | **EVE as a Percentage of Present <br> Value of Assets <sup>(3)</sup>** | **EVE as a Percentage of Present <br> Value of Assets <sup>(3)</sup>** |
| <br>**Change in Interest <br> Rates (basis points) <sup>(1)</sup>** |<br>**Estimated <br> EVE <sup>(2)</sup>** | **Amount** | **Percent** | **EVE Ratio <sup>(4)</sup>** | **Increase <br> (Decrease) <br> (basis points)** | **Increase <br> (Decrease) <br> (basis points)** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |  |
| 400 | $21635 | $(5380) | (19.91)% | 13.43% |  | (112) |
| 300 | 23997 | (3108) | (11.17) | 14.39 |  | (16) |
| 200 | 26015 | (1000) | (3.70) | 15.00 |  | 45 |
| 100 | 27503 | 488 | 1.81 | 15.30 |  | 75 |
| Level | 27015 |  |  | 14.55 |  |  |
| (100) | 27322 | 307 | 1.14 | 14.37 |  | (18) |
| (200) | 28102 | 1087 | 4.02 | 14.73 |  | 18 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Assumes
 an immediate uniform change in interest rates at all maturities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) EVE
 is the discounted present value of expected cash flows from assets, liabilities and off-balance
 sheet contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Present
 value of assets represents the discounted present value of incoming cash flows on interest-earning
 assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) EVE
 Ratio represents EVE divided by the present value of assets.

The table above indicates that at December 31, 2021, we would have experienced a 3.70% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 4.02% increase in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.

***Change in Net Interest Income.*** The following table sets forth, at December 31, 2022, the calculation of the estimated changes in our net interest income ("NII") that would result from the designated immediate changes in the United States Treasury yield curve.

---

| | | |
|:---|:---|:---|
| **At December 31, 2022** | **At December 31, 2022** | **At December 31, 2022** |
| &nbsp;&nbsp;**Change in Interest Rates<br> (basis points) <sup>(1)</sup>**  | **Net Interest Income Year 1 <br> Forecast**  | **Year 1 Change from Level**  |
| &nbsp;&nbsp;**(Dollars in thousands)** | &nbsp;&nbsp;**(Dollars in thousands)** | &nbsp;&nbsp;**(Dollars in thousands)** |
| &nbsp;&nbsp;400 | $3325 | (21.68)% |
| &nbsp;&nbsp;300 | 4404 | (4.77)% |
| &nbsp;&nbsp;200 | 4108 | (3.27)% |
| &nbsp;&nbsp;100 | 4180 | (1.57)% |
| &nbsp;&nbsp;Level | 4247 |  |
| &nbsp;&nbsp;(100) | 4307 | 1.42% |
| &nbsp;&nbsp;(200) | 4482 | 5.54% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Assumes an immediate uniform change in interest rates at all maturities.

The table above indicates that at December 31, 2022, we would have experienced a 3.27% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 5.54% increase in net interest income in the event of an instantaneous 200 basis point decrease in market interest rates.

The following table sets forth, as of December 31, 2021, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve.

---

| | | |
|:---|:---|:---|
| **At December 31, 2021** | **At December 31, 2021** | **At December 31, 2021** |
| **Change in Interest Rates<br> (basis points) <sup>(1)</sup>**  | **Net Interest Income Year 1 <br> Forecast** | **Year 1 Change from Level** |
|  | **(Dollars in thousands)** | |
| 400 | $3481 | (12.46)% |
| 300 | 4033 | 1.42 |
| 200 | 4038 | 1.54 |
| 100 | 4044 | 1.68 |
| Level | 3977 |  |
| (100) | 3900 | (1.94) |
| (200) | 3721 | (6.43) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Assumes an immediate uniform change in interest rates at all maturities.

The table above indicate that at December 31, 2021, we would have experienced a 1.54% increase in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 6.43% decrease in net interest income in the event of an instantaneous 200 basis point decrease in market interest rates.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurement. Modeling changes in EVE and NII require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. For instance, the EVE and NII tables presented above assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. However, the shape of the yield curve changes constantly and the value and pricing of our assets and liabilities, including our deposits, may not closely correlate with changes in market interest rates. Accordingly, although the EVE and NII tables may provide an indication of our interest rate risk exposure at a particular point in time and in the context of a particular yield curve, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on EVE and NII and will differ from actual results.

EVE and net interest NII calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.

**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 maturities of securities. We also have the ability to borrow from the Federal Home Loan Bank of Chicago. At December 31, 2022, we had no borrowings from the Federal Home Loan Bank of Chicago but had the capacity to borrow $46.2 million.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. 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, cash flows from investing activities, and cash flows from financing activities. For further information, see the consolidated statements of cash flows contained in the consolidated financial statements appearing elsewhere in this prospectus.

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 December 31, 2022, Peru Federal was categorized as well-capitalized under regulatory capital guidelines. Management is not aware of any conditions or events since the most recent notification that would change our category. For further information, see note 13 to the notes to consolidated financial statements.

***Off-Balance Sheet Arrangements.*** At December 31, 2022, we had $3.6 million of outstanding commitments to originate loans, $563,000 of which represents the balance of remaining funds to be disbursed on construction loans in process. At December 31, 2022, certificates of deposit that are scheduled to mature on or before December 31, 2023 totaled $27.5 million. 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 Federal Home Loan Bank of Chicago advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

**Recent Accounting Pronouncements**

For a discussion of the impact of recent accounting pronouncements, see note 1 of the notes to the consolidated financial statements appearing elsewhere in this prospectus.

**Impact of Inflation and Changing Prices**

The financial statements and related data presented in this prospectus have been prepared according to GAAP which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution's performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

**BUSINESS OF PFS BANCORP**

PFS Bancorp was incorporated in the State of Maryland on February 23, 2023, and has not engaged in any business to date. Upon completion of the conversion and stock offering, it will own all of the issued and outstanding capital stock of Peru Federal. We intend to contribute at least 50% of the net proceeds from the stock offering to Peru Federal. PFS Bancorp will retain the remainder of the net proceeds from the stock offering and use a portion of the retained net proceeds to make a loan to the employee stock ownership plan and contribute $100,000 in cash to the charitable foundation. In the future, we may use the net proceeds to repurchase shares of common stock, subject to our capital needs, regulatory limitations and other factors. We will invest our initial capital as discussed in "How We Intend to Use the Proceeds from the Stock Offering."

Upon the completion of the conversion and stock offering, PFS Bancorp will be the savings and loan holding company of Peru Federal and will be authorized to pursue other business activities permitted by applicable laws and regulations. See "Regulation and Supervision – Holding Company Regulation" for a discussion of the activities that are permitted for savings and loan holding companies.

Following the conversion and stock offering, our cash flow will depend on earnings from the investment of the net proceeds from the stock offering that we retain, and any dividends we receive from Peru Federal. Peru Federal is subject to regulatory limitations on the amount of dividends that it may pay. See "Regulation and Supervision – Federal Banking Regulation – Capital Distributions."

Initially, PFS Bancorp will neither own nor lease any property, but will instead pay a fee to Peru Federal for the use of its premises, equipment and furniture. At the present time, we intend to employ only persons who are officers of Peru Federal to serve as officers of PFS Bancorp. However, we will use periodically the support staff of Peru Federal. We will pay a fee to Peru Federal for the time its employees devote to PFS Bancorp; however, these individuals will not be separately compensated by PFS Bancorp. PFS Bancorp may hire additional employees, as appropriate, to the extent it expands its business in the future.

**BUSINESS OF PERU FEDERAL**

**General**

We conduct our business from our main office and branch office, both located in Peru, Illinois. Our loan portfolio consists primarily of one- to four-family residential mortgage loans. To a substantially lesser extent, we also originate commercial real estate loans, agricultural real estate loans, construction and land development loans, commercial loans, home equity loans and lines of credit, and consumer loans. We originate loans primarily for retention in our portfolio. Depending on market conditions and to manage interest rate risk, we generally sell fixed-rate one-to four-family residential mortgage loans with terms of 20 years or more, and retain the servicing rights. In recent years, we have increased our focus on originating higher yielding commercial real estate loans and commercial loans, and we intend to continue that focus after the conversion and stock offering. We offer a variety of deposit accounts including non-interest bearing demand accounts, interest-bearing demand accounts, savings accounts and certificates of deposit. In addition, we offer electronic banking services including mobile banking, on-line banking and bill pay, and electronic funds transfer via Zelle<sup>®</sup>. We are subject to comprehensive regulation and examination by the OCC, our primary federal regulator.

Our main office is located at 1730 Fourth Street, Peru, Illinois 61354, and the telephone number at that address is (815) 223-4300. Our website address is *www.perufederalsavings.com*. Information on our website is not incorporated into this prospectus and should not be considered part of this prospectus.

**Market Area**

We consider LaSalle County, located in north central Illinois, and contiguous areas of adjacent Bureau County and Putnam County, to be our primary market area for originating loans and gathering deposits, generally within a 30- to 35-mile radius from our offices which encompasses parts of adjacent Bureau County and Putnam County. In terms of population, based on published statistics, LaSalle County (2020 population – approximately

110,000) is the largest of the three counties (Bureau County, 2020 population – approximately 33,000; Putnam County, 2020 population – approximately 5,600). Our primary market area is predominantly rural.

Peru, Illinois, is located on the western border of LaSalle County and within the Illinois Valley formed by the Illinois River. Located near the intersection of Interstates 80 and 39, Peru is located equidistant, approximately 100 miles, between Chicago to the east and the Quad Cities in Iowa to the west and equidistant, approximately 70 miles, between Rockford, Illinois, to the north and Bloomington, Illinois, to the south.

The economy of LaSalle County is historically agricultural, but it has a mix of healthcare, manufacturing and services. Major employers in LaSalle County include OSF Saint Elizabeth Medical Center, Wal-Mart Distribution Center, Constellation Energy – LaSalle County Generating Station, St. Margaret's Hospital, Vactor Manufacturing, Ace Hardware Distribution Center, and Martin Engineering. Agricultural production is primarily focused on corn, soybeans and other crops.

According to published statistics, the 2023 estimated population of LaSalle County is approximately 108,000. The 2023 to 2028 estimated population growth rate for LaSalle County is negative 0.3%, compared to negative 0.2% statewide and positive 0.4% nationwide. Estimated 2023 median household income for La Salle County is approximately $62,900, compared to $77,300 statewide and $73,500 nationwide. The 2023 to 2028 estimated median household income growth rate for LaSalle County is 1.9%, compared to 2.4% statewide and 2.5% nationwide. Estimated 2023 per capita income for LaSalle County is $34,600, compared to $43,500 statewide and $41,300 nationwide. The 2023 to 2028 estimated per capita income growth rate for LaSalle County is 2.3%, compared to 2.5% statewide and 2.6% nationwide. The December 2022 unemployment rate for LaSalle County was 4.7%, compared to 4.2% statewide and 3.3% nationwide.

**Competition**

We face strong competition within our primary market area both in making loans and attracting retail deposits. Our market area includes large money center and regional banks, community banks and savings institutions, and credit unions. We also face competition for loans from mortgage banking firms, consumer finance companies, credit unions, and fintech companies and, with respect to deposits, from money market funds, brokerage firms, mutual funds and insurance companies. At June 30, 2022 (the most recent date for which Federal Deposit Insurance Corporation, referred to as the "FDIC" throughout this prospectus, is publicly available), we were ranked 8<sup>th</sup> among the 23 FDIC-insured financial institutions with offices in LaSalle County, with a deposit market share of 4.64%.

**Lending Activities**

***General.*** Our loan portfolio consists primarily of one-to four-family residential mortgage loans. To a substantially lesser extent, we also originate commercial real estate loans, agricultural real estate loans, construction and land development loans, commercial loans, home equity loans and lines of credit, and consumer loans. We originate loans primarily for retention in our portfolio, and we are not an active seller loans. In recent years, we have increased our focus on originating higher yielding commercial real estate loans and commercial loans, and we intend to continue that focus after the conversion and stock offering.

Commercial real estate loans and commercial have not historically comprised a significant portion of our total loan portfolio. While we expect that one- to four-family residential real estate lending will continue to be the primary emphasis of our lending operations, we intend to modestly increase our emphasis on commercial real estate loans and commercial loans in an effort to increase loan portfolio yield.

We participated in the Paycheck Protection Program ("PPP") administered by the U.S. Small Business Administration. While the PPP was in effect, we originated loans with an aggregate principal balance of $6.2 million. At December 31, 2022, there were no PPP loans outstanding.

***Loan Portfolio Composition.*** The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated. There were no loans held for sale at any date indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** |
|  | **2022** | **2022** | **2021** | **2021** |
|  | **Amount** | **Percent** | **Amount** | **Percent** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Real estate loans: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;One- to four-family residential | $59112 | 69.17% | $55138 | 67.73% |
| &nbsp;&nbsp;&nbsp;Multi-family | 1526 | 1.79 | 1248 | 1.53 |
| &nbsp;&nbsp;&nbsp;Commercial | 16371 | 19.16 | 16473 | 20.24 |
| &nbsp;&nbsp;&nbsp;Construction and land development | 1518 | 1.77 | 2034 | 2.50 |
| Commercial loans | 2116 | 2.48 | 2202 | 2.70 |
| Home equity loans and lines of credit | 2013 | 2.35 | 1584 | 1.95 |
| Consumer loans | 2803 | 3.28 | 2728 | 3.35 |
|  | 85459 | 100.00% | 81407 | 100.00% |
| Less: Allowance for loan losses | 543 |  | 567 |  |
| &nbsp;&nbsp;&nbsp;Net loans | $84916 |  | $80840 |  |

---

***Contractual Maturities.*** The following table sets forth the contractual maturities of our total loan portfolio at December 31, 2022. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. Because the tables present contractual maturities and do not reflect repricing or the effect of prepayments, actual maturities may differ.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | <br>**One- to<br> Four-Family<br> Residential<br> Real Estate** | <br>**Multi-Family<br> and<br> Commercial<br> Real Estate** | <br>**Commercial<br> and Land<br> Development** | <br>**Commercial** | **Home<br> Equity <br> Loans and<br> Lines of<br> Credit** | **Consumer** | **Total** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Amounts due in: |  |  |  |  |  |  |  |
| One year or less | $118 | $563 | $— | $594 | $168 | $95 | $1538 |
| After one year through two years | 204 | 493 |  | 257 | 92 | 245 | 1291 |
| After two years through three years | 476 |  |  | 153 | 396 | 518 | 1543 |
| After three years through five years | 1193 |  |  | 634 | 109 | 1028 | 2964 |
| After five years through 10 years | 5954 | 2793 |  | 363 | 836 | 718 | 10664 |
| After 10 years through 15 years | 16257 | 4364 | 396 |  | 399 | 199 | 21615 |
| After 15 years | 34910 | 9684 | 1122 | 115 | 13 |  | 45844 |
| Total | $59112 | $17897 | $1518 | $2116 | $2013 | $2803 | $85459 |

---

The following table sets forth our fixed and adjustable-rate loans at December 31, 2022 that are contractually due after December 31, 2023.

---

| | | | |
|:---|:---|:---|:---|
|  | **Due After December 31, 2022** | **Due After December 31, 2022** | **Due After December 31, 2022** |
|  | **Fixed** | **Adjustable** | **Total** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Real estate loans: |  |  |  |
| &nbsp;&nbsp;&nbsp;One- to four-family residential | $54613 | $4381 | $58994 |
| &nbsp;&nbsp;&nbsp;Multi-family | 1526 |  | 1526 |
| &nbsp;&nbsp;&nbsp;Commercial | 5836 | 9972 | 15808 |
| &nbsp;&nbsp;&nbsp;Construction and land development | 1373 | 145 | 1518 |
| Commercial loans | 1145 | 377 | 1522 |
| Home equity loans and lines of credit | 1296 | 549 | 1845 |
| Consumer loans | 2088 | 620 | 2708 |
| &nbsp;&nbsp;&nbsp;Total loans | $67877 | $16044 | $83921 |

---

***One- to Four-Family Residential Mortgage Lending*** **.** At December 31, 2022, one-to four-family residential mortgage loans totaled $59.1 million, or 69.2% of total loans. Our one- to four-family residential real estate loans are primarily secured by properties located in our primary market area.

Our one- to four-family residential real estate loans are generally underwritten to secondary market guidelines. We offer both fixed-rate and adjustable rate residential mortgage loans for terms up to 30 years. The interest rate on fixed-rate loans are set by reference to the secondary market rates published by the Federal Home Loan Bank Mortgage Partnership Finance Program. The interest rate on adjustable rate loans is set by Peru Federal's Executive Loan Committee. For adjustable rate loans, the interest rate is fixed for the initial term of five, seven or 10 years, and then adjusts yearly thereafter with a maximum lifetime rate adjustment of 8% over the initial rate. We generally limit the loan-to-value ratios of our residential mortgage loans to 80% (95% with private mortgage insurance; 102% for loans guaranteed by U.S. Department of Agriculture) of the purchase price or appraised value, whichever is lower.

We do not offer "interest only" residential mortgage loans, where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan. We also do not offer loans that provide for negative amortization of principal, such as "Option ARM" loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance during the life of the loan. We do not currently offer "subprime loans" on one- to four-family residential real estate loans (<u>i.e.</u>, generally loans to borrowers with credit scores less than 620).

***Multi-Family Real Estate Loans*** **.** At December 31, 2022, multi-family real estate loans totaled $1.5 million, or 1.8% of total loans. Our multi-family real estate loans are primarily secured by properties located in our primary market area. Multi-family real estate loans generally adjustable rate loans for terms up to 20 years, with the interest rate fixed over the initial 5-year, 7-year or 10-year period. The initial interest rate is a negotiated rate, and the interest rate during the adjustable-rate period resets annually based on the *Wall Street Journal* prime rate, plus a 1% margin. We generally limit the loan-to-value ratios of our multi-family real estate to 75% of the purchase price or appraised value, whichever is lower.

***Commercial Real Estate Loans*** **.** At December 31, 2022, commercial real estate loans totaled $16.4 million, or 19.2% of total loans, of which $1.6 million was secured by agricultural properties. Our commercial real estate loans are generally secured primarily by owner-occupied properties including warehouses, storage units, and store fronts. Our commercial real estate loans are generally adjustable rate loans with a negotiated interest rate. The interest rate is fixed for the initial term of five, seven or ten years, and then adjusts yearly thereafter based on the prime rate, plus a margin. Commercial real estate loans generally have terms up to 20 years. We generally limit the loan-to-value ratios of our commercial mortgage loans to 75% of the purchase price or appraised value, whichever is lower.

At December 31, 2022, our largest commercial real estate loan had an outstanding balance of $1.5 million and is secured by storage units located in our primary market area. At December 31, 2022, this loan was performing according to its original terms.

We consider a number of factors in originating commercial real estate loans, including those secured by agricultural properties. We evaluate the qualifications and financial condition of the borrower, including credit history, profitability and expertise, as well as the value and condition of the property securing the loan. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower's experience in owning or managing similar property and the borrower's payment history with us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property, and the debt service coverage ratio (the ratio of net operating income to debt service). Generally, we require that the debt service coverage ratio be at least 1.20x. The significant majority of our commercial real estate loans are appraised by outside independent appraisers approved by the board of directors. Personal guarantees are generally obtained from the principals of the borrowers.

***Construction and Land Development Loans.*** At December 31, 2022, construction and land development loans totaled $1.5 million, or 1.8% of total loans. We make residential construction loans, primarily to individuals for the construction of their primary residences and occasionally to contractors and builders of single-family homes. We do not make speculative residential construction loans, which are construction loans to a builder where there is not a contract in place for the purchase of the home at the time the construction loan is originated. Our residential construction loans are structured as construction/permanent loans where after a one year construction period the loan

converts to a permanent one-to four-family residential mortgage loan. Our residential construction loans are underwritten to the same guidelines for permanent residential mortgage loans. At December 31, 2022, our largest residential construction loan amounted to $620,000, of which $258,000 had been disbursed.

We occasionally make commercial construction loans, which are structured as construction/permanent loans where after a one year construction period the loan converts to a permanent commercial mortgage loan. Our commercial construction loans are underwritten to the same guidelines for commercial mortgage loans. At December 31, 2022, there were no commercial construction loans outstanding.

Construction loans generally can be made with a maximum loan-to-value ratio of 80% (residential properties) and 75% (commercial properties) of the estimated appraised market value upon completion of the project. Before making a commitment to fund a construction loan, we require an appraisal of the property by an independent licensed appraiser. We also generally require inspections of the property before disbursements of funds during the term of the construction loan.

We also make a limited amount of land development loans to complement our construction lending activities, as such loans are generally secured by lots that will be used for residential development. At December 31, 2021, our largest land loan had an outstanding balance of $92,000. At December 31, 2022, this loan was performing according to its original terms.

***Commercial Loans.*** At December 31, 2022, commercial loans totaled $2.1 million, or 2.5% of total loans. Commercial loans include both term loans and lines of credit. Term loans are generally fixed rate and have terms of up to six years. Lines of credit are based on the prime rate, plus a margin, and have terms of up to 24 months. These loans are generally secured by business assets, such as equipment, inventory and accounts receivable. Depending on the collateral used to secure the loans, commercial loans are made in amounts of up to 75% of the value of the collateral securing the loan.

When making commercial loans, we consider the financial statements of the borrower, our lending history with the borrower, the debt service capabilities and global cash flows of the borrower and other guarantors, the projected cash flows of the business and the value of the collateral, accounts receivable, inventory and equipment.

At December 31, 2022, our largest commercial loan totaled $249,000 and is secured by equipment. At December 31, 2022, this loan was performing according to its original terms.

***Home Equity Loans and Lines of Credit.*** At December 31, 2022, home equity loans and lines of credit totaled $2.0 million, or 2.3% of total loans. Home equity loans are generally fixed-rate loans for terms of five, seven or 10 years. The interest rate for home equity lines of credit are based on the prime rate. The loan to value ratio for home equity loans and lines of credit is generally up to 90%, taking into account any superior mortgage on the collateral property.

***Consumer Loans*** **.** At December 31, 2022, consumer loans totaled $2.8 million, or 3.3% of total loans. Our consumer loan portfolio generally consists of loans secured predominately by automobiles and trucks (new and used). Consumer loans have fixed interest rates and terms up to five years, with loan to value ratios generally up to 100% of invoice price (for new vehicles) or 100% of the National Automobile Dealers Association trade-in value (for used vehicles).

**Loan Underwriting Risks**

***Commercial Real Estate Loans, Agricultural Real Estate Loans and Multi-family Real Estate Loans.*** Loans secured by commercial real estate, agricultural real estate or multi-family properties generally have larger balances and involve a greater degree of risk than one- to four-family residential real estate loans. The primary concern in commercial real estate lending, agricultural real estate lending and multi-family lending is the borrower's creditworthiness and the feasibility and cash flow potential of the underlying business or multi-family property. Payments on loans secured by income producing properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject, to a greater extent than residential real estate

loans, to adverse conditions in the real estate market or the economy. To monitor cash flows on income properties, we require borrowers and loan guarantors to provide quarterly, semi-annual or annual financial statements, depending on the size of the loan, on commercial real estate loans. In reaching a decision on whether to make a commercial real estate loan, agricultural real estate loan or multi-family loan, we consider and review a global cash flow analysis of the borrower and consider the net operating income of the property, the borrower's expertise, credit history and profitability and the value of the underlying property. We have generally required that the properties securing these real estate loans have an aggregate debt service ratio, including the guarantor's cash flows and the borrower's other projects, of at least 1.20x. An environmental phase one report is obtained when the possibility exists that hazardous materials may have existed on the site, or the site may have been impacted by adjoining properties that handled hazardous materials.

If we foreclose on a commercial real estate loan, an agricultural real estate loan or a multi-family loan, the marketing and liquidation period to convert the real estate asset to cash can be lengthy with substantial holding costs. In addition, vacancies, deferred maintenance, repairs and market stigma can result in prospective buyers expecting sale price concessions to offset their real or perceived economic losses for the time it takes them to return the property to profitability. Depending on the individual circumstances, initial charge-offs and subsequent losses on these loans can be unpredictable and substantial.

***Commercial Loans.*** Unlike residential real estate loans, which generally are made on the basis of the borrower's ability to make repayment from his or her employment or other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial and industrial loans are of higher risk and typically are made on the basis of the borrower's ability to make repayment from the cash flows of the borrower's business, and the collateral securing these loans may fluctuate in value. Our commercial loans are originated primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. Collateral for commercial loans typically consists of equipment, accounts receivable, or inventory. Credit support provided by the borrower for most of these loans is based on the liquidation of the pledged collateral and enforcement of a personal guarantee, if any. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself.

***Construction and Land Development Loans.*** Our construction loans are based upon estimates of costs and values associated with the completed project. Underwriting is focused on the borrowers' financial strength, credit history and demonstrated ability to produce a quality product and effectively market and manage their operations.

Construction lending involves additional risks when compared with permanent lending because funds are advanced upon the security of the project, which is of uncertain value before its completion. Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio. In addition, generally during the term of a construction loan, interest may be funded by the borrower or disbursed from an interest reserve set aside from the construction loan budget. These loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. If the appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss. Land development loans have substantially similar risks.

***Consumer Loans.*** Consumer loans may entail greater risk than residential real estate loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against the borrower. Consumer loan collections depend on the borrower's continuing financial stability, and therefore are likely to be adversely affected by various factors, including job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

**Loan Originations, Purchases and Sales**

We originate loans through employee marketing and advertising efforts, our existing customer base, walk-in customers and referrals from customers.

We generally do not purchase loans, except for an occasional participation interest in a loan originated by another financial institution acting as the lead lender. At December 31, 2022, our largest purchased participation interest had an outstanding balance of $909,000, representing a 10.3% participation interest in a $9.0 million commercial real estate loan secured by a medical building in Spring Valley, IL. At December 31, 2022, this loan was performing according to its original terms.

We generally originate loans for retention in our loan portfolio. Depending on market conditions and to manage interest rate risk, we generally sell fixed-rate one-to four-family residential mortgage loans with terms of 20 years or more, and retain the servicing rights. At December 31, 2022, we had no loans held-for-sale and the unpaid balance of loans serviced for others was $26.5 million. At December 31, 2022, the fair value of our servicing rights was $315,000.

**Loan Approval Procedures and Authority**

Our lending is subject to written, non-discriminatory underwriting standards and origination procedures. Decisions on loan applications are made on the basis of detailed applications submitted by the prospective borrower and property valuations. Our policies require that for all real estate loans that we originate, property valuations must be performed by outside independent state-licensed appraisers approved by our board of directors. The loan applications are designed primarily to determine the borrower's ability to repay the requested loan, and the more significant items on the application are verified through use of credit reports, financial statements and tax returns.

By law, the aggregate amount of loans that we are permitted to make to any one borrower or a group of related borrowers is generally limited to 15% of Peru Federal's unimpaired capital and surplus (25% if the amount in excess of 15% is secured by "readily marketable collateral" or 30% for certain residential development loans). At December 31, 2022, our largest credit relationship to one borrower had an outstanding balance of $3.4 million and is secured by residential and commercial real estate. At December 31, 2022, this loan was performing according to its original terms.

We have an Executive Loan Committee, which consists of our President and Chief Executive Officer, Chief Operations Officer, and Chief Lending Officer, and a Loan Committee, which consists of the Chief Lending Officer and our loan officers. The Executive Loan Committee has approval authority up to $500,000 depending on the loan type. The Loan Committee has approval authority up to $400,000 depending on the loan type. Any member of the Executive Loan Committee has approval authority up to $300,000 depending on the loan type. Individual loan officers have approval authority up to $50,000 depending on the loan type. All loans that exceed the approval authority of the Executive Loan Committee are submitted to the Board of Directors for review and disposition.

Generally, we require property and extended coverage casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property, depending on the type of loan. In addition, we require an escrow for flood insurance (where appropriate) and generally request an escrow for property taxes and insurance. We allow borrowers to pay their own taxes and property and casualty insurance as long as proof of payment is provided.

**Delinquencies, Classified Assets and Nonperforming Assets**

***Delinquency Procedures.*** When a borrower becomes 20 days past due on a loan, we attempt to contact the borrower by telephone. Delinquency letters are mailed to borrowers at delinquency intervals of 30, 60 and 90 days. Once the loan is considered in default, generally at 90 days past due, a letter is generally sent to the borrower explaining that the entire balance of the loan is due and payable, the loan is placed on non-accrual status, and additional efforts are made to contact the borrower. If the borrower does not respond, we generally initiate

foreclosure proceedings when the loan is 120 days past due. If the loan is reinstated, foreclosure proceedings will be discontinued and the borrower will be permitted to continue to make payments. In certain instances, we may modify the loan or grant a limited exemption from loan payments to allow the borrower to reorganize his or her financial affairs. All delinquent loans are reported to the board of directors each month.

When we acquire real estate as a result of foreclosure or by deed in lieu of foreclosure, the real estate is classified as other real estate owned until it is sold. The real estate is recorded at estimated fair value at the date of acquisition, less estimated costs to sell, and any write-down resulting from the acquisition is charged to the allowance for loan losses. Subsequent decreases in the value of the property are charged to operations. After acquisition, all costs in maintaining the property are expensed as incurred. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell. At December 31, 2022, we had no real estate acquired as a result of foreclosure or by deed in lieu of foreclosure.

***Troubled Debt Restructurings.*** We occasionally modify loans to extend the term or make other concessions to help a borrower stay current on his or her loan and to avoid foreclosure. We consider modifications only after analyzing the borrower's current repayment capacity, evaluating the strength of any guarantors based on documented current financial information, and assessing the current value of any collateral pledged. We generally do not forgive principal or interest on loans, but may do so if it is in our best interest and increases the likelihood that we can collect the remaining principal balance. We may modify the terms of loans to lower interest rates (which may be at below market rates), to provide for fixed interest rates on loans where fixed rates are otherwise not available, to provide for longer amortization schedules, or to provide for interest-only terms. These modifications are made only when a workout plan has been agreed to by the borrower that we believe is reasonable and attainable and in our best interests. At December 31, 2022, we had three one-to four-family residential mortgage loans which was classified as a troubled debt restructuring, with aggregate outstanding balances of $506,000.

***Delinquent Loans***. The following table sets forth our loan delinquencies (including non-accrual loans), by type and amount at December 31, 2022 and 2021.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **30-59 <br> Days Past<br> Due** | **60-89 <br> Days Past<br> Due** | **90 Days<br> or More<br> Past Due** | **30-59 <br> Days Past<br> Due** | **60-89 <br> Days Past<br> Due** | **90 Days<br> or More<br> Past Due** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Real estate loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;One- to four-family residential | $1141 | $308 | $75 | $684 | $262 | $99 |
| &nbsp;&nbsp;&nbsp;Multi-family |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Commercial | 46 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |  |  |  | 99 |
| Commercial loans |  |  |  |  |  |  |
| Home equity loans and lines of credit |  |  |  |  |  |  |
| Consumer loans |  |  |  | 11 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $1187 | $308 | $75 | $695 | $262 | $198 |

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***Non-Performing Assets.*** The following table sets forth information regarding our non-performing assets at the dates indicated. There were no non-accruing troubled debt restructurings included in non-accrual loans at either December 31, 2022 or 2021.

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| | | |
|:---|:---|:---|
|  | **At December 31,** | **At December 31,** |
|  | **2022** | **2021** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Non-accrual loans: |  |  |
| Real estate loans: |  |  |
| &nbsp;&nbsp;&nbsp;One- to four-family residential | $117 | $169 |
| &nbsp;&nbsp;&nbsp;Multi-family |  |  |
| &nbsp;&nbsp;&nbsp;Commercial |  |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |
| Commercial loans |  | 99 |
| Home equity loans and lines of credit |  |  |
| Consumer loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-accrual loans | $117 | $268 |
| Accruing loans past due 90 days or more |  |  |
| Real estate owned: |  |  |
| &nbsp;&nbsp;&nbsp;One- to four-family residential |  |  |
| &nbsp;&nbsp;&nbsp;Multi-family |  |  |
| &nbsp;&nbsp;&nbsp;Commercial |  |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total real estate owned |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-performing assets | $117 | $268 |
| Total accruing troubled debt restructured loans | $506 | $516 |
| Total non-performing loans to total loans | 0.73% | 0.98% |
| Total non-accruing loans to total loans | 0.14% | 0.33% |
| Total non-performing assets to total assets | 0.36% | 0.43% |

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***Classified Assets***. Federal regulations provide that loans and other assets of lesser quality should be classified as "substandard," "doubtful" or "loss." An asset is considered "substandard" if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. "Substandard" assets include those characterized by the "distinct possibility" that the insured institution will sustain "some loss" if the deficiencies are not corrected. Assets classified as "doubtful" have all of the weaknesses inherent in those classified "substandard," with the added characteristic that the weaknesses present make "collection or liquidation in full," on the basis of currently existing facts, conditions, and values, "highly questionable and improbable." Assets classified as "loss" are those considered "uncollectible" and of such little value that their continuance as assets without the establishment of a specific allowance for loan losses is not warranted. Assets that do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as "special mention."

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

In connection with the filing of our periodic regulatory reports and according to our classification of assets policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification according to applicable regulations. If a problem loan deteriorates in asset quality, the classification is changed to "substandard," "doubtful" or "loss" depending on the circumstances and the evaluation. Generally, loans 90 days or more past due are placed on nonaccrual status and classified "substandard."

Our classified and special mention assets at the dates indicated were as follows:

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| | | |
|:---|:---|:---|
|  | **At December 31,** | **At December 31,** |
|  | **2022** | **2021** |
|  | **(In thousands)** | **(In thousands)** |
| Substandard assets | $623 | $796 |
| Doubtful assets |  |  |
| Loss assets |  |  |
| &nbsp;&nbsp;&nbsp;Total classified assets | $623 | $796 |
| Special mention assets | $1240 | $1387 |

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***Other Loans of Concern.*** At December 31, 2022, except for loans included in the above table, there were no other loans of concern for which we had information about possible credit problems of borrowers that caused us to have serious doubts about the ability of the borrowers to comply with present loan repayment terms and that may result in disclosure of such loans in the future.

**Allowance for Loan Losses**

The allowance for loan losses is maintained at a level which, in management's judgment, is adequate to absorb probable credit losses inherent in the loan portfolio. The amount of the allowance is based on management's evaluation of the collectability of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, and economic conditions. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. Because of uncertainties associated with regional economic conditions, collateral values, and future cash flows on impaired loans, it is reasonably possible that management's estimate of probable credit losses inherent in the loan portfolio and the related allowance may change materially in the near-term. The allowance is increased by a provision for loan losses, which is charged to expense and reduced by full and partial charge-offs, net of recoveries. Changes in the allowance relating to impaired loans are charged or credited to the provision for loan losses. Management's periodic evaluation of the adequacy of the allowance is based on various factors, including, but not limited to, management's ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.

Effective January 1, 2023, the Current Expected Credit Loss, referred to as "CECL" throughout this prospectus, accounting standard became effective for Peru Federal and other financial institutions. CECL requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans and recognize the expected credit losses as allowances for credit losses. CECL will require us to change the current method of providing allowances for loan losses that are incurred or probable, which will likely require us to increase our allowance for loan losses and increase the types of data we will need to collect and review to determine the appropriate level of the allowance for loan losses.

As an integral part of their examination process, the OCC will periodically review our allowance for loan and losses, and as a result of such reviews, we may determine to adjust our allowance for loan losses. However, the OCC is not directly involved in the process for establishing the allowance for loan losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.

The following table sets forth activity in our allowance for loan losses for the years indicated.

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| | | |
|:---|:---|:---|
|  | **At or For the Years Ended<br> December 31,** | **At or For the Years Ended<br> December 31,** |
|  | **2022** | **2021** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Allowance for loan losses at beginning of period | $567 | $576 |
| Provision (credit) for loan losses | 61 | (6) |
| Charge-offs: |  |  |
| Real estate loans: |  |  |
| &nbsp;&nbsp;&nbsp;One- to four-family residential | 1 | 3 |
| &nbsp;&nbsp;&nbsp;Multi-family |  |  |
| &nbsp;&nbsp;&nbsp;Commercial | 84 |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |
| Commercial loans |  |  |
| Home equity loans and lines of credit |  |  |
| Consumer loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total charge-offs | 85 | 3 |
| Recoveries: |  |  |
| Real estate loans: |  |  |
| &nbsp;&nbsp;&nbsp;One- to four-family residential |  |  |
| &nbsp;&nbsp;&nbsp;Multi-family |  |  |
| &nbsp;&nbsp;&nbsp;Commercial |  |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |
| Commercial loans |  |  |
| Home equity loans and lines of credit |  |  |
| Consumer loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total recoveries |  |  |
| Net (charge-offs) recoveries | (85) | (3) |
| Allowance for loan losses at end of period | $543 | $567 |
| Allowance for loan losses as a percentage of non-performing loans at end of period | 87.16% | 72.32% |
| Allowance for loan losses as a percentage of total loans outstanding at end of period | 0.64% | 0.70% |
| Net (charge-offs) recoveries as a percentage of average loans outstanding during period | (0.01)% | —% |

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***Allocation of Allowance for Loan Losses.*** The following tables set forth the allowance for loan losses allocated by loan category and the percent of the allowance in each category to the total allocated allowance at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Allowance<br> for Loan<br> Losses** | **Percent of<br> Allowance<br> in Each<br> Category <br> to Total<br> Allocated<br> Allowance** | **Percent of<br> Loans in <br> Each<br> Category to<br> Total Loans** | **Allowance<br> for Loan<br> Losses** | **Percent of<br> Allowance<br> in Each<br> Category <br> to Total<br> Allocated<br> Allowance** | **Percent of<br> Loans in <br> Each<br> Category<br> to Total<br> Loans** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Real estate loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;One- to four-family residential | $251 | 46.22% | 0.42% | $242 | 42.68% | 0.44% |
| &nbsp;&nbsp;&nbsp;Multi-family | 5 | 0.92 | 0.33 | 6 | 1.06 | 0.48 |
| &nbsp;&nbsp;&nbsp;Commercial | 213 | 39.23 | 1.30 | 212 | 37.39 | 1.29 |
| &nbsp;&nbsp;&nbsp;Construction and land development | 11 | 2.02 | 0.72 | 14 | 2.47 | 0.69 |
| Commercial loans | 36 | 6.63 | 1.70 | 67 | 11.82 | 3.04 |
| Home equity loans and lines of credit | 11 | 2.03 | 0.55 | 10 | 1.76 | 0.63 |
| Consumer loans | 16 | 2.95 | 0.57 | 16 | 2.82 | 0.59 |
| &nbsp;&nbsp;&nbsp;Total allocated allowance | $543 | 100.00% | 0.64 | $567 | 100.00% | 0.70 |
| Unallocated allowance |  |  |  |  |  |  |
| Total allowance | $543 |  |  | $567 |  |  |

---

Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance for loan losses may not be adequate and management may determine that increases in the allowance are necessary if the quality of any portion of our loan portfolio deteriorates as a result. Furthermore, as an integral part of its examination process, the OCC will periodically review our allowance for loan losses. The OCC may have judgments different than those of management, and we may determine to increase our allowance as a result of these regulatory reviews. Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations.

**Investment Activities**

***General*** **.** The goal of our investment policy is to maximize portfolio yield over the long term in a manner that is consistent with minimizing risk, meeting liquidity needs, meeting pledging requirements, and managing asset/liability management and interest rate risk strategies. Subject to loan demand and our interest rate risk analysis, we will increase the balance of our investment securities portfolio when we have excess liquidity.

Our investment policy was adopted by the board of directors and is reviewed annually by the board of directors. All investment decisions are made by our Asset/Liability Committee according to board-approved policies. An investment schedule detailing the investment portfolio is reviewed at least monthly by the board of directors.

Our current investment policy permits, with certain limitations, investments in U.S. Treasury and federal agency securities; securities issued by the U.S. government and its agencies or government sponsored enterprises including mortgage-backed securities; state and municipal securities; interest-bearing time deposits in other financial institutions; among other investments.

At December 31, 2022, our investment portfolio consisted of U.S. Treasury and federal agency securities, mortgage-backed securities issued by U.S. government-sponsored enterprises, and state and municipal securities. At December 31, 2022, we also owned $347,000 of Federal Home Loan Bank of Chicago stock. As a member of Federal Home Loan Bank of Chicago, we are required to purchase stock in the Federal Home Loan Bank of Chicago, which is carried at cost and classified as a restricted investment.

For additional information regarding our investment securities portfolio, see note 3 to the notes to consolidated financial statements.

**Sources of Funds**

***General.*** Deposits have traditionally been our primary source of funds for use in lending and investment activities. We may also use borrowings to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and to manage the cost of funds. In addition, we receive funds from scheduled loan payments, investment maturities, loan prepayments, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition.

***Deposits.*** Our deposits are generated primarily from our primary market area. We offer a selection of deposit accounts, including savings accounts, checking accounts, certificates of deposit and individual retirement accounts. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate.

Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. We rely upon personalized customer service, long-standing

relationships with customers, and our favorable reputation in the community to attract and retain local deposits. We also seek to obtain deposits from our commercial loan customers.

The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition. The variety of deposit accounts offered allows us to be competitive in obtaining funds and responding to changes in consumer demand. Based on experience, we believe that our deposits are relatively stable. However, the ability to attract and maintain deposits and the rates paid on these deposits, has been and will continue to be significantly affected by market conditions.

The following table sets forth the distribution of total deposits, by account type, at the dates indicated.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | <br>**Amount** | <br>**Percent** | **Average<br> Rate** | <br>**Amount** | <br>**Percent** | **Average <br> Rate** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Non-interest-bearing demand deposits | $17248 | 11.30% | —% | $18611 | 11.94% | —% |
| Regular savings deposits | 36682 | 24.02 | 0.09 | 36032 | 23.11 | 0.09 |
| NOW savings deposits | 24266 | 15.89 | 0.47 | 26833 | 17.21 | 0.22 |
| Money market deposits | 26172 | 17.14 | 0.92 | 27455 | 17.61 | 0.24 |
| Time deposits | 48339 | 31.65 | 1.50 | 46981 | 30.13 | 0.76 |
| Total | $152707 | 100.00% | 0.83 | $155912 | 100.00% | 0.33 |

---

At December 31, 2022 and 2021, the aggregate amount of all uninsured deposits (deposits in excess of the Federal Deposit Insurance limit of $250,000 per account) was $17.2 million and $19.7 million, respectively. At December 31, 2022 and 2021, the aggregate amount of all uninsured time deposits was $3.3 million and $2.8 million, respectively. At December 31, 2022 and 2021, we had no deposits that were uninsured for any reason other than being in excess of the Federal Deposit Insurance Corporation limit.

The following table sets forth, by time remaining until maturity, the uninsured time deposits at December 31, 2022.

---

| | |
|:---|:---|
|  | **At December 31, 2022** |
|  | **(In thousands)** |
| **Maturity Period:** |  |
| &nbsp;&nbsp;&nbsp;Three months or less | 485 |
| &nbsp;&nbsp;&nbsp;Over three months through 6 months | 783 |
| &nbsp;&nbsp;&nbsp;Over six months through 12 months | 1508 |
| &nbsp;&nbsp;&nbsp;Over 12 months | 623 |
| &nbsp;&nbsp;&nbsp;Total | $3399 |

---

***Borrowings.*** We may obtain advances from the Federal Home Loan Bank of Chicago upon the security of our capital stock in it and our one- to four-family residential real estate portfolio. We may utilize these advances for asset/liability management purposes and for additional funding for our operations. Such advances may be made under several different credit programs, each of which has its own interest rate and range of maturities. At December 31, 2022, we had no outstanding advances from the Federal Home Loan Bank of Chicago. At December 31, 2022, based on available collateral and our ownership of Federal Home Loan Bank of Chicago common stock, we had access to up to $46.2 million of advances from the Federal Home Loan Bank of Chicago. At December 31, 2022, we also had a $4.0 million line of credit with a correspondent bank, with no outstanding balance at that date.

**Properties**

At December 31, 2022, the net book value of our properties (including furniture, fixtures, improvements, and equipment) was $2.2 million. We operate from our main office located at 1730 Fourth Street, Peru, Illinois, and a branch office located at 914 Shooting Park Road, Peru, Illinois, both of which we own. We believe that our current facility is adequate to meet our present and foreseeable needs. We currently do not have any plans or understandings to expand our office network.

**Subsidiary Activities**

Upon completion of the conversion and stock offering, Peru Federal will become the sole and wholly-owned subsidiary of PFS Bancorp. Peru Federal has one subsidiary, PFSB Financial Services, Inc., an Illinois corporation, which is inactive.

**Legal Proceedings**

We are not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. At December 31, 2022, we were not involved in any legal proceedings, the outcome of which we believe would be material to our consolidated financial condition or results of operations.

**Expense and Tax Allocation Agreements**

Upon the completion of the conversion and stock offering, Peru Federal and PFS Bancorp will enter into an agreement for Peru Federal to provide PFS Bancorp with certain administrative support services, including use of the premises, furniture, equipment and employees of Peru Federal as needed in the conduct of PFS Bancorp's business. PFS Bancorp will compensate Peru Federal in an amount not less than the fair market value of the services provided. In addition, upon the consummation of the conversion and stock offering, PFS Bancorp and Peru Federal will enter into an agreement to establish a method for allocating and reimbursing the payment of their consolidated federal and state tax liabilities and any local tax liabilities.

**Employees**

At December 31, 2022, we had 23 full-time employees and three part-time employees. Our employees are not represented by a collective bargaining group. Management believes that we have a good working relationship with our employees.

**REGULATION AND SUPERVISION**

**General**

As a federal savings association (the term "savings association" includes a federal savings bank), Peru Federal is subject to examination and regulation by the OCC, and is also subject to examination by the FDIC. This regulation and supervision establishes a comprehensive framework of activities in which an institution may engage and is intended primarily for the protection of the FDIC's deposit insurance fund and depositors, and not for the protection of security holders. Peru Federal also is a member of and owns stock in the Federal Home Loan Bank of Chicago, which is one of the 11 regional banks in the Federal Home Loan Bank System.

Under this system of regulation, the regulatory authorities have extensive discretion in connection with their supervisory, enforcement, rulemaking and examination activities and policies, including rules or policies that: establish minimum capital levels; restrict the timing and amount of dividend payments; govern the classification of assets; determine the adequacy of loan loss reserves for regulatory purposes; and establish the timing and amounts of assessments and fees. Moreover, as part of their examination authority, the banking regulators assign numerical ratings to banks and savings institutions relating to capital, asset quality, management, liquidity, earnings and other factors. The receipt of a less than satisfactory rating in one or more categories may result in enforcement action by the banking regulators against a financial institution. A less than satisfactory rating may also prevent a financial institution, such as Peru Federal or its holding company, from obtaining necessary regulatory approvals to access the capital markets, pay dividends, acquire other financial institutions or establish new branches.

In addition, we must comply with significant anti-money laundering and anti-terrorism laws and regulations, Community Reinvestment Act laws and regulations, and fair lending laws and regulations. Government agencies have the authority to impose monetary penalties and other sanctions on institutions that fail to comply with these laws and regulations, which could significantly affect our business activities, including our ability to acquire other financial institutions or expand our branch network.

Following the conversion and stock offering, PFS Bancorp will be a savings and loan holding company and will be required to comply with the rules and regulations of the Federal Reserve Board. It will be required to file certain reports with the Federal Reserve Board and will be subject to examination by the enforcement authority of the Federal Reserve Board. It will also be subject to the rules and regulations of the Securities and Exchange Commission under the federal securities laws.

Any change in applicable laws or regulations, whether by the OCC, the FDIC, the Federal Reserve Board, the Securities and Exchange Commission or Congress, could have a material adverse impact on the operations and financial performance of PFS Bancorp and Peru Federal.

Set forth below is a brief description of material regulatory requirements that are or will be applicable to Peru Federal and PFS Bancorp. The description is limited to certain material aspects of the statutes and regulations addressed, and is not intended to be a complete description of such statutes and regulations and their effects on Peru Federal and PFS Bancorp.

**Federal Banking Regulation**

***Business Activities.*** A federal association derives its lending and investment powers from the Home Owners' Loan Act, as amended, and applicable federal regulations. Under these laws and regulations, Peru Federal may invest in mortgage loans secured by residential and commercial real estate, commercial business and consumer loans, certain types of debt securities and certain other assets, subject to applicable limits. Peru Federal may also establish subsidiaries that may engage in certain activities not otherwise permissible for Peru Federal to engage in directly, including real estate investment and securities and insurance brokerage.

***Capital Requirements*** **.** Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-weighted assets ratio of 4.5%, a Tier 1 capital to risk-weighted assets ratio of 6.0%, a total capital to risk-weighted assets of 8.0%, and a 4.0% Tier 1 capital to adjusted average total assets leverage ratio.

Common equity Tier 1 capital is generally defined as common stockholders' equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (Loss) ("AOCI"), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities). Peru Federal exercised its AOCI opt-out election. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.

In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (*e.g.*, recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one- to four-family residential real estate loans, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount

necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented at 2.5% of risk-weighted assets on January 1, 2019.

The federal banking agencies have developed a "Community Bank Leverage Ratio (CBLR)" (the ratio of Tier 1 capital to average total consolidated assets) for financial institutions with assets of less than $10 billion that meet certain qualifying criteria. A "qualifying community bank" that exceeds this ratio will be deemed compliant with all other capital requirements, including the capital requirements to be considered "well capitalized" under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution's risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum Community Bank Leverage Ratio at not less than 8% and not more than 10%, and as of January 1, 2022, it is set at 9%. Peru Federal has not elected to be subject to the CBLR framework.

***Loans-to-One Borrower.*** Generally, a federal savings association may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. At December 31, 2022, Peru Federal complied with the loans-to-one borrower limitations.

***Qualified Thrift Lender Test.*** As a federal savings association, Peru Federal must satisfy the qualified thrift lender, or "QTL," test. Under the QTL test, it must maintain at least 65% of its "portfolio assets" in "qualified thrift investments" (primarily residential mortgages and related investments, including mortgage-backed securities) in at least nine months of the most recent 12-month period. "Portfolio assets" generally means total assets of a savings association, less the sum of specified liquid assets up to 20% of total assets, goodwill and other intangible assets, and the value of property used in the conduct of the savings association's business.

Peru Federal also may satisfy the QTL test by qualifying as a "domestic building and loan association" as defined in the Internal Revenue Code of 1986, as amended. This test generally requires a savings association to have at least 75% of its deposits held by the public and earn at least 25% of its income from loans and U.S. government obligations. Alternatively, a savings association can satisfy this test by maintaining at least 60% of its assets in cash, real estate loans and U.S. Government or state obligations.

A savings association that fails the qualified thrift lender test must operate under specified restrictions set forth in the Home Owners' Loan Act. The Dodd-Frank Act made noncompliance with the QTL test subject to agency enforcement action for a violation of law. At December 31, 2022, Peru Federal complied with the qualified thrift lender test, with a percentage of qualified thrift investments to total assets of approximately 77.33%.

***Capital Distributions.*** Federal regulations govern capital distributions by a federal savings association, which include cash dividends, stock repurchases and other transactions charged to its capital account. A federal savings association must file an application with the OCC for approval of a capital distribution if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the total capital distributions for the applicable calendar year exceed the sum of the savings association's net income for
that year to date plus its retained net income for the preceding two years;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the savings association would not be at least adequately capitalized following the distribution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the distribution would violate any applicable statute, regulation, agreement or regulatory condition; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the savings association is not eligible for expedited treatment of its filings, generally due to an unsatisfactory CAMELS rating or
being subject to a cease and desist order or formal written agreement that requires action to improve the institution's financial
condition.

Even if an application is not otherwise required, every savings association that is a subsidiary of a savings and loan holding company, such as Peru Federal will be upon the consummation of the conversion and stock offering, must still file a notice with the Federal Reserve Board at least 30 days before the board of directors declares a dividend or approves a capital distribution.

A notice or application related to a capital distribution may be disapproved if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the savings association would be undercapitalized following the distribution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the proposed capital distribution raises safety and soundness concerns; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the capital distribution would violate a prohibition contained in any statute, regulation or agreement.

In addition, an insured depository institution may not make any capital distribution if, after making such distribution, the institution would fail to meet any applicable regulatory capital requirement. A federal savings association also may not make a capital distribution that would reduce its regulatory capital below the amount required for the liquidation account established in connection with its conversion to stock form.

***Community Reinvestment Act and Fair Lending Laws.*** All federal savings associations have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-income borrowers. In connection with its examination of a federal savings association, the OCC is required to assess the federal savings association's record of compliance with the Community Reinvestment Act. A savings association's failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in denial of certain corporate applications such as branches or mergers, or in restrictions on its activities. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the OCC, as well as other federal regulatory agencies and the Department of Justice.

The Community Reinvestment Act requires all institutions insured by the FDIC to publicly disclose their rating. Peru Federal received a "satisfactory" Community Reinvestment Act rating in its most recent federal examination.

***Transactions with Related Parties.*** A federal savings association's authority to engage in transactions with its affiliates is limited by Sections 23A and 23B of the Federal Reserve Act and federal regulations. An affiliate is generally a company that controls, or is under common control with, an insured depository institution such as Peru Federal. PFS Bancorp will be an affiliate of Peru Federal because it will control Peru Federal. In general, transactions between an insured depository institution and its affiliates are subject to certain quantitative limits and collateral requirements. In addition, federal regulations prohibit a savings association from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary. Finally, transactions with affiliates must be consistent with safe and sound banking practices, not involve the purchase of low-quality assets and be on terms that are as favorable to the institution as comparable transactions with non-affiliates.

Peru Federal's authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board. Among other things, these provisions generally require that extensions of credit to insiders:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those
prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present
other unfavorable features; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· not exceed certain limitations
 on the amount of credit extended to such persons, individually and in the aggregate, which
 limits are based, in part, on the amount of Peru Federal's capital.

In addition, extensions of credit in excess of certain limits must be approved by Peru Federal's board of directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved.

***Enforcement.*** The OCC has primary enforcement responsibility over federal savings associations and has authority to bring enforcement action against all "institution-affiliated parties," including directors, officers, stockholders, attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on a federal savings association. Formal enforcement action by the OCC may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of the institution and the appointment of a receiver or conservator. Civil penalties cover a wide range of violations and actions, and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million per day. The FDIC also has the authority to terminate deposit insurance or recommend to the OCC that enforcement action be taken with respect to a particular savings association. If such action is not taken, the FDIC has authority to take the action under specified circumstances.

***Standards for Safety and Soundness.*** Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation and other operational and managerial standards as the agency deems appropriate. Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to implement an acceptable compliance plan. Failure to implement such a plan can result in further enforcement action, including the issuance of a cease and desist order or the imposition of civil money penalties.

***Interstate Banking and Branching.*** Federal law permits well capitalized and well managed holding companies to acquire banks in any state, subject to Federal Reserve Board approval, certain concentration limits and other specified conditions. Interstate mergers of banks are also authorized, subject to regulatory approval and other specified conditions. In addition, among other things, amendments made by the Dodd-Frank Act permit banks to establish *de novo* branches on an interstate basis provided that branching is authorized by the law of the host state for the banks chartered by that state.

***Prompt Corrective Action.*** Federal law requires, among other things, that federal bank regulators take "prompt corrective action" with respect to institutions that do not meet minimum capital requirements. For this purpose, the law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. Under the regulations, as amended effective January 1, 2015 to incorporate the previously mentioned amendments to the regulatory capital requirements, an institution is deemed to be "well capitalized" if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater. An institution is "adequately capitalized" if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater. An institution is "undercapitalized" if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%. An institution is deemed to be "significantly undercapitalized" if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%. An institution is considered to be "critically undercapitalized" if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.

Federal law and regulations also specify circumstances under which a federal banking agency may reclassify a well-capitalized institution as adequately capitalized and may require an institution classified as less than well-capitalized to comply with supervisory actions as if it were in the next lower category.

The OCC may order savings associations that have insufficient capital to take corrective actions. For example, a savings association that is categorized as "undercapitalized" is subject to growth limitations and is required to submit a capital restoration plan, and a holding company that controls such a savings association is required to guarantee that the savings association complies with the restoration plan. A "significantly undercapitalized" savings association may be subject to additional restrictions. Savings associations deemed by the OCC to be "critically undercapitalized" would be subject to the appointment of a receiver or conservator.

At December 31, 2022, Peru Federal met the criteria for being considered "well capitalized." For further information, see note 13 to the notes to consolidated financial statements.

***Insurance of Deposit Accounts.*** Peru Federal is a member of the Deposit Insurance Fund, which is administered by the FDIC. Its deposit accounts are insured by the FDIC, generally up to a maximum of $250,000 per depositor.

The FDIC imposes deposit insurance assessments against all insured depository institutions. An institution's assessment rate depends upon the perceived risk of the institution to the Deposit Insurance Fund, with institutions deemed less risky paying lower rates. Currently, assessments for institutions of less than $10 billion of total assets are based on financial measures and supervisory ratings derived from statistical models estimating the probability of failure within three years. That system was effective July 1, 2016 and replaced a system under which each institution was assigned to a risk category. Assessment rates (inclusive of possible adjustments) currently range from 1.5 to 30 basis points of each institution's total assets less tangible capital. The current scale, also effective July 1, 2016, is a reduction from the previous range of 2.5 to 45 basis points. The FDIC may increase or decrease the range of assessments uniformly, except that no adjustment can deviate more than two basis points from the base assessment rate without notice and comment rulemaking. The existing system represents a change, required by the Dodd-Frank Act, from the FDIC's prior practice of basing the assessment on an institution's aggregate deposits.

The FDIC has the authority to increase insurance assessments. A significant increase in insurance premiums would have an adverse effect on the operating expenses and results of operations of Peru Federal. We cannot predict what deposit insurance assessment rates will be in the future.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not know of any practice, condition or violation that might lead to termination of deposit insurance for Peru Federal.

***Privacy Regulations.*** Federal regulations generally require that Peru Federal disclose its privacy policy, including identifying with whom it shares a customer's "non-public personal information," to customers at the time of establishing the customer relationship and annually thereafter. In addition, Peru Federal is required to provide its customers with the ability to "opt-out" of having their personal information shared with unaffiliated third parties and not to disclose account numbers or access codes to non-affiliated third parties for marketing purposes. Peru Federal has a privacy protection policy in place and believes that such policy is in compliance with the regulations.

***USA Patriot Act.*** Peru Federal is subject to the USA PATRIOT Act, which gives federal agencies additional powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering requirements. The USA PATRIOT Act contains provisions intended to encourage information sharing among bank regulatory agencies and law enforcement bodies and imposes affirmative obligations on financial institutions, such as enhanced recordkeeping and customer identification requirements.

***Prohibitions Against Tying Arrangements*** **.** Federal savings associations are prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

**Other Regulations**

Interest and other charges collected or contracted for by Peru Federal are subject to state usury laws and federal laws concerning interest rates. Loan operations are also subject to state and federal laws applicable to credit transactions, such as the:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Home Mortgage Disclosure
 Act of 1975, requiring financial institutions to provide information to enable the public
 and public officials to determine whether a financial institution is fulfilling its obligation
 to help meet the housing needs of the community it serves;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Equal Credit Opportunity
 Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in
 extending credit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Fair Credit Reporting
 Act of 1978, governing the use and provision of information to credit reporting agencies;
 and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Rules and regulations
 of the various federal and state agencies charged with the responsibility of implementing
 such federal and state laws.

The deposit operations of Peru Federal also are subject to, among others, the:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Right to Financial Privacy
 Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes
 procedures for complying with administrative subpoenas of financial records;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Check Clearing for the
 21st Century Act (also known as "Check 21"), which gives "substitute checks,"
 such as digital check images and copies made from that image, the same legal standing as
 the original paper check; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Electronic Funds Transfer
 Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals
 from deposit accounts and customers' rights and liabilities arising from the use of
 automated teller machines and other electronic banking services.

**Federal Home Loan Bank System**

Peru Federal is a member of the Federal Home Loan Bank of Chicago, which is one of 11 regional Federal Home Loan Banks in the Federal Home Loan Bank System. The Federal Home Loan Bank of Chicago provides a central credit facility primarily for its member institutions. Members of the Federal Home Loan Bank of Chicago are required to acquire and hold shares of capital stock in the Federal Home Loan Bank of Chicago. Peru Federal complied with this requirement at December 31, 2022. Based on redemption provisions of the Federal Home Loan Bank of Chicago, the stock has no quoted market value and is carried at cost. Peru Federal reviews for impairment, based on the ultimate recoverability, the cost basis of the Federal Home Loan Bank of Chicago stock. At December 31, 2022, no impairment was recognized.

**Holding Company Regulation**

Upon completion of the conversion and stock offering PFS Bancorp will be a unitary savings and loan holding company subject to regulation and supervision by the Federal Reserve Board. The Federal Reserve Board will have enforcement authority over PFS Bancorp and its non-savings institution subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a risk to Peru Federal.

As a savings and loan holding company, PFS Bancorp's activities will be limited to those activities permissible by law for financial holding companies (if PFS Bancorp makes an election to be treated as a financial holding company and meets the other requirements to be a financial holding company) or multiple savings and loan

holding companies. PFS Bancorp does not intend to make an election to be treated as a financial holding company. A financial holding company may engage in activities that are financial in nature, incidental to financial activities or complementary to a financial activity. Such activities include lending and other activities permitted for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, insurance and underwriting equity securities. Multiple savings and loan holding companies are authorized to engage in activities specified by federal regulation, including activities permitted for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act.

Federal law prohibits a savings and loan holding company, directly or indirectly, or through one or more subsidiaries, from acquiring more than 5% of another savings institution or savings and loan holding company without prior written approval of the Federal Reserve Board, and from acquiring or retaining control of any depository institution not insured by the FDIC. In evaluating applications by holding companies to acquire savings institutions, the Federal Reserve Board must consider such things as the financial and managerial resources and future prospects of the company and institution involved, the effect of the acquisition on and the risk to the federal deposit insurance fund, the convenience and needs of the community and competitive factors. A savings and loan holding company may not acquire a savings institution in another state and hold the target institution as a separate subsidiary unless it is a supervisory acquisition under Section 13(k) of the Federal Deposit Insurance Act or the law of the state in which the target is located authorizes such acquisitions by out-of-state companies.

Savings and loan holding companies historically have not been subject to consolidated regulatory capital requirements. The Dodd-Frank Act requires the Federal Reserve Board to establish minimum consolidated capital requirements for all depository institution holding companies that are as stringent as those required for the insured depository subsidiaries. However, legislation was enacted in May 2018 that required the Federal Reserve Board to amend its "Small Bank Holding Company" exemption from consolidated holding company capital requirements to generally extend its applicability to bank and savings and loan holding companies of up to $3.0 billion in assets. Regulations implementing this amendment were effective in August 2018. Consequently, savings and loan holding companies of under $3.0 billion in consolidated assets remain exempt from consolidated regulatory capital requirements, unless the Federal Reserve determines otherwise in particular cases.

The Dodd-Frank Act extended the "source of strength" doctrine to savings and loan holding companies. The Federal Reserve Board has promulgated regulations implementing the "source of strength" policy that require holding companies to act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.

The Federal Reserve Board has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies and savings and loan holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization's capital needs, asset quality and overall financial condition. Regulatory guidance provides for prior regulatory consultation with respect to capital distributions in certain circumstances such as where the company's net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the company's overall rate of earnings retention is inconsistent with the company's capital needs and overall financial condition. The ability of a holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. The policy statement also states that a holding company should inform the Federal Reserve Board supervisory staff before redeeming or repurchasing common stock or perpetual preferred stock if the holding company is experiencing financial weaknesses or if the repurchase or redemption would result in a net reduction, at the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. These regulatory policies may affect the ability of PFS Bancorp to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.

For PFS Bancorp to be regulated by the Federal Reserve Board as savings and loan holding company rather than as a bank holding company, Peru Federal must qualify as a "qualified thrift lender" under federal regulations or satisfy the "domestic building and loan association" test under the Internal Revenue Code. Under the qualified thrift lender test, a savings institution is required to maintain at least 65% of its "portfolio assets" (total assets less: (i) specified liquid assets up to 20% of total assets; (ii) intangible assets, including goodwill; and (iii) the value of property used to conduct business) in certain "qualified thrift investments" (primarily residential mortgages and

related investments, including certain mortgage-backed and related securities) in at least nine out of each 12 month period. At December 31, 2022, Peru Federal maintained approximately 77.33% of its portfolio assets in qualified thrift investments and was in compliance with the qualified thrift lender requirement.

**Federal Securities Laws**

PFS Bancorp common stock will be registered with the Securities and Exchange Commission after the conversion and stock offering. PFS Bancorp will be subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934, as amended.

The registration under the Securities Act of 1933, as amended, of shares of common stock issued in PFS Bancorp's stock offering does not cover the resale of those shares. Shares of common stock purchased by persons who are not affiliates of PFS Bancorp may be resold without registration. Shares purchased by an affiliate of PFS Bancorp will be subject to the resale restrictions of Rule 144 under the Securities Act of 1933. If PFS Bancorp meets the current public information requirements of Rule 144 under the Securities Act of 1933, each affiliate of PFS Bancorp that complies with the other conditions of Rule 144, including those that require the affiliate's sale to be aggregated with those of other persons, would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of 1% of the outstanding shares of PFS Bancorp, or the average weekly volume of trading in the shares during the preceding four calendar weeks. In the future, PFS Bancorp may permit affiliates to have their shares registered for sale under the Securities Act of 1933.

**Sarbanes-Oxley Act of 2002**

The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures required under the federal securities laws. We have policies, procedures and systems designed to comply with these regulations, and we review and document such policies, procedures and systems to ensure continued compliance with these regulations.

**Change in Control Regulations**

Under the Change in Bank Control Act, a federal statute, no person may acquire control of a savings and loan holding company such as PFS Bancorp unless the Federal Reserve Board has been given 60 days prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition. Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of the institution's directors, or a determination by the regulator that the acquiror has the power, directly or indirectly, to exercise a controlling influence over the management or policies of the institution. Acquisition of more than 10% of any class of a savings and loan holding company's voting stock constitutes a rebuttable presumption of control under the regulations under certain circumstances including where, as will be the case with PFS Bancorp, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.

In addition, federal regulations provide that no company may acquire control of a savings and loan holding company without the prior approval of the Federal Reserve Board. Any company that acquires such control becomes a "savings and loan holding company" subject to registration, examination and regulation by the Federal Reserve Board.

**TAXATION**

**Federal Taxation**

***General.*** PFS Bancorp and Peru Federal are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to summarize material federal income tax matters and is not a comprehensive description of the tax rules applicable to PFS Bancorp and Peru Federal.

***Method of Accounting.*** For federal income tax purposes, Peru Federal currently reports its income and expenses on the accrual method of accounting and uses a tax year ending December 31 for filing its federal income tax returns. The Small Business Protection Act of 1996 eliminated the use of the reserve method of accounting for bad debt reserves by savings institutions, effective for taxable years beginning after 1995.

***Minimum Tax.*** The alternative minimum tax ("AMT") for corporations has been repealed for tax years beginning after December 31, 2017. Any unused minimum tax credit of a corporation may be used to offset regular tax liability for any tax year. In addition, a portion of unused minimum tax credit was refundable in 2018 through 2021. The refundable portion is 50% (100% in 2021) of the excess of the minimum tax credit for the year over any credit allowable against regular tax for that year. At December 31, 2022, Peru Federal had no minimum tax credit carryforward.

***Net Operating Loss Carryovers.*** Generally, a corporation may carry forward net operating losses generated in tax years beginning after December 31, 2017 indefinitely and can offset up to 80% of taxable income. At December 31, 2022, Peru Federal no net operating loss carrryforwards.

***Capital Loss Carryovers.*** Generally, a corporation may carry back capital losses to the preceding three taxable years and forward to the succeeding five taxable years. Any capital loss carryback or carryover is treated as a short-term capital loss for the year to which it is carried. As such, it is grouped with any other capital losses for the year to which it is carried and is used to offset any capital gains. Any undeducted loss remaining after the five-year carryover period is not deductible. At December 31, 2022, Peru Federal had no capital loss carryovers.

***Corporate Dividends.*** PFS Bancorp may generally exclude from our income 100% of dividends received from Peru Federal as a member of the same affiliated group of corporations.

***Audit of Tax Returns.*** Peru Federal's federal income tax returns have not been audited in the most recent five-year period.

**State Taxation**

PFS Bancorp and Peru Federal will be required to file an annual combined Illinois income tax return and pay tax at a stated tax rate of 9.50%. For these purposes, Illinois taxable income generally means federal taxable income subject to certain modifications, primarily the exclusion of interest income on United States obligations. Peru Federal's state income tax returns have not been audited in the most recent five-year period.

As a Maryland business corporation, PFS Bancorp will be required to file an annual report with and pay personal property taxes to the State of Maryland.

**MANAGEMENT**

**Shared Management Structure**

Each director of PFS Bancorp is a director of Peru Federal. Each executive officer of PFS Bancorp is an executive officer of Peru Federal. We expect that PFS Bancorp and Peru Federal will continue to have a shared management structure until there is a business reason to establish separate management structures.

**Executive Officers of PFS Bancorp**

The following table sets forth information regarding the executive officers of PFS Bancorp. Age information is at December 31, 2022. The executive officers are elected annually by PFS Bancorp's board of directors.

---

| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| Eric J. Heagy, CPA | 48 | President, Chief Executive Officer, Chief Financial Officer and Treasurer |
| Dale R. Tieman | 59 | Corporate Secretary |

---

**Executive Officers of Peru Federal**

The following table sets forth information regarding the executive officers of Peru Federal. Age information is at December 31, 2022. The executive officers are elected annually by Peru Federal's board of directors.

---

| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| Eric J. Heagy, CPA | 48 | President, Chief Executive Officer, Chief Financial Officer and Treasurer |
| Dale R. Tieman | 59 | Executive Vice President, Chief Operations Officer and Corporate Secretary |
| Christopher J. Vaske | 54 | Senior Vice President and Chief Lending Officer |

---

**Directors of PFS Bancorp and Peru Federal**

PFS Bancorp and Peru Federal each have six directors, consisting of the same individuals. Directors serve three-year staggered terms so that approximately one-third of the directors are elected at each annual meeting. After the conversion and stock offering, the directors of Peru Federal will be elected by PFS Bancorp in its capacity as sole stockholder of Peru Federal. The following table sets forth information regarding our directors, including their ages at December 31, 2022 and the calendar years when they began serving as directors of Peru Federal.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Position(s) Held With Peru Federal** | **Age** | **Director <br> Since** | **Current Term <br> Expires** |
| James J. Brady, IV | Director | 54 | 2016 | 2023 |
| Jonathan F. Brandt | Vice Chairman of the Board | 64 | 2007 | 2025 |
| Eric J. Heagy, CPA | President, Chief Executive Officer, Chief Financial Officer and Treasurer |  | 2008 | 2023 |
| Cynthia L. Kurkowski, CPA | Director | 64 | 2015 | 2024 |
| Michael J. Rooney, O.D. | Chairman of the Board | 66 | 1995 | 2025 |
| Dale R. Tieman | Executive Vice President, Chief Operations Officer and Corporate Secretary | 59 | 2015 | 2024 |

---

**Board Independence**

PFS Bancorp has determined to adopt the standards for "independence" for purposes of board and committee service as set forth in the listing standards of the Nasdaq Stock Market. The board of directors has

determined that each director, except for Eric J. Heagy, CPA and Dale R. Tieman, is "independent" as defined in the listing standards of the Nasdaq Stock Market. Messrs. Heagy and Tieman are not considered independent because they are employed as executive officers of PFS Bancorp and Peru Federal.

To our knowledge, there were no other transactions between us and any director or entity controlled by any director, which would interfere with the directors' exercise of independent judgment in carrying out his responsibilities as a director.

**Business Background of Our Directors and Executive Officers**

The business experience for the past five years of each of our directors is set forth below. With respect to directors, the biographies also contain information regarding the person's experience, qualifications, attributes or skills that caused the Nominating Committee and the board of directors to determine that the person should serve as a director. Unless otherwise indicated, directors have held their positions for the past five years.

***James J. Brady, IV*** is part owner and President of JB Contracting Corporation in LaSalle, IL. JB Contracting is an electrical, plumbing, and mechanical and industrial contractor that has been in business for 47 years. It was started by Mr. Brady's father, Jim Brady, Sr., in May 1976 and now has been operated by Mr. Brady and his two brothers since 2019. JB Contracting does large, medium and small commercial and industrial projects in a 100-mile radius of LaSalle/Peru, IL. Mr. Brady started working at the age of 14 in the JB Contracting shop after school. He graduated from St. Bede Academy and attended Illinois Valley Community College and Joliet Junior College where he took electrical courses. He began his electrical apprenticeship program in 1988 with the IBEW Local 176. He worked as an electrician in the field for over 15 years before taking the role of estimator, superintendent and project manager for the electrical projects. Mr. Brady is a member of Will/Grundy Contractors Association and the Illinois Valley Contractors Association and serves on the City of Peru planning commission committee. With his 35 years of experience in the construction industry, he provides Peru Federal's board of directors with invaluable construction insight into building and construction lending operations.

***Jonathan F. Brandt*** has served as Vice Chairman of the Board of Peru Federal since 2009. He is an attorney-at-law and primary shareholder of the law firm Duncan & Brandt, P.C. He graduated from Illinois State University before earning his law degree from The John Marshall Law School in Chicago, Illinois. He has been practicing law for 35 years with a strong emphasis on real estate law. His legal expertise provides Peru Federal's board of directors with invaluable legal insight with respect to Peru Federal's real estate lending operations.

***Eric J. Heagy, CPA*** has served as President, Chief Executive and Chief Financial Officer of Peru Federal since 2007. Mr. Heagy graduated from Illinois State University with a bachelor's degree in accounting and is a licensed Certified Public Accountant. He joined Peru Federal in 2002 following four years in public accounting, auditing various entities including financial institutions. He began his career at Peru Federal as Controller, was promoted to Chief Financial Officer in 2004, and then to President and Chief Executive Officer in 2007. During his time at Peru Federal, in addition to his primary responsibilities, Mr. Heagy has guided Peru Federal in other operational areas as compliance officer, IT officer, lending officer and human resources officer. He has served the community in leadership roles of many local organizations and currently is the Board Treasurer of the Illinois Valley YMCA and Treasurer of the Peru Elementary School District 124. His 21 years of community banking experience and knowledge of Peru Federal's business and market area provides Peru Federal's board of directors with valuable insight to the business of Peru Federal.

***Cynthia L. Kurkowski, CPA***, now retired and inactive as a CPA, became a CPA after earning a BS in Accounting from Northern Illinois University in 1981. She began her career in the public accounting sector. In 1984, she moved to the manufacturing sector as a staff accountant. She held a variety of accounting and leadership positions in the manufacturing and retail industry before retiring in 2019. Ms. Kurkowski provides Peru Federal's board of directors with over 35 years of financial, audit and managerial experience, with more than 20 years at the executive level. She is currently sharing her passion for accounting as a professional tutor at Illinois Valley Community College.

***Dr. Michael J. Rooney, O.D.*** is a doctor of optometry. He has served as Chairman of the Board of Peru Federal since 2008. Dr. Rooney joined Peru Federal in 1996 and serves on the Audit and Compensation

Committees. He graduated from Creighton University in 1977 and the Illinois College of Optometry in 1981 when he entered private practice. He has been in active management of Eye Care Professionals, a multi-doctor group practice, since 1999. His community involvement has placed him on many boards of directors of not-for-profit organizations including church council, hospital, school boards and foundations. He is currently the Chair of the Lighted Way Foundation and is active in the Peru Rotary Club. His experience in health care and serving on many boards of directors over the past 41 years brings knowledge of the financial and humanitarian needs of the community to Peru Federal to facilitate Peru Federal's ability to serve its community.

***Dale R. Tieman*** is the Executive Vice President and Chief Operations Officer of Peru Federal. Mr. Tieman has been with Peru Federal since 2001. He began his career with Peru Federal as a Financial Advisor and has advanced to different positions with Peru Federal. In 2009, he was promoted to Executive Vice President/Chief Operations Officer. Mr. Tieman serves on the board for several local non-for-profit organizations. Mr. Tieman holds Series 7, 63 and 65 securities licenses and is a graduate of the Graduate School of Banking, Madison. With his over 25 years of community banking experience and knowledge of Peru Federal's business and market area, Mr. Tieman provides Peru Federal's board of directors with valuable insight into the business of Peru Federal.

**Executive Officers Who are not Directors**

The following sets forth information regarding our executive officers who are not directors. Age information is at December 31, 2022.

***Christopher J. Vaske***, age 53, has served as Senior Vice President and Chief Lending Officer since 2012. Before joining Peru Federal, he served as a commercial lending officer, commercial underwriter and credit officer for two regional financial institutions. He received his Bachelor of Science in Marketing, with a minor in finance, and a Masters of Business Administration from the University of Iowa. Mr. Vaske has served the community in leadership roles for many local organizations and currently is the Board Treasurer of the Lighted Way Association, Autism Foundation of the Illinois Valley, LPHS Band Parent Association, LaSalle Rotary Park Foundation and the Depue Community Unit School District 103.

**Meetings and Committees of the Board of Directors of PFS Bancorp and Peru Federal**

The board of directors of PFS Bancorp has met _____ times since the incorporation of PFS Bancorp to address certain organizational matters and matters related to the conversion and stock offering, and has established the following standing committees: Audit Committee (consisting of Michael J. Rooney and Cynthia L. Kurkowski), Compensation Committee (consisting of Michael J. Rooney and Cynthia L. Kurkowski), and Nominating Committee (consisting of James J. Brady, IV and Jonathan F. Brandt). Each these committee is expected to operate under a written charter, which governs its composition, responsibilities and operations. The board of directors of PFS Bancorp has designed Cynthia L. Kurkowski, a certified public accountant (inactive), as an "audit committee financial expert" as that term is defined in applicable regulations of the Securities and Exchange Commission.

During the year ended December 31, 2022, Peru Federal's board of directors met 25 times. The Peru Federal board of directors conducts business through several committees, including an audit committee, a loan committee and an asset/liability management committee.

**Corporate Governance Policies and Procedures**

In addition to establishing committees of our board of directors, we expect to adopt several policies to govern the activities of both PFS Bancorp and Peru Federal including corporate governance policies and a code of business conduct and ethics. The corporate governance policies are expected to involve such matters as the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the composition, responsibilities
 and operation of our board of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the establishment and
 operation of board committees, including audit, nominating/corporate governance and compensation
 committees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· convening executive
 sessions of independent directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· our board of directors'
 interaction with management and third parties.

The code of business conduct and ethics, which is expected to apply to all employees and directors, will address conflicts of interest, the treatment of confidential information, general employee conduct and compliance with applicable laws, rules and regulations. In addition, the code of business conduct and ethics will be designed to deter wrongdoing and to promote honest and ethical conduct, the avoidance of conflicts of interest, full and accurate disclosure and compliance with all applicable laws, rules and regulations.

**Transactions With Certain Related Persons**

***Loans and Extensions of Credit.*** Federal law generally prohibits publicly traded companies from making loans and extensions of credit to their executive officers and directors, but it contains a specific exemption from such prohibition for loans made by federally insured financial institutions, such as Peru Federal, to their executive officers and directors in compliance with federal banking regulations. Federal regulations permit executive officers and directors to receive the same terms that are widely available to other employees as long as the director or executive officer is not given preferential treatment compared to the other participating employees. All loans made to our executive officers and directors that were outstanding at December 31, 2022, were made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to Peru Federal and did not involve more than the normal risk of collectability or present other unfavorable features. All such other loans were performing according to their original repayment terms at December 31, 2022, and were made in compliance with federal banking regulations.

***Other.*** Jonathan F. Brandt, a director of PFS Bancorp and Peru Federal, is an attorney-at-law and the primary shareholder of the law firm of Duncan & Brandt, PC. The law firm performs legal work for Peru Federal. For the years ended December 31, 2022 and 2021, Peru Federal paid legal fees to the law firm of $69,000 and $73,000, respectively. These fees were paid in the ordinary course of business and on substantially the same terms and conditions as for unrelated third parties.

**Executive Compensation**

***Summary Compensation Table***. The following information is furnished for our principal executive officer and the two most highly compensated executive officers (other than the principal executive officer) whose total compensation exceeded $100,000 for the fiscal year ended December 31, 2022. These individuals are sometimes referred to in this prospectus as the "named executive officers."

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Salary ($)** | **Bonus ($)** | **All Other<br> Compensation ($) <sup>(1)</sup>** | **Total ($)** |
| Eric J. Heagy, CPA <br>President and Chief Executive Officer | 2022 | 205000 | 20000 | 12695 | 237695 |
| Dale R. Tieman |  |  |  |  |  |
| Executive Vice President, Chief Operations Officer and Corporate Secretary | 2022 | 146000 | 10000 | 8801 | 164801 |
| Christopher J. Vaske <br>Senior Vice President and Chief Lending Officer | 2022 | 125000 | 10000 | 7750 | 142750 |

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(1) The compensation disclosed in the "All Other Compensation"
 column consists of the following:

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Life Insurance<br> Imputed Income ($)** | **401(k) Plan<br> Employer<br> Contributions ($)** | **Total All Other<br> Compensation ($)** |
| Eric J. Heagy, CPA | 127 | 12568 | 12695 |
| Dale R. Tieman | 180 | 8621 | 8801 |
| Christopher J. Vaske | 284 | 7466 | 7750 |

---

***Proposed Employment Agreements***. Peru Federal does not currently maintain employment agreements with any of its employees. In connection with the conversion and stock offering, it intends to enter into an employment agreement with each of Eric J. Heagy, Dale R. Tieman and Christopher Vaske. Our continued success depends to a significant degree on their skills and competence and the employment agreements are intended to ensure we maintain a stable management base following the conversion and stock offering.

The employment agreements for Messrs. Heagy, Tieman and Vaske will have initial terms that commences on the date of conversion and stock offering and continues until December 31, 2023. Commencing on January 1, 2024, the respective terms will continue thereafter for three years for Mr. Heagy's agreement and two years for Messrs. Tieman and Vaske's agreement. On January 1, 2025 and each January 1 thereafter, the respective terms of the agreements will extend for an additional year, so that the respective terms again become three years for Mr. Heagy's agreement and two years for Messrs. Tieman and Vaske's agreements. However, at least thirty (30) days before a January 1<sup>st</sup> renewal date of the respective terms of the agreements, the disinterested members of the board of directors must conduct a comprehensive performance evaluation of Messrs. Heagy, Tieman and Vaske and affirmatively approve any extension of the respective agreements for an additional year or determine not to extend the term of any of the agreements. If the board of directors determines not to extend the term, it must notify the executive before the applicable January 1<sup>st</sup> renewal date and the term of the applicable agreement will expire at the end of the then current term. If a change in control occurs during the terms of the employment agreements, the terms of the respective agreements will automatically renew for three years for Mr. Heagy's agreement and two years for Messrs. Tieman and Vaske's agreements from the date of the change in control.

The employment agreements will provide Messrs. Heagy, Tieman and Vaske with an annual base salary of $205,000, $146,000 and $130,000, respectively. The board of directors will review the executive's base salary at least annually and the base salary may be increased, but not decreased, except for a decrease that is generally applicable to all employees. In addition to receiving base salary, Messrs. Heagy, Tieman and Vaske will participate in any bonus programs and benefit plans made available to senior management employees. Peru Federal will also reimburse Messrs. Heagy, Tieman and Vaske for all reasonable business expenses incurred in performing their duties.

If Messrs. Heagy's, Tieman's or Vaske's employment involuntary terminates for reasons other than cause, disability or death, or in the event of the executive's resignation for "good reason," in either event other than in connection with a change in control, the executive will receive a severance payment, paid in a lump sum, equal to: (i) the base salary and bonuses (based on the highest bonus paid during the prior three years) the executive would have received during the remaining term of the respective employment agreement, (ii) the present value of the contributions that would have been made on the executive's behalf under Peru Federal's defined contribution plans as if executive had continued working for Peru Federal for the remaining term of the agreement, and (iii) continued nontaxable medical and dental coverage and life insurance coverage substantially comparable, as reasonably available, to the coverage maintained by Peru Federal for the executive, at no cost to the executive, for the remaining unexpired term of the agreement.

If Messrs. Heagy's, Tieman's or Vaske's employment involuntary terminates for reasons other than cause, disability or death, or in the event of the executive's resignation for "good reason," (as defined in the agreement) in either event within eighteen (18) months following a change in control, the executive will receive a severance payment, paid in a lump sum, equal to: (i) three times the sum of (a) the highest annual base salary paid to the executive at any time under the agreement, and (b) the highest bonus paid to the executive with respect to the three completed fiscal years before the change in control, (ii) the present value of the contributions that would have been made on the executive's behalf under Peru Federal's defined contribution plans as if executive had continued working for Peru Federal thirty-six (36) months, and (iii) continued nontaxable medical and dental coverage and life insurance coverage substantially comparable, as reasonably available, to the coverage maintained by Peru Federal for the executive, at no cost to the executive, for thirty-six (36) months. The severance benefits under Messrs. Tieman's and Vaske's respective employment agreements may be reduced if the severance benefits under the employment agreement or otherwise result in "excess parachute payments" under Section 280G of the Internal Revenue Code.

If Messrs. Heagy, Tieman or Vaske become disabled during the term of the respective employment agreement, the executive will be entitled to receive benefits under all short-term or long-term disability plans maintained by Peru Federal for its executives. To the extent such benefits are less than executive's base salary, Peru

Federal shall pay the executive an amount equal to the difference between such disability plan benefits, the executive's social security disability benefits and the amount of executive's base salary for the longer of one (1) year following the termination of the executive's employment due to disability or the remaining term of the employment agreement, payable in accordance with the regular payroll practices of Peru Federal. In addition, the executive will be entitled to continued non-taxable medical and dental coverage that is substantially comparable, as reasonably available, to the coverage maintained by Peru Federal for the executive before the termination of the executive's employment until the earlier of (i) the date the executive returns to the full-time employment of Peru Federal; (ii) executive's full-time employment by another employer; (iii) expiration of the remaining term of the agreement; or (iv) executive's death.

If the executive dies while employed by Peru Federal, the executive's beneficiaries will receive the executive's base salary, payable in accordance with the regular payroll practices of Peru Federal, for a period of one (1) year from the date of executive's death, and Peru Federal shall continue to provide non-taxable medical, and dental insurance benefits normally provided to the executive's family (in accordance with its customary co-pay percentages) for twelve (12) months after the executive's death.

Upon termination of employment, Messrs. Heagy, Tieman or Vaske will be required to adhere to a one-year non-solicitation restriction and a six month non-competition restriction (other than a termination in connection with a change in control).

***Salary Continuation Agreement.*** In connection with the conversion and stock offering, Peru Federal intends to enter into a salary continuation agreement with Mr. Heagy. Under the agreement, if Mr. Heagy separates from service after reaching the normal retirement age of age sixty-two (62), he will be entitled to an annual benefit equal to $25,000. This benefit payment will begin on the first business day of the first month following the executive's separation from service and will be payable monthly for a period of 120 months.

If Mr. Heagy separates from service before reaching normal retirement age (other than on account of death or for cause), he will be entitled to the accrued benefit (i.e., the amount accrued for GAAP purposes), paid in a lump sum on the first business day of the first month following the executive's separation from service. If Mr. Heagy experiences a qualifying termination of employment within two years following a change in control and before age sixty-two (62), he will receive an amount equal to the present value of the normal retirement benefit under the agreement (regardless of the executive's age at the time). The benefit will be paid to him in a lump sum on the first business day of the first month following the executive's separation from service.

If Mr. Heagy dies before a separation from service and before age sixty-two (62), the executive's beneficiary will receive the accrued benefit paid in a lump sum on the first business day of the first month following the executive's death. If Mr. Heagy dies before a separation from service and after age sixty-two (62), the executive's beneficiary will receive the benefits (at the same time and in the same form) he would have continued to have received under the agreement had he survived. If Mr. Heagy dies while receiving benefits, the executive's beneficiary will continue to receive the benefit payments (at the same time and in the same form) he would have continued to have received under the agreement had he survived.

***Deferred Compensation Plan.*** Peru Federal maintains the Peru Federal Savings Bank Amended and Restated Deferred Compensation Plan, pursuant to which directors may elect to defer a portion of their director's fees each year. Peru Federal credits the deferred amounts with earnings at a rate equivalent to the Moody's Aaa seasoned bond rate as of December 31 of the previous year. Directors may elect to receive their deferred fees and earnings when they separate from service or at a specified date and have the benefits paid in a lump sum or installments. In connection with the conversion and stock offering, Peru Federal's board of directors has amended and restated the deferred compensation plan to (i) permit the amounts credited on behalf of a participant to be invested in the common stock of PFS Bancorp, and (ii) allow certain executives to participate and defer salary and cash bonuses. In addition, and in connection with the conversion and stock offering, the board of directors adopted a rabbi trust to hold shares of common stock of PFS Bancorp that may be purchased with the amounts credited under the deferred compensation plan. Shares of common stock of PFS Bancorp purchased with amounts credited under the deferred compensation plan will be distributed in the form of common stock of PFS Bancorp.

***Supplemental Life Insurance Agreement.*** Peru Federal has entered into a Peru Federal Savings Bank Supplemental Life Insurance Agreement with each named executive officer. Peru Federal purchased life insurance

policies on the life of each named executive officer in an amount sufficient to provide for the benefits under the agreement. The named executive officer has the right to designate a beneficiary who will receive the executive's share of the proceeds payable upon the executive's death. The policies are owned by Peru Federal, which paid the premium due on the policies. In accordance with the terms of the agreement, upon the death of a covered executive before a separation from service, the executive's beneficiary, would be entitled to the lesser of (i) one times the covered executive's annual base salary or (ii) the net death proceeds. The "net death proceeds" amount equals the total death benefit of a life insurance policy less the cash surrender value of the policy.

***401(k) Plan.*** Peru Federal maintains the Peru Federal Savings Bank Profit Sharing and 401(k) Plan, a tax-qualified defined contribution plan for eligible employees (the "401(k) Plan"). The named executive officers are eligible to participate in the 401(k) Plan on the same terms as other eligible employees. Eligible employees become participants in the 401(k) Plan and may make salary deferrals under the plan after having attained age 21 and completed three months of service. Employees become eligible for employer contributions, including matching contributions, after they attain age 21 and complete one year of service.

Under the 401(k) Plan, a participant may elect to defer, on a pre-tax basis, the maximum amount of compensation permitted by the Internal Revenue Code. For 2023, the salary deferral contribution limit is $22,500, provided, however, that a participant over age 50 may contribute an additional $7,500 to the 401(k) Plan for a total of $30,000. In addition to salary deferral contributions, Peru Federal currently makes two types of contributions: (i) a contribution equal to 3.0% of a participant's compensation, even if such participant does not elect to make salary deferral contributions, and (ii) matching contributions at the level of 50% of the participant's salary deferral on the first 5% of the participant's compensation (for a total possible employer match of 2.5%).

A participant is always 100% vested in his or her salary deferral contributions. A participant will vest in matching and other employer contributions at the rate of 20% per year of service, beginning after two years of service, so that a participant will become fully vested after completing six years of credited service. Generally, unless the participant elects otherwise, the participant's account balance will be distributed following the participant's termination of employment. However, participants may take in-service withdrawals from the 401(k) Plan in certain circumstances, including for loans and hardships.

Expense recognized in connection with the 401(k) Plan totaled $73,000 for the year ended December 31, 2022.

***Employee Stock Ownership Plan*** **.** Peru Federal intends to adopt an employee stock ownership plan, effective January 1, 2023, for eligible employees. It is anticipated that eligible employees will include employees who have attained age 21 and have completed one year of service. Employees employed as of January 1, 2023, will begin participation in the employee stock ownership plan on the later of the effective date of the employee stock ownership plan or upon the first entry date commencing on or after the eligible employee's completion of 1,000 hours of service during a continuous 12-month period.

The employee stock ownership plan trustee is expected to purchase, on behalf of the employee stock ownership plan, 8% of the sum of the number of shares of PFS Bancorp common stock sold in the stock offering and contributed to the charitable foundation. We anticipate that the employee stock ownership plan will fund its stock purchase with a loan from PFS Bancorp equal to the aggregate purchase price of the common stock. The loan will be repaid principally through Peru Federal's contribution to the employee stock ownership plan and dividends payable on common stock held by the employee stock ownership plan over the anticipated 25-year term of the loan. The interest rate for the employee stock ownership plan loan is expected to be a fixed-rate equal to the prime rate, as published in *The Wall Street Journal*, on the closing date of the conversion and stock offering. If market conditions warrant, in the judgment of its trustees, the employee stock ownership plan's subscription order will not be filled and the employee stock ownership plan may elect to purchase shares in the open market following the completion of the conversion and stock offering, subject to applicable regulatory approvals or non-objections.

The trustee will hold the shares purchased by the employee stock ownership plan in an unallocated suspense account. Shares will be released from the suspense account on a pro-rata basis as the trustee repays the loan. The trustee will allocate the shares released among the participants' accounts based on each participant's proportional share of compensation relative to all participants. Participants will vest in their benefit at a rate of 20% per year beginning after two years of service, such that the participants will be 100% vested upon completion of six

years of credited services. Participants who were employed by Peru Federal immediately before the completion of the conversion and stock offering will receive credit for vesting purposes for years of service before adoption of the employee stock ownership plan. Participants also will become fully vested upon normal retirement, death or disability, a change in control, or termination of the employee stock ownership plan. Generally, participants will receive distributions from the employee stock ownership plan upon severance from employment. The employee stock ownership plan reallocates any unvested shares forfeited upon termination of employment among the remaining participants.

The employee stock ownership plan will permit participants to direct the trustee as to how to vote the shares of common stock allocated to their accounts. The trustee will vote unallocated shares and allocated shares for which participants do not provide instructions on any matter in the same ratio as those shares for which participants provide instructions, subject to fulfillment of the trustee's fiduciary responsibilities.

Under applicable accounting requirements, Peru Federal will record a compensation expense for the employee stock ownership plan at the fair market value of the shares as they are committed to be released from the unallocated suspense account to participants' accounts. The compensation expense resulting from the release of PFS Bancorp common stock from the suspense account and allocation to plan participants will result in a corresponding reduction in the earnings of PFS Bancorp.

**Directors' Compensation**

The following table sets forth for the year ended December 31, 2022, certain information as to the total renumeration paid to our non-employee directors.

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Fees Earned or Paid<br> in Cash ($)** | **All Other<br> Compensation ($)** | **Total ($)** |
| Dr. Michael J. Rooney, Chairman | 35200<sup>(1)</sup> | —<sup>(1)</sup> | 35200 |
| Jonathan F. Brandt, Vice Chairman | 31200 | 68591<sup>(2)</sup> | 99791 |
| Cynthia L. Kurkowski, CPA | 31200 |  | 31200 |
| James J. Brady, IV | 31200 |  | 31200 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Cash fees of $35,200 were deferred pursuant to the Peru Federal Savings
 Bank Deferred Compensation Plan and the earnings on Dr. Rooney's account balance
 in the plan were based on an interest rate below the applicable market interest rate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Represents
 retainer paid to Mr. Brandt's law firm, Duncan & Brandt P.C., of $52,000
 and loan document preparation fees of $16,591.

Peru Federal pays director fees only to the directors who are not employees of Peru Federal. For the year ended December 31, 2022, the non-employee directors of Peru Federal received an annual retainer of $13,000 ($16,000 for the Chairman of the Board) and $700 for attendance at each meeting of the board of directors or of its committees. Commencing January 1, 2023, Peru Federal no longer pays any fees for attendance at meetings of the Board of Directors or of its committees and Peru Federal increased the annual retainer to $35,000 ($38,000 for the Chairman of the Board).

Each individual who serves as a director of Peru Federal also serves as a director of PFS Bancorp. Initially, the non-employee directors of Peru Federal will receive director fees only in their capacity as a director of Peru Federal. Following the completion of the conversion and stock offering, PFS Bancorp may also determine to pay director fees but has not determined to do so at this time.

**Deferred Compensation Plan**

Peru Federal maintains the Peru Federal Savings Bank Amended and Restated Deferred Compensation Plan, pursuant to which directors may elect to defer a portion of their director's fees each year. Peru Federal credits the deferred amounts with earnings at a rate equivalent to the Moody's Aaa seasoned bond rate as of December 31 of the previous year. Directors may elect to receive their deferred fees and earnings when they separate from service or at a specified date and have the benefits paid in a lump sum or installments. In connection with the conversion and stock offering, Peru Federal's board of directors amended and restated the deferred compensation plan to (i) permit the amounts credited on behalf of a participant to be invested in the common stock of PFS Bancorp and (ii) allow certain executives to participate and defer salary and cash bonuses. In addition, the board of directors adopted a rabbi trust to hold shares of common stock of PFS Bancorp that may be purchased with the amounts credited under

the deferred compensation plan. Shares of common stock of PFS Bancorp purchased with amounts credited under the deferred compensation plan will be distributed in the form of common stock of PFS Bancorp.

**Benefits to be Considered Following Completion of the Conversion and Stock Offering**

***Stock-Based Benefit Plans.*** Following the conversion and stock offering, we intend to adopt one or more new stock-based benefit plans that will provide for grants of stock options and restricted stock awards (including restricted stock units). The stock-based benefit plans will not be adopted sooner than six months after the conversion and stock offering, and, if adopted within 12 months after the conversion and stock offering, stockholders must approve the plans by a majority of the votes eligible to be cast. If the stock-based benefit plans are established more than 12 months after the conversion and stock offering, stockholders must approve the plans by a majority of votes cast. Also, if adopted within 12 months following the completion of the conversion, the aggregate number of shares reserved for the exercise of stock options or available for stock awards under the stock-based benefit plans would be limited to 10% and 4%, respectively, of the sum of the number of shares sold in the stock offering and contributed to the charitable foundation.

The following additional restrictions would apply to our stock-based benefit plans if we adopt such plans within 12 months after the conversion and stock offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· non-employee
 directors in the aggregate may not receive more than 30% of the options and restricted stock
 awards authorized under the plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· any
 one non-employee director may not receive more than 5% of the options and restricted stock
 awards authorized under the plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· any
 officer or employee may not receive more than 25% of the options and restricted stock awards
 authorized under the plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· any
 tax-qualified employee stock benefit plans and restricted stock plans, in the aggregate,
 may not acquire more than 10% of the sum of the number of shares sold in the stock offering
 and contributed to the charitable foundation, unless Peru Federal has tangible capital of
 10% or more, in which case tax-qualified employee stock benefit plans and restricted stock
 plans may acquire up to 12% of the sum of the number of shares sold in the stock offering
 and contributed to the charitable foundation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the
 options and restricted stock awards may not vest more rapidly than 20% per year, beginning
 on the first anniversary of stockholder approval of the plans; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· accelerated
 vesting is not permitted except for death, disability or upon a change in control of PFS
 Bancorp or Peru Federal.

We have not determined whether we will present stock-based benefit plans for stockholder approval before or after 12 months after the completion of the conversion and stock offering.

We may obtain the shares needed for our stock-based benefit plans by issuing additional shares of common stock from authorized but unissued shares or through stock repurchases.

The actual value of the shares awarded under stock-based benefit plans would be based in part on the price of the common stock of PFS Bancorp when the shares are awarded. The following table presents the total value of all shares of restricted stock that would be available for issuance under the new stock-based benefit plans, assuming the shares are awarded when the market price of our common stock ranges from $8.00 per share to $14.00 per share.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Share Price** | **Value of Shares Awarded <br> at Minimum of Offering<br> Range** | **Value of Shares Awarded <br> at Midpoint of Offering<br> Range** | **Value of Shares Awarded <br> at Maximum of Offering<br> Range** | **Value of Shares <br> Awarded at <br> Adjusted Maximum <br> of Offering Range** |
| **(In thousands, except share price information)** | **(In thousands, except share price information)** | **(In thousands, except share price information)** | **(In thousands, except share price information)** | **(In thousands, except share price information)** |
| $8.00 | $502 | $589 | $675 | $775 |
| 10.00 | 628 | 736 | 844 | 968 |
| 12.00 | 754 | 883 | 1013 | 1162 |
| 14.00 | 879 | 1030 | 1182 | 1355 |

---

The grant-date fair value of the options granted under the new stock-based benefit plans will be based in part on the price of shares of common stock of PFS Bancorp when the options are granted. The value also will depend on the various assumptions utilized in the option pricing model ultimately adopted. The following table presents the total estimated value of the options to be available for grant under the stock-based benefit plans, assuming the market price and exercise price for the stock options are equal and the range of market prices for the shares is $8.00 per share to $14.00 per share. The Black-Scholes option pricing model provides an estimate only of the fair value of the stock options, and the actual value of the stock options may differ significantly from the value set forth in this table.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Exercise Price** | **Grant-Date Fair <br> Value Per Option** | **Value of Options at<br> Minimum of Offering<br> Range** | **Value of Options at<br> Midpoint of Offering<br> Range** | **Value of Options at<br> Maximum of Offering<br> Range** | **Value of Options at<br> Adjusted Maximum of<br> Offering Range** |
| **(In thousands, except exercise price and fair value information)** | **(In thousands, except exercise price and fair value information)** | **(In thousands, except exercise price and fair value information)** | **(In thousands, except exercise price and fair value information)** | **(In thousands, except exercise price and fair value information)** | **(In thousands, except exercise price and fair value information)** |
| $8.00 | $3.26 | $512 | $600 | $688 | $789 |
| 10.00 | 4.07 | 639 | 749 | 859 | 985 |
| 12.00 | 4.89 | 768 | 900 | 1032 | 1184 |
| 14.00 | 5.70 | 895 | 1049 | 1203 | 1380 |

---

**The above tables are provided for informational purposes only. There can be no assurance that our stock price will not trade below the offering price of $10.00 per share. Before you make an investment decision, we urge you to read this prospectus carefully, including, but not limited to, the section entitled "Risk Factors."**

**SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS**

The following table sets forth information regarding intended common stock subscriptions by each of the directors and executive officers and their associates and by all directors, officers and their associates as a group. However, there can be no assurance that any such person or group will purchase any specific number of shares of our common stock. If the individual maximum purchase limitation is increased, persons subscribing for the maximum amount may increase their purchase order. Directors and officers will purchase shares of common stock at the same $10.00 purchase price per share and on the same terms as other purchasers in the stock offering. This table excludes shares of common stock to be purchased by the employee stock ownership plan, as well as any stock awards or stock option grants that may be made no earlier than six months after the completion of the conversion and stock offering. Purchases by directors, officers and their associates will be included in determining whether the required minimum number of shares has been subscribed for in the stock offering. The shares being acquired by the directors, executive officers and their associates are being acquired for investment purposes, and not with a view towards resale. Our directors and executive officers will be subject to the same minimum purchase requirements and purchase limitations as other participants in the stock offering set forth under "The Conversion and Stock Offering – Limitations on Common Stock Purchases."

---

| | | | |
|:---|:---|:---|:---|
| **Name and Title** | **Number of<br> Shares <sup>(1)</sup>** | **Aggregate<br> Purchase <br> Price <sup>(1)</sup>** | **Percent<br> Outstanding at<br> Minimum of<br> Offering Range <sup>(2)</sup>** |
| James J. Brady, Director | 35000 | $350000 | 2.2% |
| Jonathan F. Brandt, Vice Chairman of the Board | 40000 | 400000 | 2.5 |
| Eric J. Heagy, CPA, President, Chief Executive Officer, Chief Financial Officer, and Director | 10000 | 100000 | \* |
| Cynthia L. Kurkowski, CPA, Director | 25000 | 250000 | 1.6 |
| Michael J. Rooney, O.D., Chairman of the Board | 40000 | 400000 | 2.5 |
| Dale R. Tieman, Executive Vice President, Chief Operations Officer, and Director <sup>(3)</sup> |  |  |  |
| Christopher J. Vaske, Senior Vice President and Chief Lending Officer | 5000 | 50000 | \* |
| All directors and executive officers as a group (7 persons) | 155000 | $1550000 | 9.9% |

---

\* Less than 1.0%

(1) Includes purchases by the named individual's spouse and other relatives of the named individual living in the same household, if any. Other than as set forth above, the named individual is not aware of any other intended purchases by a person or entity that would be considered an associate of the named individual under the plan of conversion.

(2) Percentage based on a denominator equal to the sum of 1,530,000 shares of common stock sold in the stock offering at the minimum of the offering range and 40,000 shares of common stock contributed to the charitable foundation.

(3) Mr. Tieman is affiliated with a broker-dealer regulated by the Financial Institutions Regulatory Authority (FINRA). FINRA rules prohibit him from participating in the stock offering due to that affiliation.

**THE CONVERSION AND STOCK OFFERING**

The board of directors of Peru Federal has approved the plan of conversion. The plan of conversion provides for the establishment and funding of the charitable foundation. The plan of conversion must also be approved by Peru Federal's members (its depositors). The establishment and funding of the charitable foundation must also be approved by Peru Federal's members, by a separate vote. A special meeting of members has been called for these purposes. Peru Federal has filed an application with respect to the conversion and stock offering with the OCC, and PFS Bancorp has filed a holding company application with the Federal Reserve Board. The approvals of the OCC and the Federal Reserve Board are required before we can consummate the conversion and stock offering. Any approval by the OCC or the Federal Reserve Board does not constitute a recommendation or endorsement of the plan of conversion.

**General**

The board of directors of Peru Federal adopted and approved the plan of conversion on March 6, 2023. According to the plan of conversion, Peru Federal will convert from the mutual form of organization to the stock form of organization. In connection with the conversion, Peru Federal has organized a new Maryland stock holding company, named PFS Bancorp, which will sell shares of common stock to the public in an initial public stock offering. When the conversion and stock offering are completed, all of the capital stock of Peru Federal will be owned by PFS Bancorp, and all of the common stock of PFS Bancorp will be owned by its stockholders.

PFS Bancorp expects to retain between $5.5 million and $7.8 million of the net proceeds of the stock offering, or $9.1 million if the offering range is increased by 15% because of demand for the shares or changes in market conditions. Peru Federal will receive a capital contribution equal to at least 50% of the net proceeds of the stock offering. Based on this formula, we anticipate that PFS Bancorp will invest in Peru Federal $6.9 million, $8.3 million, $9.6 million and $11.2 million, respectively, of the net proceeds at the minimum, midpoint, maximum, and adjusted maximum of the offering range. The conversion and stock offering will be consummated only upon the sale of at least 1,530,000 shares of our common stock.

The plan of conversion provides that we will offer shares of common stock for sale in the subscription offering to Eligible Account Holders, our tax-qualified employee benefit plans, specifically our employee stock ownership plan, Supplemental Eligible Account Holders and Other Members. If all shares are not subscribed for in the subscription offering, we may, in our discretion, offer common stock for sale in a community offering to members of the public, with a preference given to natural persons (and trusts of natural persons) residing in Bureau, LaSalle and Putnam Counties in Illinois. In addition, shares of common stock not purchased in the subscription

offering and community offering may be offered for sale to the general public in a syndicated community offering to be managed by KBW, acting as our agent.

We have the right to accept or reject, in whole or in part, any orders to purchase shares of the common stock received in any community offering or any syndicated community offering. The community offering and/or syndicated community offering, if any, may begin at the same time as, during, or after the subscription offering, and must be completed within 45 days after the completion of the subscription offering unless otherwise extended by us with the approval of the OCC. See " – Community Offering" and " – Syndicated Community Offering."

We determined the number of shares of common stock to be offered in the stock offering based upon an independent valuation of the estimated consolidated pro forma market value of PFS Bancorp, assuming the conversion and stock offering are completed. All shares of common stock to be sold in the stock offering will be sold at $10.00 per share. Investors will not be charged a commission to purchase shares of common stock. The independent valuation will be updated and the final number of the shares of common stock to be issued in the stock offering will be determined at the completion of the stock offering. See " – Determination of Share Price and Number of Shares to be Issued" for more information as to the determination of the estimated pro forma market value of the common stock.

The following is a brief summary of the plan of conversion. We recommend reading the plan of conversion in its entirety for more information. A copy of the plan of conversion is available for inspection at each banking office of Peru Federal and as described in the section of this prospectus entitled "Where You Can Find Additional Information." The plan of conversion is also filed as an exhibit to Peru Federal's application for approval to convert from mutual to stock form, of which this prospectus is a part, copies of which may be obtained from the OCC. The plan of conversion is also filed as an exhibit to PFS Bancorp's registration statement filed with the Securities and Exchange Commission, of which this prospectus is a part, copies of which may be obtained from the Securities and Exchange Commission or online at the Securities and Exchange Commission's website, *www.sec.gov*. See "Where You Can Find Additional Information."

**Reasons for the Conversion**

Consistent with our business strategy, our primary reasons for converting and raising additional capital through the stock offering are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to
 increase capital to support future growth and profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to
 retain and attract qualified personnel by establishing stock-based benefit plans for management
 and employees; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to
 offer our customers and employees an opportunity to purchase an equity interest in Peru Federal
 by purchasing shares of common stock of PFS Bancorp.

Additionally, mutual institutions cannot offer stock incentives to attract and retain highly qualified management personnel. While Peru Federal has not required these capital tools and stock incentives in the past, they could prove to be important to implementing our business strategy, and management believes that the additional capital raised in the stock offering will enable us to take advantage of business opportunities that may not otherwise be available to us.

**Approvals Required**

The affirmative vote of a majority of the total votes eligible to be cast by the members of Peru Federal is required to approve the plan of conversion and to approve the establishment and funding of the charitable foundation. A special meeting of members to consider and vote upon the plan of conversion and the establishment and funding of the charitable foundation has been set for June ____, 2023, and a proxy statement will be sent to the members of Peru Federal eligible to vote at the special meeting of members to solicit their votes in favor of the plan of conversion and the establishment and funding of the charitable foundation. The plan of conversion also must be

approved by the OCC. Additionally, the Federal Reserve Board must approve PFS Bancorp's holding company application. We cannot consummate the conversion and the stock offering without satisfying the conditions contained in these approvals.

**Effects of Conversion on Depositors, Borrowers and Members**

***Continuity*** *.*** While the conversion and stock offering is being accomplished, our normal business of accepting deposits and making loans will continue without interruption. Peru Federal will continue to be a federally-chartered savings bank and will continue to be regulated by the OCC, while PFS Bancorp will be regulated by the Federal Reserve Board. After the conversion and stock offering, we will continue to offer existing services to depositors, borrowers and other customers. The individuals serving as directors of Peru Federal at the time of the conversion will serve as the directors of Peru Federal and of PFS Bancorp after the conversion and stock offering.

***Effect on Deposit Accounts*** *.*** According to the plan of conversion, each depositor of Peru Federal at the time of the conversion will automatically continue as a depositor after the conversion and stock offering, and the deposit balance, interest rate and other terms of such deposit accounts will not change as a result of the conversion ad stock offering. Each such account will be insured by the FDIC to the same extent as before the conversion and stock offering. Depositors will continue to hold their existing certificates of deposit, passbooks and other evidences of their accounts.

***Effect on Loans*** *.*** No loan outstanding from Peru Federal will be affected by the conversion and stock offering, and the amount, interest rate, maturity and security for each loan will remain as it was contractually fixed before the conversion and stock offering.

***Effect on Voting Rights of Members*** *.*** All of our depositors are members of and have voting rights in Peru Federal as to all matters requiring a vote of members, including the election of directors of Peru Federal, proposed amendments to Peru Federal's charter, and the vote on the plan of conversion. Upon completion of the conversion and stock offering, Peru Federal will cease to have members and former members will no longer have voting rights in Peru Federal. Upon completion of the conversion and stock offering, all voting rights in Peru Federal will be vested in PFS Bancorp as the sole stockholder of Peru Federal. The stockholders of PFS Bancorp will possess exclusive voting rights with respect to PFS Bancorp common stock.

***Tax Effects*** *.*** We have received opinions of our counsel and our tax advisors with regard to the federal and state income tax consequences of the conversion and stock offering to the effect that the conversion will not be taxable for federal or Illinois income tax purposes to Peru Federal or its members. See " – Material Income Tax Consequences."

***Effect on Liquidation Rights*** *.*** Each depositor of Peru Federal has both a deposit account in Peru Federal and a pro rata ownership interest in the net worth of Peru Federal based upon the deposit balance in the depositor's account. This ownership interest is tied to the depositor's account and has no tangible market value separate from the deposit account. This interest may only be realized in the event of a complete liquidation of Peru Federal. Any depositor who opens a deposit account obtains a pro rata ownership interest in Peru Federal without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her account receives a portion or all, respectively, of the balance in the deposit account but nothing for his or her ownership interest in the net worth of Peru Federal, which is lost to the extent that the balance in the account is reduced or closed.

Consequently, depositors in a mutual savings bank normally have no way of realizing the value of their ownership interest, which has realizable value only in the unlikely event that the institution is completely liquidated. If this occurs, the depositors of record at that time, as owners, would share pro rata in any residual surplus and reserves of Peru Federal after other claims, including claims of depositors to the amounts of their deposits, are paid.

In the unlikely event that Peru Federal were to liquidate after the conversion and stock offering, all claims of creditors, including those of depositors, would be paid first, followed by distribution of a "liquidation account" to depositors as of December 31, 2021 and March 31, 2023 who continue to maintain their deposit accounts as of the date of liquidation, with any assets remaining thereafter distributed to PFS Bancorp as the sole owner of Peru

Federal's capital stock. According to OCC rules and regulations, a post-conversion merger, consolidation, sale of bulk assets or similar combination or transaction with another insured savings institution would not be considered a liquidation and, in such a transaction, the liquidation account would be assumed by the surviving institution. See " – Liquidation Rights."

**Determination of Share Price and Number of Shares to be Issued**

The plan of conversion and OCC regulations require that the aggregate purchase price of the common stock sold in the stock offering be based on the appraised pro forma market value of the common stock, as determined by an independent valuation. We have retained Feldman Financial, an independent appraisal firm, to prepare an independent valuation appraisal. For its services in preparing the initial valuation and one final update valuation, Feldman Financial will receive a fee of $45,000, and will be reimbursed for its expenses up to $5,000.

We are not affiliated with Feldman Financial, and neither we nor Feldman Financial has an economic interest in or is held in common with the other. Feldman Financial represents and warrants that it is not aware of any fact or circumstance that would cause it not to be "independent" within the meaning of the conversion regulations or the applicable regulatory valuation guidelines or otherwise prohibit or restrict in anyway Feldman Financial from serving in the role of our independent appraiser.

We have agreed to indemnify Feldman Financial and its employees and affiliates against specified losses, including any losses in connection with claims under the federal securities laws, arising out of its services as independent appraiser, except where such liability results from its negligence or bad faith.

The independent valuation appraisal considered the pro forma effect of the conversion and stock offering. Consistent with federal appraisal guidelines, the appraisal applied three primary methodologies: (i) the pro forma price-to-book value approach applied to both reported book value and tangible book value; (ii) the pro forma price-to-earnings approach applied to reported and core earnings; and (iii) the pro forma price-to-assets approach. The market value ratios applied in the three methodologies were based on the current market valuations of the peer group companies. Feldman Financial placed the greatest emphasis on the price-to-earnings and price-to-book approaches in estimating pro forma market value. Feldman Financial did not consider a pro forma price-to-assets approach to be meaningful in preparing the appraisal, as this approach is more meaningful when a company has low equity or earnings. The price-to-assets approach is less meaningful for a company like us, as we have equity in excess of regulatory capital requirements and positive reported and core earnings.

The independent valuation was prepared by Feldman Financial in reliance upon the information contained in this prospectus, including our financial statements. Feldman Financial also considered the following factors, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the
 operating results and financial condition of Peru Federal and the projected operating results
 and financial condition of PFS Bancorp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the
 economic and demographic conditions in our existing market area;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· certain
 historical, financial and other information relating to us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· a
 comparative evaluation of our operating and financial characteristics with those of other
 similarly situated publicly traded savings institutions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the
 impact of the conversion and stock offering on PFS Bancorp's stockholders' equity
 and earnings potential;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the
 proposed dividend policy of PFS Bancorp; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the
 trading market for securities of comparable institutions and general conditions in the market
 for such securities.

The independent valuation is also based on an analysis of a peer group of publicly traded savings and loan holding companies that Feldman Financial considered comparable to us under regulatory guidelines applicable to the independent valuation. Under these guidelines, a minimum of ten peer group companies are selected from the universe of all publicly traded savings institutions with relatively comparable resources, strategies and financial and other operating characteristics. Such companies must also be traded on an exchange (such as Nasdaq or the New York Stock Exchange). Because of the initial and continuing listing standards of Nasdaq and the New York Stock Exchange, including public float and round lot holders requirements, as well as the fact that many of the smaller converted thrifts ultimately de-list their shares from Nasdaq and/or are acquired by larger companies, each of the peer group companies has a comparatively larger asset size than Peru Federal. The peer group companies selected also consisted of fully converted stock institutions that were not subject to an actual or rumored acquisition and that had been in fully converted form for at least one year. In addition, the peer group companies were limited to the following selection criteria: (i) total assets of less than $1.0 billion, (ii) tangible equity-to-assets ratios of greater than 7.0%, (iii) total market capitalization of less than $100 million, and (iv) initial emphasis on including Midwest institutions and expanded subsequently to consider Southwest, Southeast, or Mid-Atlantic institutions.

Included in the independent valuation were certain assumptions as to our pro forma earnings after the conversion that were utilized in determining the appraised value. These assumptions included estimated expenses, an assumed after-tax rate of return on the net offering proceeds of 2.85%, and purchases in the open market of 4.0% of the sum of the shares of common stock sold in the stock offering and contributed to the charitable foundation by the stock-based benefit plan at the $10.00 purchase price. See "Pro Forma Data" for additional information concerning these assumptions. The use of different assumptions may yield different results.

In applying each of the valuation methods, Feldman Financial considered adjustments to the pro forma market value based on a comparison of PFS Bancorp with the peer group. Feldman Financial made downward adjustments for earnings growth and viability, market area, liquidity of the stock issue, and marketing of the stock issue. The downward adjustment for earnings growth and viability was prompted by Peru Federal's lower net interest margin and less favorable efficiency ratio as compared to the overall peer group companies. The downward adjustment for market area reflected the less favorable demographic measures for Peru Federal's primary market area regarding unemployment rates, population growth and household income levels compared to the primary market areas of the peer group companies. The downward adjustment for the liquidity of the issue took into consideration the lower number of shares to be outstanding and the lower market capitalization expected in comparison to the peer group companies. The downward adjustment for marketing of the issue was based on the risk and uncertainty related to a new offering in the current environment of market volatility. Feldman Financial made no adjustments for financial condition, management, dividend policy, and subscription interest.

On the basis of the foregoing, Feldman Financial's independent valuation states that as of February 21, 2023, the estimated pro forma market value of PFS Bancorp was $18.4 million (inclusive of the shares of common stock to be contributed to the charitable foundation). Based on OCC regulations, this market value forms the midpoint of a range with a minimum of $15.7 million and a maximum of $21.1 million. Our board of directors decided to offer the shares of common stock for a price of $10.00 per share primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. The number of shares offered for sale in the stock offering equals to the aggregate offering price of the shares divided by the price per share. Based on the valuation range and the $10.00 price per share, the minimum of the offering range is 1,530,000 shares, the midpoint of the offering range is 1,800,000 shares and the maximum of the offering range is 2,070,000 shares, or 2,380,500 shares if the maximum amount is increased by 15% because of demand for shares or changes in market conditions.

The following table presents a summary of selected pricing ratios for the peer group companies and for PFS Bancorp (on a pro forma basis) utilized by Feldman Financial in its independent appraisal. These ratios are based on PFS Bancorp's book value, tangible book value and core earnings at and for the 12 months ended December 31, 2022. The peer group ratios are based on the latest date for which complete financial data are publicly available and stock prices as of February 21, 2023. Compared to the average pricing of the peer group, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 19.3% on a price-to-core earnings basis and a discount of 39.7% on a price-to-tangible book value basis.

---

| | | | |
|:---|:---|:---|:---|
|  | **Price-to-core <br> earnings<br> multiple <sup>(1)</sup>** | **Price-to-book<br> value ratio** | **Price-to-tangible<br> book value ratio** |
| **PFS Bancorp (pro forma basis, assuming completion of the conversion and stock offering):** |  |  |  |
| &nbsp;&nbsp;&nbsp;Adjusted Maximum | 18.87 x | 61.16% | 61.16% |
| &nbsp;&nbsp;&nbsp;Maximum | 16.95 x | 57.27% | 57.27% |
| &nbsp;&nbsp;&nbsp;Midpoint | 15.15 x | 53.36% | 53.36% |
| &nbsp;&nbsp;&nbsp;Minimum | 13.16 x | 48.92% | 48.92% |
| **Valuation of peer group companies, all of which are fully converted (historical basis):** |  |  |  |
| &nbsp;&nbsp;&nbsp;Average | 18.78 x | 88.17% | 88.47% |
| &nbsp;&nbsp;&nbsp;Median | 19.23 x | 84.96% | 84.96% |

---

(1) Price-to-earnings multiples calculated by Feldman Financial for the independent
 appraisal are based on an estimate of "core" or recurring earnings. These ratios
 are different from those presented in "Pro Forma Data."

The following table presents information regarding the peer group companies utilized by Feldman Financial in its independent appraisal.

---

| | | | |
|:---|:---|:---|:---|
| **Company Name** | **Ticker Symbol** | **Headquarters** | **Total Asset<br> (in millions)** |
| 1895 Bancorp of Wisconsin, Inc. | BCOW | Greenfield, WI | $529.3<sup>(1)</sup> |
| Catalyst Bancorp, Inc. | CLST | Opelousas, LA | 263.3<sup>(2)</sup> |
| Cullman Bancorp, Inc. | CULL | Cullman, AL | 406.1<sup>(1)</sup> |
| Generations Bancorp NY, Inc. | GBNY | Seneca Falls, NY | 373.6<sup>(1)</sup> |
| Home Federal Bancorp Inc. of Louisiana | HFBL | Shreveport, LA | 576.5<sup>(2)</sup> |
| IF Bancorp, Inc. | IROQ | Watseka, IL | 823.7<sup>(2)</sup> |
| Magyar Bancorp, Inc. | MGYR | New Brunswick, NJ | 821.6<sup>(2)</sup> |
| Mid-Southern Bancorp, Inc. | MSVB | Salem, IN | 264.5<sup>(1)</sup> |
| NSTS Bancorp, Inc. | NSTS | Waukegan, IL | 268.2<sup>(1)</sup> |
| PB Bankshares, Inc. | PBBK | Coatesville, PA | 376.7<sup>(1)</sup> |
| TC Bancshares, Inc. | TCBC | Thomasville, GA | 406.2<sup>(1)</sup> |
| Texas Community Bancshares, Inc. | TCBS | Mineola, TX | 375.7<sup>(1)</sup> |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Total assets as of September 30, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Total assets as of December 31, 2022.

Our board of directors reviewed the independent valuation and, in particular, considered the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· our
 financial condition and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· a
 comparison of our financial performance ratios to those of other financial institutions of
 similar size; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· market
 conditions generally and, in particular, for financial institutions.

All of these factors are set forth in the independent valuation. Our board of directors also reviewed the methodology and the assumptions used by Feldman Financial in preparing the independent valuation and believes that such assumptions were reasonable. The offering range may be amended with the approval of the OCC, if required, as a result of subsequent developments in our financial condition or market conditions generally. If the independent valuation is updated to amend our pro forma market value (inclusive of the shares of common stock to be contributed to the charitable foundation) to less than $15.7 million or more than $21.1 million, the updated appraisal will be filed with the Securities and Exchange Commission by means of a post-effective amendment to our registration statement.

**The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of our common stock. Feldman Financial did not**

**independently verify our financial statements and other information that we provided to them, nor did Feldman Financial independently value our assets or liabilities. The independent valuation considers Peru Federal as a going concern and should not be considered as an indication of its liquidation value. Moreover, because the valuation is necessarily based upon estimates and projections of a number of matters, all of which may change from time to time, no assurance can be given that persons purchasing our common stock in the stock offering will thereafter be able to sell their shares at prices at or above the $10.00 offering price per share.**

Following commencement of the subscription offering, the maximum of the valuation range may be increased by up to 15%, or up to $24.2 million (inclusive of the shares of common stock to be contributed to the charitable foundation), which would result in a corresponding increase of up to 15% in the maximum of the offering range to up to 2,380,500 shares, to reflect changes in the market and financial conditions or demand for the shares. We will not increase the offering range above this level or decrease the minimum of the offering range without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed. See " – Limitations on Common Stock Purchases" as to the method of distribution and allocation of additional shares that may be issued in the event of an increase in the offering range to fill unfilled orders in the stock offering.

If the update to the independent valuation at the conclusion of the stock offering results in an increase in the maximum of the valuation range to more than $24.2 million, and a corresponding increase in the offering range to more than 2,380,500 shares, or a decrease in the minimum of the valuation range to less than $15.7 million and a corresponding decrease in the offering range to less than 1,530,000 shares, then we will promptly return, with interest at a rate of 0.10% per annum, all funds received in the stock offering and cancel deposit account withdrawal authorizations. After consulting with the OCC, we may terminate the plan of conversion. Alternatively, we may establish a new offering range and commence a resolicitation of subscribers or take other actions as permitted by the OCC in order to complete the conversion and stock offering. If we conduct a resolicitation, we will notify subscribers of their rights to place a new stock order for a specified period of time. If a person does not respond, we will cancel his or her stock order and return his or her subscription funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. Any resolicitation following the conclusion of the subscription and community offerings would not exceed 45 days unless further extended with the approval, to the extent approval is required, of the OCC, for periods of up to 90 days.

An increase in the number of shares to be issued in the stock offering would decrease both a subscriber's ownership interest and our pro forma earnings and stockholders' equity on a per share basis while increasing pro forma earnings and stockholders' equity on an aggregate basis. A decrease in the number of shares to be issued in the stock offering would increase both a subscriber's ownership interest and our pro forma earnings and stockholders' equity on a per share basis, while decreasing pro forma earnings and stockholders' equity on an aggregate basis. For a presentation of the effects of these changes, see "Pro Forma Data."

A copy of Feldman Financial's independent valuation appraisal report is available for inspection at our offices, as specified under "Where You Can Find Additional Information."

**Subscription Offering and Subscription Rights**

According to the plan of conversion, rights to subscribe for shares of common stock in the subscription offering have been granted in the descending order of priority disclosed below. The filling of all valid subscriptions we receive will depend on the availability of common stock after satisfaction of all valid subscriptions of all persons having prior rights in the subscription offering and to the minimum, maximum and overall purchase limitations set forth in the plan of conversion and as described below under " – Limitations on Common Stock Purchases."

***Priority 1: Eligible Account Holders*** *.*** Each depositor with aggregate deposit account balances of $50.00 or more (a "Qualifying Deposit") at the close of business on December 31, 2021 (an "Eligible Account Holder") will receive, without payment therefor, nontransferable subscription rights to purchase, subject to the overall purchase limitations, up to the greater of 25,000 shares ($250,000) of our common stock, 0.10% of the total number of shares of common stock issued in the stock offering, or 15 times the number of shares offered multiplied by a fraction of which the numerator is the Qualifying Deposit of the Eligible Account Holder and the denominator is the aggregate Qualifying Deposits of all Eligible Account Holders, subject to the overall purchase limitations. See " – Limitations

on Common Stock Purchases." If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of shares of our common stock, each Eligible Account Holder must list on his or her stock order form all deposit accounts in which he or she had an ownership interest at the close of business on December 31, 2021. In the event of oversubscription, failure to list an account, or including incomplete or incorrect information, could result in fewer shares being allocated than if all information had been disclosed. In the event of an oversubscription, the subscription rights of Eligible Account Holders who are also our directors or senior officers or their associates will be subordinated to the subscription rights of other Eligible Account Holders to the extent of such portion of their subscription rights attributable to their increased deposits during the year preceding December 31, 2021.

***Priority 2: Tax-Qualified Plans*** *.*** Our tax-qualified employee benefit plans, specifically our employee stock ownership plan which we are establishing in connection with the conversion, will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the sum of the number of shares of common stock sold in the stock offering and contributed to the charitable foundation. Our employee stock ownership plan intends to purchase up to 8% of the sum of the total number of shares of common stock sold in the stock offering and contributed to the charitable foundation. Alternatively, subject to market conditions and receipt of regulatory approval, the employee stock ownership plan may instead elect to purchase shares of common stock in the open market following the completion of the stock offering to fill all or a portion of the employee stock ownership plan's intended subscription.

***Priority 3: Supplemental Eligible Account Holders*** *.*** To the extent that there are sufficient shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders and our tax-qualified employee benefit plans, each depositor with a Qualifying Deposit at the close of business on March 31, 2023 who is not an Eligible Account Holder ("Supplemental Eligible Account Holder") will receive, without payment therefor, nontransferable subscription rights to purchase up to the greater of 25,000 shares ($250,000) of common stock, 0.10% of the total number of shares of common stock issued in the stock offering, or 15 times the number of shares offered multiplied by a fraction of which the numerator is the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator is the aggregate Qualifying Deposits of all Supplemental Eligible Account Holders, subject to the overall purchase limitations. See " – Limitations on Common Stock Purchases." If there are not sufficient shares available to satisfy all subscriptions, shares will be allocated so as to permit each Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Supplemental Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Supplemental Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of common stock, each Supplemental Eligible Account Holder must list on the stock order form all deposit accounts in which he or she had an ownership interest at the close of business on March 31, 2023. In the event of oversubscription, failure to list an account, or including incomplete or incorrect information, could result in fewer shares being allocated than if all information had been disclosed.

***Priority 4: Other Members*** *.*** To the extent that there are shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders, our tax-qualified employee benefit plans, and Supplemental Eligible Account Holders, each depositor as of the close of business on the voting record date of

_______, 2023, who is not an Eligible Account Holder or Supplemental Eligible Account Holder ("Other Members") will receive, without payment therefor, nontransferable subscription rights to purchase up to the greater of 25,000 shares ($250,000) of common stock or 0.10% of the total number of shares of common stock issued in the stock offering, subject to the overall purchase limitations. See " – Limitations on Common Stock Purchases." If there are not sufficient shares available to satisfy all subscriptions, available shares will be allocated so as to permit each Other Member to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Other Member whose subscription remains unfilled in the proportion that the amount of his or her subscription bears to the total amount of subscriptions of all Other Members whose subscriptions remain unfilled.

To ensure proper allocation of common stock, each Other Member must list on the stock order form all deposit accounts in which he or she had an ownership interest at the close of business on ________, 2023. In the event of oversubscription, failure to list an account, or including incomplete or incorrect information, could result in fewer shares being allocated than if all accounts had been disclosed.

***Expiration Date*** **.** The Subscription Offering will expire at 1:00 p.m., Central time, on __________, 2023, unless extended by us for up to 45 days or such additional periods of up to 90 days with the approval of the OCC, if necessary. Subscription rights will expire whether or not each person eligible to subscribe in the subscription offering can be located. We may decide to extend the expiration date of the subscription offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint or maximum of the offering range. Subscription rights that have not been exercised before the expiration date will become void.

We will not execute orders in the stock offering until we have received orders to purchase at least the minimum number of shares of common stock. If we have not received valid purchase orders for at least 1,530,000 shares within 45 days after the _________, 2023 expiration date, and the OCC has not consented to an extension, the stock offering will be terminated and all funds delivered to purchase shares of common stock in the stock offering will be returned promptly to the subscribers with interest at a rate of 0.10% per annum, and all deposit account withdrawal authorizations will be cancelled. If an extension beyond __________, 2023 is granted by the OCC, we will resolicit subscribers as described under " – Procedure for Purchasing Shares in the Subscription Offering and any Community Offering – Expiration Date."

**Community Offering**

To the extent that shares of common stock remain available for purchase after satisfaction of all subscriptions of the Eligible Account Holders, our tax-qualified employee benefit plans, Supplemental Eligible Account Holders and Other Members, we may offer shares pursuant to the plan of conversion to the public in a community offering, with a preference given to natural persons (and trusts of natural persons) residing in Bureau, LaSalle and Putnam Counties in Illinois.

Subscribers in any community offering may purchase up to 25,000 shares ($250,000) of common stock, subject to the overall purchase limitations. See " – Limitations on Common Stock Purchases." **The opportunity to purchase shares of common stock in any community offering category is subject to our right, in our sole discretion, to accept or reject any such orders in whole or in part either at the time of receipt of an order or as soon as practicable following the expiration date of the stock offering.**

If we do not have sufficient shares of common stock available to fill the orders of natural persons (and trusts of natural persons) residing in Bureau, LaSalle and Putnam Counties in Illinois, we will allocate the available shares among those persons in a manner that permits each of them, to the extent possible, to purchase the lesser of 100 shares, or the number of shares subscribed for by such person. Thereafter, unallocated shares will be allocated among such persons whose orders remain unsatisfied on an equal number of shares basis per order. If, instead, we do not have sufficient shares of common stock available to fill the orders of other members of the public, we will allocate the available shares among those persons in the manner described above for persons residing in Bureau, LaSalle and Putnam Counties in Illinois. In connection with the allocation process, orders received for shares of common stock in the community offering will first be filled up to a maximum of 2% of the shares sold in the stock

offering, and thereafter any remaining shares will be allocated on an equal number of shares basis per order until all shares have been allocated.

The term "residing" or "resident" as used in this prospectus means any person who occupies a dwelling within Bureau, LaSalle or Putnam Counties in Illinois, has a present intent to remain there for a period of time and manifests the genuineness of that intent by establishing an ongoing physical presence there, together with an indication that this presence within Bureau, LaSalle or Putnam Counties in Illinois is something other than merely transitory in nature. We may use our deposit or loan records or other evidence provided to us to decide whether a person is a resident of Bureau County, LaSalle County or Putnam County, in Illinois. In all cases, however, the determination shall be in our sole discretion.

***Expiration Date.*** The community offering, if any, may begin at the same time as, during or after the subscription offering. We will not execute stock orders until we have received orders to purchase at least the minimum number of shares of common stock. The community offering, if any, is expected to conclude at 1:00 p.m., Central time, on _________, 2023, but must terminate no more than 45 days following the expiration of the subscription offering, unless extended with regulatory approval. We may decide to extend the community offering, if any, for any reason and are not required to give purchasers notice of any such extension unless such period extends beyond ________, 2023. If an extension beyond ________, 2023 is granted by the required regulatory agencies, we will resolicit persons whose orders we accept in the community offering, giving them an opportunity to confirm, change or cancel their orders. If a person does not respond, we will cancel his or her stock order and return funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. These extensions may not go beyond __________, 2025, which is two years after the date of the special meeting of members.

**Syndicated Community Offering**

Our board of directors may decide to offer for sale shares of common stock not subscribed for in the subscription and community offerings in a syndicated community offering in a manner that will achieve a widespread distribution of our shares of common stock to the general public. If a syndicated community offering is held, KBW will serve as sole book running manager and will assist us in selling our common stock on a best efforts basis. In such capacity, KBW may form a syndicate of other broker-dealers who are FINRA member firms. Neither KBW nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in any syndicated community offering.

In any syndicated community offering, any person may purchase up to 25,000 shares ($250,000) of common stock, subject to the overall purchase limitations. See " – Limitations on Common Stock Purchases." We retain the right to accept or reject in whole or in part any orders in the syndicated community offering. Unless the OCC permits otherwise, accepted orders for our common stock in the syndicated community offering will first be filled up to a maximum of 2% of the shares sold in the stock offering. Thereafter any remaining shares will be allocated on an equal number of shares per order basis until all shares have been allocated. Unless the syndicated community offering begins during the subscription offering or the community offering, the syndicated community offering will begin as soon as possible after the expiration of the subscription and community offerings. The syndicated community offering must terminate no more than 45 days following the expiration of the subscription offering.

The syndicated community offering will be conducted according to certain Securities and Exchange Commission rules applicable to best efforts "min/max" offerings. Orders in the syndicated community offering will be submitted in substantially the same manner as utilized in the subscription and community offerings. Payments in the syndicated offering, however, must be made in immediately available funds (bank checks, money orders, Peru Federal deposit account withdrawal authorizations or wire transfers). Personal checks will not be accepted. If the closing of the stock offering does not occur, either as a result of not confirming receipt of at least $15.3 million in gross proceeds (the minimum of the offering range) or the inability to satisfy other closing conditions to the stock offering, the funds will be promptly returned with interest at a rate of 0.10% per annum.

The closing of the syndicated community offering, which will be simultaneous with the closing of the subscription and community offerings, is subject to conditions set forth in an agency agreement among Peru Federal and PFS Bancorp, on one hand, and KBW, on the other hand.

***Expiration Date.*** The syndicated community offering may begin concurrently with, during or after the subscription offering, and may terminate at the same time as the subscription offering, but must terminate no more than 45 days following the expiration of the subscription offering, unless extended with regulatory approval. If held, the syndicated community offering is expected to conclude at 1:00 p.m., Central time, on _______, 2023, but must terminate no more than 45 days following the expiration of the subscription offering, unless extended with regulatory approval. We may decide to extend the syndicated community offering for any reason and are not required to give purchasers notice of any such extension unless such period extends beyond _______, 2023. If an extension beyond _________, 2023 is granted by the required regulatory agencies, we will resolicit persons whose orders we accept in the syndicated community offering, giving them an opportunity to confirm, change or cancel their orders. If a person does not respond, we will cancel his or her stock order and return funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. These extensions may not go beyond ______, 2025, which is two years after the date of the special meeting of members.

If for any reason we cannot conduct a syndicated community offering of shares of common stock, or if we are unable to find purchasers from the general public to reach the minimum of the offering range, we will try to make other arrangements for the sale of unsubscribed shares, including an underwritten public offering, if possible. The OCC and FINRA must approve any such arrangements.

**Limitations on Common Stock Purchases**

The plan of conversion includes the following limitations on the number of shares of common stock that may be purchased in the stock offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· No person or entity, together with any associate or group of persons acting in concert, may purchase more than 40,000 shares ($400,000)
of common stock in all categories of the stock offering combined, except that our tax-qualified employee benefit plans may purchase in
the aggregate up to 10% of the sum of the number of shares of common stock sold in the stock offering and contributed to the charitable
foundation (including shares issued in the event of an increase in the offering range of up to 15%);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The maximum number of shares of common stock that may be purchased in all categories of the stock offering by our senior officers
and directors and their associates, in the aggregate, may not exceed 32% of the shares sold in the stock offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The minimum purchase by each person purchasing shares in the stock offering is 25 shares, to the extent those shares are available.

Depending upon market or financial conditions, with the receipt of any required approvals of the OCC, we may increase the individual or aggregate purchase limitations to an amount generally not to exceed 5.0% of the common stock sold in the stock offering. If a purchase limitation is increased, subscribers in the subscription offering who ordered the maximum amount of common stock and who indicated a desire on their stock order form to be resolicited, will be, and, in our sole discretion some other large subscribers may be, given the opportunity to increase their subscriptions up to the then-applicable limit. The effect of this type of resolicitation will be to increase the number of shares of common stock owned by subscribers who choose to increase their subscriptions. If a purchase limitation is increased to 5.0% of the stock sold in the stock offering, such limitation may be further increased to 9.99%, provided that orders for shares of common stock exceeding 5.0% of the shares of common stock sold in the stock offering do not exceed in the aggregate 10.0% of the total shares of the common stock sold in the stock offering. Any such requests to purchase additional shares of common stock in the event that a purchase limitation is so increased will be determined by our board of directors in its sole discretion.

In the event of an increase in the offering range of up to 15% of the total number of shares of common stock offered in the stock offering, shares will be allocated in the following order of priority according to the plan of conversion:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to fill our tax-qualified employee benefit plans' subscriptions for up to 10% of the sum of the number of shares of common stock
sold in the stock offering and contributed to the charitable foundation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) if there is an oversubscription at the Eligible Account Holder, Supplemental Eligible Account Holder or Other Member levels, to fill
unfulfilled subscriptions of these subscribers according to their respective priorities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) to fill unfulfilled subscriptions in the community offering, with preference given to natural persons (and trusts of natural persons)
residing in Bureau, LaSalle and Putnam Counties in Illinois.

The term "associate" of a person means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any corporation or organization, other than Peru Federal, PFS Bancorp or a majority-owned subsidiary of these entities, of which the
person is a senior officer, partner or 10% or greater beneficial stockholder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a fiduciary capacity,
excluding any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee or in a fiduciary
capacity; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any blood or marriage relative of the person, who either resides with the person or who is a director or officer of Peru Federal or
PFS Bancorp.

The term "acting in concert" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) knowing participation in a joint activity or parallel action towards a common goal whether or not pursuant to an express agreement;
or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract,
understanding, relationship, agreement, or other arrangement, whether written or otherwise.

In general, a person or company that acts in concert with another person or company ("other party") shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated. Persons having the same address or exercising subscription rights through qualifying accounts registered to the same address generally will be assumed to be associates of, and acting in concert with, each other. We have the right to determine, in our sole discretion, whether purchasers are associates or acting in concert.

Our directors are not treated as associates of each other solely because of their membership on the board of directors. Shares of common stock purchased in the stock offering will be freely transferable except for shares purchased by our senior officers and directors and except as described below. Any purchases made by any associate of Peru Federal or PFS Bancorp for the explicit purpose of meeting the minimum number of shares of common stock required to be sold in order to complete the stock offering shall be made for investment purposes only and not with a view toward redistribution. In addition, under the guidelines of FINRA, members of FINRA and their associates are subject to certain restrictions on transfer of securities purchased according to subscription rights and to certain reporting requirements upon purchase of these securities. For a further discussion of limitations on purchases of shares of our common stock at the time of conversion and thereafter, see " – Restrictions on Transfer of Subscription Rights and Shares," " – Other Restrictions" and "Restrictions on Acquisition of PFS Bancorp."

**Plan of Distribution; Selling Agent and Underwriter Compensation**

***Subscription and Community Offerings.*** To assist in the marketing of our shares of common stock in the subscription offering and any community offering, we have retained KBW, which is a broker-dealer registered with the Financial Industry Regulatory Authority. KBW will assist us on a best efforts basis in the subscription offering and any community offering by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· advising us on the financial and securities market implications of the conversion and stock offering and the plan of conversion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· assisting us in structuring and marketing the stock offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· reviewing all offering documents, including the prospectus, stock order forms and marketing materials (it being understood that the
preparation and filing of any and all such documents will be our responsibility and that of our counsel);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· assisting us in scheduling and preparing meetings with potential investors and broker-dealers, if necessary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· assisting us in analyzing proposals from outside vendors in connection with the stock offering, as needed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· assisting us in the drafting and distribution of press releases as required or appropriate in connection with the stock offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· meeting with our board of directors and/or our management to discuss any of the above services; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· providing such other financial advisory and investment banking services as may be reasonably necessary to promote the successful completion
of the stock offering.

For these services, KBW has received a non-refundable management fee of $25,000 and will receive at the closing of the stock offering a success fee of $300,000. The non-refundable management fee will be credited against the success fee. In addition, if KBW is required or requested to provide significant services as a result of a resolicitation of subscribers, it will be entitled to additional compensation for such services, not to exceed $25,000.

***Syndicated Community Offering.*** If shares of common stock are sold in a syndicated community offering, we will pay a fee of up to 6.0% of the aggregate dollar amount of common stock sold in the syndicated community offering to KBW and any other broker-dealers participating in the syndicated community offering.

***Expenses.*** KBW will also be reimbursed for reasonable out-of-pocket expenses, not to exceed $30,000, and fees and expenses of its legal counsel not to exceed $100,000. These expenses may be increased by additional amounts not to exceed $10,000 and $15,000, respectively, if unusual circumstances arise or a delay or resolicitation occurs, including a delay in the stock offering that would require an update to the financial information included in this prospectus. In no event shall out-of-pocket expenses, including fees and expenses of legal counsel, exceed $155,000. If the plan of conversion is terminated or if KBW's engagement is terminated in accordance with the provisions of the agency agreement, KBW will receive reimbursement of its reasonable out-of-pocket expenses. KBW shall have earned in full, and be entitled to be paid in full, all fees then due and payable at such date of termination. We have separately agreed to pay KBW fees and expenses for serving as records management agent, as described below.

**Records Management**

We have also engaged KBW to serve as conversion and records management agent in connection with the conversion and stock offering. In its role as conversion and records management agent, KBW will assist us in the stock offering by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· reviewing our deposit accounts and create a master file of Peru Federal's members (<u>i.e.</u>, depositors) as of the key record
dates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· assisting us in designing and preparing proxy forms and stock order forms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· tabulating proxies from members of Peru Federal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· acting as or supporting the inspector of election at Peru Federal's special meeting of members;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· operating and managing the Stock Information Center; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· processing stock order forms.

KBW will receive fees of $30,000 for these services, of which $15,000 has been paid as of the date of this prospectus. The remaining balance will be paid upon the closing of the conversion and stock offering. These fees can be increased by up to $15,000 if there are material changes in regulations or the plan of conversion, or there are delays requiring duplicate or replacement processing due to changes in key record dates. KBW will also be reimbursed for its reasonable out-of-pocket expenses not to exceed $7,500.

**Indemnity**

We have agreed to indemnify KBW against liabilities and expenses, including legal fees, incurred in connection with certain claims or litigation arising out of or based upon untrue statements or omissions contained in the stock offering materials for the common stock, including liabilities under the Securities Act of 1933, as well as certain other claims and litigation arising out of KBW's engagement with respect to the conversion and stock offering.

**Solicitation of Officers by Our Officers and Directors**

Some of our directors and executive officers may participate in the solicitation of offers to purchase common stock. These persons will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation. Other regular employees of Peru Federal may assist in the stock offering, but only in ministerial capacities, and may provide clerical work in effecting a sales transaction. No offers or sales may be made by tellers or at the teller counters. Investment-related questions of prospective purchasers will be directed to executive officers or registered representatives of KBW. Our other employees have been instructed not to solicit offers to purchase shares of common stock or provide advice regarding the purchase of common stock. We will rely on Rule 3a4-1 under the Securities Exchange Act of 1934, as amended, and sales of common stock will be conducted within the requirements of Rule 3a4-1, so as to permit officers, directors and employees to participate in the sale of common stock. None of our officers, directors or employees will be compensated in connection with their participation in the stock offering.

**Prospectus Delivery**

To ensure that each purchaser in the subscription offering and any community offering receives a prospectus at least 48 hours before the expiration of the stock offering according to Rule 15c2-8 of the Securities Exchange Act of 1934, we may not mail a prospectus any later than five days before the expiration date or hand deliver a prospectus any later than two days before that date. We are not obligated to deliver a prospectus or stock order form by means other than U.S. Mail. Execution of a stock order form will confirm receipt of delivery of a prospectus according to Rule 15c2-8. Stock order forms will be distributed only if preceded or accompanied by a prospectus.

In any syndicated community offering, a prospectus and stock order form in electronic format may be made available on Internet sites or through other online services maintained by KBW or one or more other members of the syndicate, or by their respective affiliates. In those cases, prospective investors may view offering terms online. The members of the syndicate may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made on the same basis as other allocations.

Other than the prospectus in electronic format, the information on the Internet sites referenced in the preceding paragraph and any information contained in any other Internet site maintained by any member of the syndicate is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or by KBW or any other member of the syndicate in its capacity as selling agent or syndicate member and should not be relied upon by investors.

**Procedure for Purchasing Shares in the Subscription Offering and any Community Offering**

***Expiration Date*** *.*** The subscription offering and any community offering will expire at 1:00 p.m., Central time, on _________, 2023, unless we extend one or both for up to 45 days, with the approval of the OCC, if required. This extension may be approved by us, in our sole discretion, without notice to purchasers in the stock offering. Any extension of the subscription offering and/or any community offering beyond _________, 2023 would require the OCC's approval. If the stock offering is so extended, all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond to the notice of extension, we will promptly return your funds, with interest at 0.10% per annum, or cancel your deposit account withdrawal authorization. If the offering range is decreased below the minimum of the offering range or is increased above the adjusted maximum of the offering range, all subscribers' stock orders will be cancelled, their deposit account withdrawal authorizations will be cancelled, and funds submitted to us will be returned promptly, with interest at 0.10% per annum, for funds received in the subscription offering and any community offering. We will then resolicit the subscribers, giving them an opportunity to place a new stock order for a period of time.

To ensure each purchaser receives a prospectus at least 48 hours before the _________, 2023 expiration date of the stock offering, according to Rule 15c2-8 of the Securities Exchange Act of 1934, as amended, no prospectus will be mailed any later than five days before the expiration date or hand delivered any later than two days before the expiration date. Execution of a stock order form will confirm receipt of delivery according to Rule 15c2-8. Stock order forms will be distributed only with, or preceded by, a prospectus.

We reserve the right in our sole discretion to terminate the stock offering at any time and for any reason, in which case we will cancel any deposit account withdrawal authorizations and promptly return all funds submitted, with interest at 0.10% per annum, from the date of receipt as described above.

***Use of Order Forms in the Subscription and Community Offerings*** *.*** To purchase shares of common stock in the subscription and community offerings, you must properly complete an original stock order form and remit full payment. We will not accept orders submitted on photocopied or facsimiled stock order forms. All stock order forms must be *received* (not postmarked) on or before 1:00 p.m., Central time, on _________, 2023. We are not required to accept stock order forms that are not received by that time, are not signed or are otherwise executed defectively or are received without full payment or without appropriate deposit account withdrawal instructions. We are not required to notify subscribers of incomplete or improperly executed stock order forms. We have the right to waive or permit the correction of incomplete or improperly executed stock order forms. We do not represent, however, that we will do so and we have no affirmative duty to notify any prospective subscriber of any such defects. You may submit your stock order form and payment by mail using the stock order reply envelope provided or by overnight delivery to the address listed on the stock order form. You may hand-deliver your stock order form Peru Federal's main office located at 1730 Fourth Street, Peru, Illinois. Hand-delivered stock order forms will be accepted only at this location. **Do not mail stock order forms to Peru Federal.**

Once tendered, an order form cannot be modified or revoked without our consent. We reserve the absolute right, in our sole discretion, to reject orders received in the community offering, in whole or in part, at the time of receipt or at any time before completion of the stock offering. If you are ordering shares in the stock offering, you must represent that you are purchasing shares for your own account and that you have no agreement or understanding with any person for the sale or transfer of the shares. We have the right to reject any order submitted

in the stock offering by a person who we believe is making false representations or who we otherwise believe, either alone or acting in concert with others, is violating, evading, circumventing, or intends to violate, evade or circumvent the terms and conditions of the plan of conversion. Our interpretation of the terms and conditions of the plan of conversion and of the acceptability of the order forms will be final.

By signing the order form, you will be acknowledging that the common stock is not a deposit or savings account and is not federally insured or otherwise guaranteed by Peru Federal, the Federal Deposit Insurance Corporation or the federal government, and that you received a copy of this prospectus. However, signing the order form will not result in you waiving your rights under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

***Payment for Shares*** *.*** Payment for all shares of common stock must accompany all completed order forms for the purchase to be valid. Payment for shares in the subscription and community offerings may be made by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) personal check, bank check or money order, made payable to PFS Bancorp, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) authorization of withdrawal of available funds from your Peru Federal deposit account(s); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) cash.

Cash will only be accepted at Peru Federal's main office and it will be converted to a bank check. **Please do not remit cash by mail.**

Appropriate means for designating withdrawals from deposit account(s) at Peru Federal are provided on the stock order form. The funds designated must be available in the account(s) at the time the stock order form is received. A hold will be placed on these funds, making them unavailable to the depositor. Funds authorized for withdrawal will continue to earn interest within the account at the contractual rate until the stock offering is completed, at which time the designated withdrawal will be made. Interest penalties for early withdrawal applicable to certificate of deposit accounts will not apply to withdrawals authorized for the purchase of shares of common stock; however, if a withdrawal results in a certificate of deposit account with a balance less than the applicable minimum balance requirement, the certificate of deposit will be canceled at the time of withdrawal without penalty and the remaining balance will earn interest at the current statement savings rate after the withdrawal. In the case of payments made by personal check, these funds must be available in the account(s). Checks and money orders received in the subscription and community offerings will be immediately cashed and placed in a segregated account at Peru Federal and will earn interest at 0.10% per annum from the date payment is processed until the stock offering is completed or terminated.

You may not remit any type of third-party checks (including those payable to you and endorsed over to PFS Bancorp) or a Peru Federal line of credit check. You may not designate on your stock order form direct withdrawal from a retirement account at Peru Federal. See "—Using Individual Retirement Account Funds." Additionally, you may not designate on your stock order form a direct withdrawal from Peru Federal deposit accounts with check-writing privileges. Instead, a check should be provided. If you request a direct withdrawal, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and will immediately withdraw the amount from your checking account(s). If permitted by the OCC, if we resolicit persons who subscribed for the maximum purchase amount, as described above in "—Limitations on Common Stock Purchases," such purchasers who wish to increase their purchases will not be able to use personal checks to pay for the additional shares, but instead must pay for the additional shares using immediately available funds. Wire transfers will not otherwise be accepted, except as described below.

Once we receive your executed stock order form, it may not be modified, amended or rescinded without our consent, unless the stock offering is not completed by ___________, 2023. If the subscription offering and any community offering are extended past ________, 2023, all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond to the notice of extension, we will promptly return your funds, with interest at 0.10% per annum, or cancel your deposit account withdrawal authorization. We may resolicit purchasers for a specified period of time.

OCC regulations prohibit Peru Federal from lending funds or extending credit to any persons to purchase shares of common stock in the stock offering.

We have the right, in our sole discretion, to permit institutional investors to submit irrevocable orders together with the legally binding commitment for payment and to thereafter pay for the shares of common stock for which they subscribe in the community offering at any time before 48 hours before the completion of the conversion. This payment may be made by wire transfer.

If our employee stock ownership plan purchases shares in the stock offering, it will not be required to pay for such shares until completion of the stock offering, provided that there is a loan commitment from an unrelated financial institution or PFS Bancorp to lend to the employee stock ownership plan the necessary amount to fund the purchase.

***Using Individual Retirement Account Funds.*** If you are interested in using funds in your IRA at Peru Federal or other retirement account to purchase shares of common stock in the stock offering, you must do so through an account offered by a custodian that can hold common stock. By regulation, Peru Federal's IRAs are not capable of holding common stock. Therefore, if you wish to use funds that are currently in an IRA held at Peru Federal, you may not designate on the order form that you wish funds to be withdrawn from the account for the purchase of common stock. The funds you wish to use for the purchase of common stock will instead have to be transferred to an independent trustee or custodian, such as a brokerage firm, which offers the type of retirement accounts that can hold common stock. The purchase must be made through that account. If you do not have such an account, you will need to establish one before placing a stock order. A one-time and/or annual administrative fee may be payable to the independent trustee or custodian. You may select the custodian of your choice. You may, but are under no obligation to, select KBW or one of its affiliated broker dealers, Stifel, Nicolaus & Company, Incorporated or Century Securities Associates, as your IRA custodian. If you do purchase shares of PFS Bancorp common stock using funds from a KBW, Stifel, Nicolaus & Company, Incorporated, or Century Securities Associates IRA, you acknowledge that KBW, Stifel, Nicolaus & Company, Incorporated, or Century Securities Associates, as applicable, did not recommend or give you advice regarding such purchase. Other than the standard account fees and compensation associated with all IRAs, KBW, Stifel, Nicolaus & Company, Incorporated, or Century Securities Associates do not receive additional fees or compensation as a result of the purchase of PFS Bancorp common stock through a KBW, Stifel, Nicolaus & Company, Incorporated, or Century Securities Associates IRA, or other retirement account. There will be no early withdrawal or Internal Revenue Service interest penalties for these transfers. Individuals interested in using funds in an individual retirement account or any other retirement account, whether held at Peru Federal or elsewhere, to purchase shares of common stock should contact the Stock Information Center for guidance as soon as possible, preferably at least two weeks before the ____________, 2023 offering deadline. Processing these transactions takes additional time, and whether such funds can be used may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee that you will be able to use such funds.

***Delivery of Shares of Common Stock*** *.*** All shares of common stock sold will be issued in book entry form. Stock certificates will not be issued. A book entry statement reflecting ownership of shares of common stock issued in the subscription offering and any community offering will be mailed by our transfer agent to the persons entitled thereto at the registration address noted by them on their stock order forms as soon as practicable following consummation of the conversion and stock offering. We expect trading in the stock to begin on the day of completion of the conversion and stock offering or the next business day. **You may not be able to sell the shares of common stock that you purchased until a statement reflecting your ownership of shares of common stock is available and delivered to you, even though the shares of common stock will have begun trading.** Your ability to sell the shares of common stock before receiving your statement will depend on arrangements you may make with a brokerage firm.

***Other Restrictions*** *.*** Notwithstanding any other provision of the plan of conversion, no person is entitled to purchase any shares of common stock to the extent the purchase would be illegal under any federal or state law or regulation, including state "blue sky" regulations, or would violate regulations or policies of the Financial Industry Regulatory Authority, particularly those regarding free riding and withholding. We may ask for an acceptable legal opinion from any purchaser as to the legality of his or her purchase and we may refuse to honor any purchase order

if an opinion is not timely furnished. In addition, we are not required to offer shares of common stock to any person who resides in a foreign country, or in a state of the United States with respect to which any of the following apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) a small number of persons otherwise eligible to subscribe for shares under the plan of conversion reside in such state;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the offer or sale of shares of common stock to such persons would require us or our employees to register, under the securities laws
of such state, as a broker or dealer or to register or otherwise qualify our securities for sale in such state; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) such registration or qualification would be impracticable for reasons of cost or otherwise.

**Restrictions on Transfer of Subscription Rights and Shares**

**Applicable banking regulations prohibit any person with subscription rights, including the Eligible Account Holders, Supplemental Eligible Account Holders, and Other Members, from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the subscription rights issued under the plan of conversion or the shares of common stock to be issued upon their exercise. These rights may be exercised only by the person to whom they are granted and only for his or her account. When registering your stock purchase on the stock order form, you cannot add the name(s) of others for joint stock registration unless they are also named on the qualifying deposit or loan account. Taking this action may jeopardize your subscription rights. Each person exercising subscription rights will be required to certify that he or she is purchasing shares solely for his or her own account and that he or she has no agreement or understanding regarding the sale or transfer of such shares. The regulations also prohibit any person from offering or making an announcement of an offer or intent to make an offer to purchase subscription rights or shares of common stock to be issued upon their exercise before completion of the stock offering.**

**We will pursue any and all legal and equitable remedies if we become aware of the transfer of subscription rights, and we will not honor orders that we believe involve the transfer of subscription rights.**

**Stock Information Center**

Our banking office personnel may not, by law, assist with investment-related questions about the stock offering. If you have questions regarding the conversion or stock offering, call our Stock Information Center at 1-(877) ___________ (toll-free). The Stock Information Center is accepting telephone calls Monday through Friday, between 9:00 a.m. and 3:00 p.m., Central time, excluding bank holidays.

**Liquidation Rights**

In the unlikely event of a complete liquidation of Peru Federal before the completion of the conversion and stock offering, all claims of creditors of Peru Federal, including those of its depositors (to the extent of their deposit balances), would be paid first. Then, if there were any assets of Peru Federal remaining, depositors of Peru Federal would receive those remaining assets, pro rata, based upon the deposit balances in their deposit accounts in Peru Federal immediately before liquidation. In the unlikely event that Peru Federal were to liquidate after the conversion and stock offering, all claims of creditors, including those of depositors, would be paid first, followed by distribution of the "liquidation account" to certain depositors, with any assets remaining thereafter distributed to PFS Bancorp in its capacity as the sole holder of Peru Federal capital stock. According to OCC rules and regulations, a post-conversion merger, consolidation, sale of bulk assets or similar combination or transaction with another insured savings institution would not be considered a liquidation and, in these types of transactions, the liquidation account would be assumed by the surviving institution.

The plan of conversion provides for the establishment, upon the completion of the conversion and stock offering, of a "liquidation account" for the benefit of Eligible Account Holders and Supplemental Eligible Account

Holders in an amount equal to the total equity of Peru Federal as of the date of its latest balance sheet contained in this prospectus.

The purpose of the liquidation account is to provide Eligible Account Holders and Supplemental Eligible Account Holders who maintain their deposit accounts with Peru Federal after the conversion and stock offering with a liquidation interest in the unlikely event of the complete liquidation of Peru Federal after the conversion and stock offering. Each Eligible Account Holder and Supplemental Eligible Account Holder that continues to maintain his or her deposit account at Peru Federal, would be entitled, on a complete liquidation of Peru Federal after the conversion and stock offering, to an interest in the liquidation account before any payment to the stockholders of PFS Bancorp. Each Eligible Account Holder would have an initial interest in the liquidation account for each deposit account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts, money market deposit accounts, and certificates of deposit, with a balance of $50 or more held in Peru Federal as of the close of business on December 31, 2021. Each Eligible Account Holder would have a pro rata interest in the total liquidation account for each such deposit account, based on the proportion that the balance of each such deposit account as of the close of business on December 31, 2021 bears to the balance of all such deposit accounts in Peru Federal on such date. Each Supplemental Eligible Account Holder would have an initial interest in the liquidation account for each deposit account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts, money market deposit accounts, and certificates of deposit, with a balance of $50 or more held in Peru Federal as of the close of business on March 31, 2023. Each Supplemental Eligible Account Holder would have a pro rata interest in the total liquidation account for each such deposit account, based on the proportion that the balance of each such deposit account as of the close of business on March 31, 2023 bears to the balance of all such deposit accounts in Peru Federal on such date.

If, however, on any December 31 annual closing date commencing on or after the effective date of the conversion and stock offering, the amount in any such deposit account is less than the amount in the deposit account as of the close of business on December 31, 2021 or March 31, 2023, respectively, or any other annual closing date, then the interest in the liquidation account relating to such deposit account would be reduced from time to time by the proportion of any such reduction, and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders would be separate and apart from the payment of any insured deposit accounts to such depositor. Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders are satisfied would be distributed to PFS Bancorp in its capacity as the sole stockholder of Peru Federal.

**Material Income Tax Consequences**

Consummation of the conversion and stock offering is subject to the prior receipt of an opinion of counsel or tax advisor with respect to federal and state income taxation that the conversion and stock offering will not be a taxable transaction to Peru Federal, PFS Bancorp, Eligible Account Holders, Supplemental Eligible Account Holders and Other Members. Unlike private letter rulings, opinions of counsel or tax advisors are not binding on the Internal Revenue Service or any state taxing authority, and such authorities may disagree with such opinions. In the event of such disagreement, there can be no assurance that Peru Federal or PFS Bancorp would prevail in a judicial proceeding.

Peru Federal and PFS Bancorp have received an opinion from its counsel, Luse Gorman, PC, regarding all of the material federal income tax consequences of the conversion and stock offering, which includes the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The conversion of Peru Federal to a federally-chartered stock savings bank will qualify as a tax-free reorganization within the meaning
of Section 368(a)(1)(F) of the Internal Revenue Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Peru Federal will not recognize any gain or loss upon the receipt of money from PFS Bancorp in exchange for shares of common stock
of Peru Federal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The basis and holding period of the assets received by Peru Federal, in stock form, from Peru Federal, in mutual form, will be the
same as the basis and holding period in such assets immediately before the conversion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. No gain or loss will be recognized by account holders of Peru Federal, including Eligible Account Holders, Supplemental Eligible Account
Holders and Other Members, upon the issuance to them of withdrawable deposit accounts in Peru Federal, in stock form, in the same dollar
amount and under the same terms as held at Peru Federal, in mutual form. In addition, Eligible Account Holders and Supplemental Eligible
Account Holders will not recognize gain or loss upon receipt of an interest in a liquidation account in Peru Federal, in stock form, in
exchange for their ownership interests in Peru Federal, in mutual form.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The basis of the account holders' deposit accounts in Peru Federal, in stock form, will be the same as the basis of their deposit
accounts in Peru Federal, in mutual form. The basis of the Eligible Account Holders and the Supplemental Eligible Account Holders interests
in the liquidation account will be zero, which is the cost of such interest to such persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. It is more likely than not that the fair market value of the nontransferable subscription rights will be zero, based on the fact that
these rights are acquired by the recipients without cost, are nontransferable and of short duration, and afford the recipients the right
only to purchase the common stock at a price equal to its estimated fair market value, which will be the same price as the subscription
price for the shares of common stock in the stock offering. Accordingly, no gain or loss will be recognized by Eligible Account Holders,
Supplemental Eligible Account Holders or Other Members upon distribution to them of nontransferable subscription rights to purchase shares
of PFS Bancorp common stock, provided that the amount to be paid for PFS Bancorp common stock is equal to the fair market value of PFS
Bancorp common stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. It is more likely than not that the basis of the shares of PFS Bancorp common stock purchased in the stock offering will be the purchase
price. The holding period of the PFS Bancorp common stock purchased pursuant to the exercise of nontransferable subscription rights will
commence on the date on which the right to acquire such stock was exercised.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. No gain or loss will be recognized by PFS Bancorp on the receipt of money in exchange for shares of PFS Bancorp common stock sold
in the stock offering.

In the view of Feldman Financial (which is acting as independent appraiser of the value of the shares of PFS Bancorp common stock), the subscription rights do not have any value for the reasons set forth above. Feldman Financial's view is not binding on the Internal Revenue Service. If the subscription rights granted to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members are deemed to have an ascertainable value, receipt of these rights could result in taxable gain to those Eligible Account Holders, Supplemental Eligible Account Holders and Other Members who exercise the subscription rights in an amount equal to their value, and PFS Bancorp could recognize gain on a distribution. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members are encouraged to consult with their own tax advisors as to the tax consequences in the event that subscription rights are deemed to have an ascertainable value.

The opinion as to the basis in the liquidation account set forth in item 4 above is based on the position that: (i) no holder of an interest in a liquidation account has ever received any payment attributable to a liquidation of a solvent bank (other than as set forth below); (ii) the interests in the liquidation account are not transferable; (iii) the amounts due under the liquidation account with respect to each Eligible Account Holder and Supplemental Eligible Account Holder will be reduced as their deposits in Peru Federal are reduced; and (iv) holders of an interest in a liquidation account have received payments of their interests in very few instances (out of hundreds of transactions involving mergers, acquisitions and the purchase of assets and assumption of liabilities of holding companies and subsidiary banks) and these instances involved the purchase and assumption of a bank's assets and liabilities by a credit union. In addition, we have received a letter from Feldman Financial stating its belief that the benefit provided by the Peru Federal liquidation account does not have any economic value as of the effective time of the conversion and stock offering. Based on the foregoing, Luse Gorman, PC believes it is more likely than not that

such rights in the Peru Federal liquidation account have no value. If such rights are subsequently found to have an economic value as of the effective time of the conversion and stock offering, income may be recognized by each Eligible Account Holder or Supplemental Eligible Account Holder in the amount of such fair market value as of the effective date of the conversion and stock offering.

The Internal Revenue Service will not issue private letter rulings with respect to the issue of whether nontransferable rights have value. Unlike private letter rulings, an opinion of counsel or the view of an independent appraiser is not binding on the Internal Revenue Service and the Internal Revenue Service could disagree with the conclusions reached therein. Depending on the conclusion or conclusions with which the Internal Revenue Service disagrees, the Internal Revenue Service may take the position that the transaction is taxable to any one or more of Peru Federal, its members, PFS Bancorp, Eligible Account Holders, Supplemental Eligible Account Holders and Other Members who exercise their subscription rights. In the event of a disagreement, there can be no assurance that PFS Bancorp or Peru Federal would prevail in a judicial or administrative proceeding.

The federal income tax opinion has been filed with the Securities and Exchange Commission as an exhibit to PFS Bancorp's registration statement. An opinion regarding the Illinois income tax consequences consistent with the federal income tax opinion has been issued by Wipfli LLP.

**Restrictions on Purchase or Transfer of Our Shares after the Conversion and Stock Offering**

The shares of common stock being acquired by the directors and executive officers of Peru Federal, and their associates, are being acquired for investment purposes, and not with a view towards resale. All shares of common stock purchased in the stock offering by a director or executive officer of PFS Bancorp or Peru Federal generally may not be sold for a period of one year following the closing of the conversion and stock offering, except in the event of the death of the director or executive officer. Each statement of ownership or certificate for restricted shares will bear a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that any transfer within this time period of any certificate or ownership of the shares other than as provided above is a violation of the restriction. Any shares of common stock issued at a later date as a stock dividend, stock split or otherwise with respect to the restricted stock will be similarly restricted. The directors and executive officers of PFS Bancorp also will be restricted by the insider trading rules under the Securities Exchange Act of 1934, as amended.

Purchases of shares of our common stock by any of our directors, executive officers and their associates, during the three-year period following the closing of the conversion and stock offering, may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written approval of the OCC. This restriction does not apply, however, to negotiated transactions involving more than 1% of our outstanding common stock, to purchases of our common stock to fund stock options by one or more stock-based benefit plans or to any of our tax-qualified employee stock benefit plans or nontax-qualified employee stock benefit plans, including any stock-based benefit plans.

OCC regulations prohibit PFS Bancorp from repurchasing its shares of common stock during the first year following the conversion and stock offering, unless compelling business reasons exist to do so or to fund management recognition plans that have been ratified by stockholders (with OCC approval) or tax-qualified employee stock benefit plans.

**PERU FEDERAL SAVINGS CHARITABLE FOUNDATION, INC.**

**General**

In furtherance of our commitment to the communities in our market area, the plan of conversion provides that we will establish a new charitable foundation, the Peru Federal Savings Charitable Foundation, Inc., as a non-stock, nonprofit Delaware corporation in connection with the conversion and stock offering. The charitable foundation will be funded with cash and shares of our common stock, as described below. By further enhancing our visibility and reputation in the communities within our market area, we believe that the charitable foundation will enhance the long-term value of Peru Federal's community banking franchise. The conversion and stock offering present a unique opportunity to provide a substantial and continuing benefit to our community through the charitable

foundation. The establishment and funding of the charitable foundation is subject to regulatory approval and approval by Peru Federal's members.

**Purpose of the Charitable Foundation**

In connection with the closing of the conversion and stock offering, we intend to contribute to the charitable foundation $100,000 in cash and 40,000 shares of our common stock, for an aggregate contribution of $500,000 based on the $10.00 per share offering price.

The purpose of the charitable foundation is to provide financial support to charitable organizations in our market area and to enable the communities that we serve to share in our long-term growth. The charitable foundation will be dedicated completely to community activities and the promotion of charitable causes, and may be able to support such activities in ways that are not presently available to us.

Funding the charitable foundation with shares of our common stock is also intended to allow our communities to share in our potential growth and success after the conversion and stock offering is completed because the charitable foundation will benefit directly from any increases in the value of our shares of common stock. In addition, the charitable foundation will maintain close ties with Peru Federal, forming a partnership within the communities in which Peru Federal operates.

**Structure of the Charitable Foundation**

The charitable foundation will be incorporated under Delaware law as a non-stock, nonprofit corporation. The certificate of incorporation of the charitable foundation will provide that the corporation is organized exclusively for charitable purposes as set forth in Section 501(c)(3) of the Internal Revenue Code. The certificate of incorporation will further provide that no part of the net earnings of the charitable foundation will inure to the benefit of, or be distributable to, its members, directors or officers or to private individuals.

The charitable foundation will be governed by a board of directors, initially consisting of Cynthia L. Kurkowski, CPA, a director of Peru Federal, and ______ other individuals. We are required to select one person to serve on the initial board of directors who is not one of our officers or directors and who has experience with local charitable organizations and grant making. As of the date of this prospectus, we have not selected the individual to serve as the director to satisfy these requirements. For five years after the conversion and stock offering, one seat on the charitable foundation's board of directors will be reserved for a person from our local community who has experience with local community charitable organizations and grant making and who is not an officer, director or employee of PFS Bancorp or Peru Federal, and at least one seat on the charitable foundation's board of directors will be reserved for a director of Peru Federal.

The board of directors of the charitable foundation will be responsible for establishing its grant and donation policies, consistent with the purposes for which it was established. As directors of a nonprofit corporation, the directors of the charitable foundation will at all times be bound by their fiduciary duty to advance the charitable foundation's charitable goals, to protect its assets and to act in a manner consistent with the charitable purposes for which the charitable foundation is established. The directors also will be responsible for directing the activities of the charitable foundation, including the management and voting of the shares of our common stock held by the charitable foundation. However, as required by applicable regulations, all shares of our common stock held by the charitable foundation must be voted in the same ratio as all other shares of our common stock on all proposals considered by our stockholders.

The charitable foundation's place of business will be located at Peru Federal's main office. The board of directors of the charitable foundation will appoint such officers and employees as may be necessary to manage its operations. To the extent applicable, we will comply with the affiliate restrictions set forth in Sections 23A and 23B of the Federal Reserve Act and applicable banking regulations governing transactions between Peru Federal and the charitable foundation.

The charitable foundation will receive working capital from the initial cash contribution and:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any dividends that may be paid on our shares of common stock in the future to the extent that it continues to own shares of our common
stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) within the limits of applicable federal and state laws, loans collateralized by the shares of common stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the proceeds of the sale of any of the shares of common stock in the open market from time to time.

As a private foundation under Section 501(c)(3) of the Internal Revenue Code, the charitable foundation will be required to distribute annually in grants or donations a minimum of 5% of the average fair market value of its net investment assets.

**Income Tax Considerations**

We believe that an organization created for the above purposes should qualify as a Section 501(c)(3) tax exempt organization under the Internal Revenue Code and should be classified as a private foundation. As long as the charitable foundation files an application for tax-exempt status within 27 months of the last day of the month in which it was organized, and provided the Internal Revenue Service approves the application, its effective date as a Section 501(c)(3) organization will be the date of its organization. We have not received a tax opinion as to whether the charitable foundation's tax-exempt status will be affected by the regulatory requirement that all shares of our common stock held by it must be voted in the same ratio as all other outstanding shares of our common stock on all proposals considered by our stockholders.

We believe that our contribution of shares of our common stock to the charitable foundation should not constitute an act of self-dealing and that we should be entitled to a deduction in the amount of the fair market value of the stock at the time of the contribution less the nominal amount that the charitable foundation is required to pay us for such stock. We are permitted to deduct for charitable purposes only an amount equal to 10% of our annual taxable income in any one year. We are permitted under the Internal Revenue Code to carry the excess contribution over the five-year period following the contribution to the charitable foundation. We estimate that all of the contribution should be deductible over the six-year period (<u>i.e.</u>, the year in which the contribution is made and the succeeding five-year period). However, we do not have any assurance that the Internal Revenue Service will grant tax-exempt status to the charitable foundation. In such event, our contribution to the charitable foundation would be expensed without a tax benefit, resulting in a reduction in earnings in the year in which the Internal Revenue Service makes such a determination. Furthermore, even if the contribution is deductible, we may not have sufficient earnings to be able to use the deduction in full. Any such decision to continue to make additional contributions to the charitable foundation in the future would be based on an assessment of, among other factors, our financial condition at that time, the interests of our stockholders and depositors, and the financial condition and operations of the foundation.

As a private foundation, earnings and gains, if any, from the sale of common stock or other assets are exempt from federal and state income taxation. However, investment income, such as interest, dividends and capital gains, is generally taxed at a rate of 1%. The charitable foundation will be required to file an annual return with the Internal Revenue Service within four and one-half months after the close of its fiscal year. The charitable foundation will be required to make its annual return available for public inspection. The annual return for a private foundation includes, among other things, an itemized list of all grants made or approved, showing the amount of each grant, the recipient, any relationship between a grant recipient and the foundation's managers and a concise statement of the purpose of each grant.

**Regulatory Requirements Imposed on the Charitable Foundation**

The OCC requires that, before Peru Federal's board of directors adopted the plan of conversion, the board of directors had to identify its member(s) that will serve on the charitable foundation's board of directors, and these director(s) could not participate in the discussions of Peru Federal's board of directors concerning contributions to the charitable foundation, and could not vote on the matter. Peru Federal's board of directors complied with this regulation in adopting the plan of conversion.

The OCC will generally not object if a well-capitalized federal savings association or savings bank contributes to a charitable foundation an aggregate amount of 8% or less of the shares or proceeds issued in a conversion stock offering. Peru Federal qualifies as a well-capitalized savings association for purposes of this limitation, and the contribution to the charitable foundation will not exceed this limitation.

The OCC imposes the following additional requirements on the establishment of the charitable foundation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the charitable foundation's primary purpose must be to serve and make grants in our local community;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the OCC may examine the charitable foundation at the foundation's expense;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the charitable foundation must comply with all supervisory directives imposed by the Federal Reserve Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the charitable foundation must provide annually to the Federal Reserve Board a copy of the annual report that the charitable foundation
submits to the Internal Revenue Service;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the charitable foundation must operate according to written policies adopted by its board of directors, including a conflict of interest
policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the charitable foundation may not engage in self-dealing and must comply with all laws necessary to maintain its tax-exempt status
under the Internal Revenue Code; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the charitable foundation must vote its shares of our common stock in the same ratio as all of the other shares voted on each proposal
considered by our stockholders.

**RESTRICTIONS ON ACQUISITION OF PFS BANCORP**

Although the board of directors of PFS Bancorp is not aware of any effort that might be made to obtain control of PFS Bancorp after the conversion and stock offering, the board of directors believes that it is appropriate to include certain provisions in PFS Bancorp's articles of incorporation and bylaws to protect the interests of PFS Bancorp and its stockholders from takeovers which our board of directors might conclude are not in the best interests of Peru Federal, PFS Bancorp or its stockholders.

The following discussion is a general summary of the material provisions of PFS Bancorp's articles of incorporation and bylaws, Peru Federal's federal stock charter and bylaws, Maryland corporation law and certain other regulatory provisions that may be deemed to have an "anti-takeover" effect. The following description of certain of these provisions is necessarily general and, with respect to provisions contained in PFS Bancorp's articles of incorporation and bylaws and Peru Federal's federal stock charter and bylaws, reference should be made in each case to the document in question, each of which is part of Peru Federal's application for conversion filed with the OCC, and except for Peru Federal's federal stock charter and bylaws, PFS Bancorp's registration statement filed with the Securities and Exchange Commission. See "Where You Can Find Additional Information."

**PFS Bancorp's Articles of Incorporation and Bylaws**

PFS Bancorp's articles of incorporation and bylaws contain a number of provisions relating to corporate governance and rights of stockholders that might discourage future takeover attempts. As a result, stockholders who might desire to participate in such transactions may not have an opportunity to do so. In addition, these provisions will also render the removal of the board of directors or management of PFS Bancorp more difficult.

***Directors****.* The board of directors will be divided into three classes. The members of each class will be elected for a term of three years and only one class of directors will be elected annually. Therefore, it would take at least two annual elections to replace a majority of our directors. The bylaws establish qualifications for board members, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· a prohibition on service as a director by a person who is a director, officer or a 10% stockholder of a competitor of Peru Federal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· a prohibition on service as a director by a person (i) who has been convicted of a crime involving dishonesty or breach of trust
that is punishable by imprisonment for a term exceeding one year under state or federal law, (ii) who is currently charged in an
information, indictment or other complaint with the commission of or participation in such a crime, or (iii) against whom a financial
or securities regulatory agency has, within the past ten years, issued a cease and desist, consent or other formal order, other than a
civil money penalty, which order is subject to public disclosure by such agency;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· a prohibition on service as a director by a person who is party to any agreement or understanding that (i) provides such person
with material benefits that are contingent upon PFS Bancorp entering into a merger or similar transaction in which it is not the surviving
entity, (ii) materially limits such person's voting discretion with respect to PFS Bancorp's strategic direction, or
(iii) materially impairs such person's ability to discharge his or her fiduciary duties with respect to the fundamental strategic
direction of PFS Bancorp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· a requirement that any person proposed to serve as a director (other than the initial directors and other than directors who are also
officers of PFS Bancorp or Peru Federal) has maintained his or her principal residence for a period of at least one year immediately before
his or her nomination or appointment to the Board of Directors within a 30-mile radius of the main office of Peru Federal; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· a prohibition on service as a director by a person who has lost more than one election for service as a director of PFS Bancorp.

Further, the bylaws impose notice and information requirements in connection with the nomination by stockholders of candidates for election to the board of directors or the proposal by stockholders of business to be acted upon at an annual meeting of stockholders. Such notice and information requirements are applicable to all stockholder business proposals and nominations, and are in addition to any requirements under the federal securities laws.

***Evaluation of Offers.*** The articles of incorporation of PFS Bancorp provide that its board of directors, when evaluating a transaction that would or may involve a change in control of PFS Bancorp (whether by purchases of its securities, merger, consolidation, share exchange, dissolution, liquidation, sale of all or substantially all of its assets, proxy solicitation or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of PFS Bancorp and its stockholders and in making any recommendation to the stockholders, give due consideration to all relevant factors, including, but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the economic effect, both immediate and long-term, upon PFS Bancorp's stockholders, including stockholders, if any, who do not
participate in the transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, PFS Bancorp
and its subsidiaries and on the communities in which it and its subsidiaries operate or are located;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of
PFS Bancorp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· whether a more favorable price could be obtained for PFS Bancorp's stock or other securities in the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as they
would affect the employees of PFS Bancorp and its subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the future value of the stock or any other securities of PFS Bancorp or the other entity to be involved in the proposed transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· any antitrust or other legal and regulatory issues that are raised by the proposal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the business and historical, current or expected future financial condition or operating results of the other entity to be involved
in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations to be
incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the
proposed transaction; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the ability of PFS Bancorp to fulfill its objectives as a financial institution holding company and on the ability of its subsidiary
financial institution(s) to fulfill the objectives of a federally-insured financial institution(s) under applicable statutes
and regulations.

If the board of directors determines that any proposed transaction should be rejected, it may take any lawful action to defeat such transaction.

***Restrictions on Calling Special Meetings*** *.*** The bylaws provide that special meetings of stockholders can be called by only the Chairperson or Vice Chairperson of the board of directors, a majority of the total number of directors that PFS Bancorp would have if there were no vacancies on the board of directors, or the Secretary upon the written request of stockholders entitled to cast at least a majority of all votes entitled to vote at the meeting.

***Prohibition of Cumulative Voting*** *.*** The articles of incorporation prohibit cumulative voting for the election of directors.

***Limitation of Voting Rights*** *.*** The articles of incorporation provide that in no event will any person who beneficially owns more than 10% of the then-outstanding shares of common stock, be entitled or permitted to vote any of the shares of common stock held in excess of the 10% limit. The 10% limit shall not apply if, before the stockholder acquires shares in excess of the 10% limit, the acquisition is approved by a majority of the directors who are not affiliated with the holder and who were members of the board of directors before the time of the acquisition (or who were chosen to fill any vacancy of an otherwise unaffiliated director by a majority of the unaffiliated directors).

***Restrictions on Removing Directors from Office*** *.*** The articles of incorporation provide that directors may be removed only for cause, and only by the affirmative vote of the holders of at least two-thirds of the voting power of all of our then-outstanding capital stock entitled to vote generally in the election of directors (after giving effect to the limitation on voting rights discussed above in " – Limitation of Voting Rights"), voting together as a single class.

***Stockholder Nominations and Proposals.*** The bylaws provide that any stockholder desiring to make a nomination for the election of directors or a proposal for new business at an annual meeting of stockholders must submit written notice to PFS Bancorp at least 90 days before and not earlier than 120 days before the anniversary date of the proxy statement relating to the previous year's annual meeting. However, if less than 90 days' prior public disclosure of the date of the meeting is given to stockholders and the date of the annual meeting is advanced by more than 30 days, or delayed by more than 30 days, from the anniversary date of the preceding year's annual meeting then stockholders must submit written notice to PFS Bancorp no later than 10 days following the day on which public disclosure of the date of the meeting is first made in a press release, in a document filed with the Securities and Exchange Commission or on a website maintained by PFS Bancorp.

***Authorized but Unissued Shares*** **.** After the conversion and stock offering, PFS Bancorp will have authorized but unissued shares of common and preferred stock. The articles of incorporation authorize 1,000,000

shares of serial preferred stock. PFS Bancorp is authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the board of directors is authorized to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of such shares. In addition, the articles of incorporation provide that a majority of the total number of directors that PFS Bancorp would have if there were no vacancies on the board of directors may, without action by the stockholders, amend the articles of incorporation to increase or decrease the aggregate number of shares of stock of any class or series that PFS Bancorp has the authority to issue. In the event of a proposed merger, tender offer or other attempt to gain control of PFS Bancorp that the board of directors does not approve, it would be possible for the board of directors to authorize the issuance of a series of preferred stock with rights and preferences that would impede the completion of the transaction. An effect of the possible issuance of preferred stock therefore may be to deter a future attempt to gain control of PFS Bancorp. The board of directors has no present plan or understanding to issue any preferred stock.

***Amendments to Articles of Incorporation and Bylaws.*** Except as provided under " – Authorized but Unissued Shares," above, regarding the amendment of the articles of incorporation by the board of directors to increase or decrease the number of shares authorized for issuance, or as otherwise allowed by law, any amendment to the articles of incorporation must be approved by our board of directors and also by two-thirds of the outstanding shares of our voting stock (or a majority of the outstanding shares of our voting stock if the amendment is approved by two-thirds of our board of directors); provided, however, that approval by at least 80% of the outstanding voting stock is generally required to amend the following provisions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the limitation on voting rights of persons who directly or indirectly beneficially own more than 10% of the outstanding shares of
common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the division of the board of directors into three staggered classes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the ability of the board of directors to fill vacancies on the board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the requirement that at least two-thirds of the voting power of the stockholders must vote to remove directors, and can only remove
directors for cause;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the ability of the board of directors to amend and repeal the bylaws and the required stockholder vote to amend or repeal the bylaws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) the ability of the board of directors to evaluate a variety of factors in evaluating offers to purchase or otherwise acquire PFS Bancorp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) the authority of the board of directors to provide for the issuance of preferred stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) the validity and effectiveness of any action lawfully authorized by the affirmative vote of the holders of a majority of the total
number of outstanding shares of common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) the number of stockholders constituting a quorum or required for stockholder consent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) the provision regarding stockholder proposals and nominations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) the indemnification of current and former directors and officers, as well as employees and other agents, by PFS Bancorp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) the limitation of liability of officers and directors to PFS Bancorp for money damages; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) the provision of the articles of incorporation requiring approval of at least 80% of the outstanding voting stock to amend the provisions
of the articles of incorporation set forth in (i) through (xii) of this list and the provisions related to amendment of the
articles of incorporation.

The articles of incorporation also provide that the bylaws may be amended by the affirmative vote of a majority of the total number of directors that PFS Bancorp would have if there were no vacancies on the board of directors or by the stockholders by the affirmative vote of at least 80% of the votes entitled to be cast in the election of directors (after giving effect to the limitation on voting rights discussed above in " – Limitation of Voting Rights").

**Maryland Corporate Law**

Under Maryland law, "business combinations" between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, statutory share exchange or, in circumstances specified in the statute, certain transfers of assets, certain stock issuances and transfers, liquidation plans and reclassifications involving interested stockholders and their affiliates or issuance or reclassification of equity securities. Maryland law defines an interested stockholder as: (i) any person who beneficially owns 10% or more of the voting power of a corporation's voting stock after the date on which the corporation had 100 or more beneficial owners of its stock; or (ii) an affiliate or associate of the corporation at any time after the date on which the corporation had 100 or more beneficial owners of its stock who, within the two-year period before the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of the corporation. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board of directors.

After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least: (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. These super-majority vote requirements do not apply if the corporation's common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

**Peru Federal's Stock Charter**

The federal stock charter of Peru Federal provides that for a period of five years from the closing of the conversion and stock offering, no person (including a group acting in concert) other than PFS Bancorp may offer directly or indirectly to acquire the beneficial ownership of more than 10% of any class of equity security of Peru Federal. This provision does not apply to any tax-qualified employee benefit plan of Peru Federal or PFS Bancorp, or to an underwriter or member of an underwriting or selling group involving the public sale or resale of securities of Peru Federal or any of its subsidiaries, so long as after the sale or resale, no underwriter or member of the selling group is a beneficial owner, directly or indirectly, of more than 10% of any class of equity securities of Peru Federal. In addition, during this five-year period, all shares owned over the 10% limit may not be voted on any matter submitted to stockholders for a vote.

**Conversion Regulations**

OCC regulations prohibit any person from making an offer, announcing an intent to make an offer or participating in any other arrangement to purchase stock or acquiring stock or subscription rights in a converting institution or its holding company from another person before completion of its conversion. Further, without the OCC's prior written approval, no person may make an offer or announcement of an offer to purchase shares or actually acquire shares of a converted institution or its holding company for a period of three years from the date of the completion of the conversion if, upon the completion of such offer, announcement or acquisition, the person would become the beneficial owner of more than 10% of the outstanding stock of the institution or its holding company. The OCC defines "person" to include any individual, group acting in concert, corporation, partnership,

association, joint stock company, trust, unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities of an insured institution. However, offers made exclusively to a savings association or its holding company, or an underwriter or member of a selling group acting on the converting institution's or its holding company's behalf for resale to the general public are excepted. The regulation also provides civil penalties for willful violation or assistance in any such violation of the regulation by any person connected with the management of the converting institution or its holding company or who controls more than 10% of the outstanding shares or voting rights of a converted institution or its holding company.

**Change in Control Regulations**

Under the Change in Bank Control Act, a federal statute, no person may acquire control of a savings and loan holding company unless the Federal Reserve Board has been given 60 days' prior written notice and has not issued a notice disapproving the proposed acquisition. In addition, Federal Reserve Board regulations provide that no company may acquire control of a savings and loan holding company without the prior approval of the Federal Reserve Board.

Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of the institution's directors, or a determination by the Federal Reserve Board that the acquirer has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution.

Acquisition of more than 10% of any class of a savings and loan holding company's voting stock, if the acquirer is also subject to any one of eight "control factors," constitutes a rebuttable determination of control under Federal Reserve Board regulations. Such control factors include the acquirer being one of the two largest stockholders. The determination of control may be rebutted by submission to the Federal Reserve Board, before the acquisition of stock or the occurrence of any other circumstances giving rise to such determination, of a statement setting forth facts and circumstances which would support a finding that no control relationship will exist and containing certain undertakings. The regulations provide that persons or companies that acquire beneficial ownership exceeding 10% or more of any class of a savings and loan holding company's stock who do not intend to participate in or seek to exercise control over a savings and loan holding company's management or policies may qualify for a safe harbor by filing with the Federal Reserve Board a certification form that states, among other things, that the holder is not in control of such institution, is not subject to a rebuttable determination of control and will take no action which would result in a determination or rebuttable determination of control without prior notice to or approval of the Federal Reserve Board, as applicable. There are also rebuttable presumptions in the regulations concerning whether a group "acting in concert" exists, including presumed action in concert among members of an "immediate family."

The Federal Reserve Board may prohibit an acquisition of control if it finds, among other things, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the acquisition would result in a monopoly or substantially lessen competition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the financial condition of the acquiring person might jeopardize the financial stability of the institution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the competence, experience or integrity of the acquiring person indicates that it would not be in the interest of the depositors or
the public to permit the acquisition of control by such person; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the acquisition would have an adverse effect on the FDIC's Deposit Insurance Fund.

In addition, a savings and loan holding company must obtain the approval of the Federal Reserve Board before acquiring voting control of more than 5% of any class of voting stock of another savings association or another savings association holding company.

**DESCRIPTION OF CAPITAL STOCK OF PFS BANCORP**

**General**

PFS Bancorp is authorized to issue 14,000,000 shares of common stock, par value of $0.01 per share, and 1,000,000 shares of preferred stock, par value $0.01 per share. PFS Bancorp currently expects to issue in the stock offering up to 2,070,000 shares of common stock and contribute 40,000 shares of common stock to the charitable foundation. It will not issue shares of preferred stock in the stock offering or contribute shares of preferred stock to the charitable foundation. Each share of PFS Bancorp common stock will have the same relative rights as, and will be identical in all respects to, each other share of common stock. Upon payment of the subscription price for the common stock according to the plan of conversion all of the shares of common stock will be duly authorized, fully paid and nonassessable.

The shares of common stock of PFS Bancorp will represent non-withdrawable capital, will not be an account of an insurable type, and will not be insured by the FDIC or any other governmental agency.

**Common Stock**

***Dividends*** *.*** PFS Bancorp can pay dividends on its common stock if, after giving effect to such distribution, (i) it would be able to pay its indebtedness as the indebtedness comes due in the usual course of business and (ii) its total assets exceed the sum of its liabilities and the amount needed, if it were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of any holders of capital stock who have a preference in the event of dissolution. The holders of common stock of PFS Bancorp will be entitled to receive and share equally in dividends as may be declared by the board of directors out of funds legally available therefor. If PFS Bancorp issues shares of preferred stock, the holders of preferred stock may have a priority over the holders of the common stock with respect to dividends.

***Voting Rights*** *.*** Upon consummation of the conversion and stock offering, the holders of common stock of PFS Bancorp will have exclusive voting rights in PFS Bancorp. They will elect its board of directors and act on other matters as are required to be presented to them under Maryland law or as are otherwise presented to them by the board of directors. Generally, each holder of common stock will be entitled to one vote per share and will not have any right to cumulate votes in the election of directors. Any person who beneficially owns more than 10% of the then-outstanding shares of PFS Bancorp's common stock, however, will not be entitled or permitted to vote any shares of common stock held in excess of the 10% limit. If PFS Bancorp issues shares of preferred stock, holders of the preferred stock may also possess voting rights. Amendments to the articles of incorporation generally require a two-thirds vote, and certain amendments require an 80% stockholder vote.

As a federal stock savings bank, corporate powers and control of Peru Federal will be vested in its board of directors, who elect the officers of Peru Federal and who fill any vacancies on the board of directors. Voting rights in Peru Federal will be vested exclusively in the owner of the shares of capital stock of Peru Federal, which will be PFS Bancorp, and voted at the direction of PFS Bancorp's board of directors. Consequently, the holders of the common stock of PFS Bancorp will not have direct control of Peru Federal.

***Liquidation*** *.*** In the event of any liquidation, dissolution or winding up of Peru Federal, PFS Bancorp, as the owner of all of Peru Federal's capital stock, would be entitled to receive all assets of Peru Federal available for distribution, after payment or provision for payment of all debts and liabilities of Peru Federal, including all deposit accounts and accrued interest thereon, and after distribution of the balance in the liquidation account to Eligible Account Holders and Supplemental Eligible Account Holders. In the event of liquidation, dissolution or winding up of PFS Bancorp, the holders of its common stock would be entitled to receive, after payment or provision for payment of all its debts and liabilities, all of the assets of PFS Bancorp available for distribution. If preferred stock is issued by PFS Bancorp, the holders thereof may have a priority over the holders of the common stock in the event of liquidation or dissolution.

***Preemptive Rights; Redemption*** *.*** Holders of the common stock of PFS Bancorp will not be entitled to preemptive rights with respect to any shares that may be issued, unless such preemptive rights are approved by the board of directors. The common stock is not subject to redemption.

**Preferred Stock**

No shares of PFS Bancorp's authorized preferred stock will be issued as part of the conversion and stock offering. Preferred stock may be issued with preferences and designations as our board of directors may from time to time determine. Our board of directors may, without stockholder approval, issue shares of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control.

**Forum Selection for Certain Stockholder Lawsuits**

The articles of incorporation of PFS Bancorp provide that, unless PFS Bancorp consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of PFS Bancorp, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of PFS Bancorp to PFS Bancorp or PFS Bancorp's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Maryland General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the State of Maryland, in all cases subject to the court's having personal jurisdiction over the indispensible parties named as defendants. This exclusive forum provision does not apply to claims arising under the federal securities laws. Under the articles of incorporation, any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of PFS Bancorp shall be deemed to have notice of and consented to the exclusive forum provision of the articles of incorporation. This exclusive forum provision may limit a stockholder's ability to bring a claim in a judicial forum it finds favorable for disputes with PFS Bancorp and its directors, officers, and other employees or may cause a stockholder to incur additional expense by having to bring a claim in a judicial forum that is distant from where the stockholder resides, or both. See "Risk Factors – Risks Related to the Stock Offering – Our articles of incorporation provide that, subject to limited exception, state and federal courts in the State of Maryland are the sole and exclusive forum for certain stockholders litigation matters, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, and other employees."

**TRANSFER AGENT**

The transfer agent and registrar for PFS Bancorp's common stock will be ______________, ________, ________.

**EXPERTS**

The consolidated financial statements of Peru Federal at December 31, 2022 and 2021 and for each of the years ended December 31, 2022 and 2021 have been included herein in reliance upon the report of Wipfli LLP, independent registered public accounting firm, which is included in this prospectus and upon the authority of said firm as experts in accounting and auditing.

Feldman Financial has consented to the publication in this prospectus of the summary of its report to PFS Bancorp setting forth its opinion as to the estimated pro forma market value of the shares of common stock upon completion of the conversion and stock offering and of its letter with respect to subscription rights.

**CHANGE IN AUDITOR**

On December 12, 2022, Peru Federal dismissed FORVIS, LLP (formerly BKD, LLP) and engaged Wipfli LLP as its independent auditor. This change in auditors was approved by Peru Federal's Audit Committee. Wipfli LLP was engaged to audit the consolidated financial statements of Peru Federal for the years ended December 31, 2022 and 2021 according to auditing standards of the Public Company Accounting Oversight Board.

Before the engagement of Wipfli LLP, Peru Federal did not consult with Wipfli LLP regarding the application of accounting principles to a specific completed or proposed transaction or regarding the type of audit opinion that might be rendered by Wipfli LLP on Peru Federal's consolidated financial statements, and Wipfli LLP did not provide any written or oral advice that was an important factor considered by Peru Federal in reaching a decision as to any such accounting, auditing or financial reporting issue, and Peru Federal did not consult with Wipfli LLP regarding any of the matters or events set forth in Item 304(a)(2)(ii) of Regulation S-K.

The report of FORVIS, LLP on its audit of the consolidated financial statements of Peru Federal for the years ended December 31, 2021 and 2020, performed under AICPA auditing standards, did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principle. In connection with its audit of the consolidated financial statements of Peru Federal for the years ended December 31, 2021 and 2020, performed under AICPA standards, there were no disagreements with FORVIS, LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of FORVIS, LLP, would have caused them to make reference thereto in their reports, and there have been no reportable events as described in Item 304(a)(1)(v) of Regulation S-K.

Peru Federal provided FORVIS, LLP with a copy of this disclosure before its filing with the Securities and Exchange Commission and requested that FORVIS, LLP furnish Peru Federal with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements and, if it does not agree, the respects in which it does not agree. A copy of the letter is filed as an exhibit to the registration statement of PFS Bancorp, of which this prospectus is a part.

**LEGAL MATTERS**

Luse Gorman, PC, Washington, D.C., special counsel to PFS Bancorp and Peru Federal, has issued to PFS Bancorp its opinion regarding the legality of the common stock and has issued to PFS Bancorp and Peru Federal its opinion regarding the federal income tax consequences of the conversion and stock offering. Wipfli LLP has issued its opinion to PFS Bancorp and Peru Federal regarding the Illinois state income tax consequences of the conversion and stock offering. Certain legal matters will be passed upon for KBW and, in the event of a syndicated community offering, for any other co-managers, by Vedder Price P.C., Chicago, Illinois.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION**

PFS Bancorp has filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933, as amended, with respect to the shares of common stock offered hereby. As permitted by the rules and regulations of the Securities and Exchange Commission, this prospectus does not contain all the information set forth in the registration statement. Such information, including the appraisal report, which is an exhibit to the registration statement, can be examined without charge at the public reference facilities of the Securities and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission telephone number is 1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains a web site (*www.sec.gov*) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission, including PFS Bancorp. The statements contained in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms of, and should be read in conjunction with, such contract or document.

Peru Federal has filed with the OCC an application for conversion from mutual to stock form. This prospectus omits certain information contained in the application. The application may be examined at the OCC Central District Office, located at 425 S. Financial Place, Suite 1700, Chicago, Illinois 60605. A copy of the plan of conversion is available for review at each office of Peru Federal.

In connection with the conversion and stock offering, PFS Bancorp will register its common stock under Section 12 of the Securities Exchange Act of 1934. Upon registration, PFS Bancorp and the holders of its common stock will become subject to the proxy solicitation rules, reporting requirements and restrictions on common stock

purchases and sales by directors, officers and greater than 10% stockholders, the annual and periodic reporting and certain other requirements of the Securities Exchange Act of 1934. Under the plan of conversion, PFS Bancorp has undertaken that it will not terminate such registration for a period of at least three years following the consummation of the conversion and stock offering.

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF PERU FEDERAL SAVINGS BANK**

---

| | |
|:---|:---|
| [Report of Independent Registered Public Accounting Firm](#SP_009) | [F-1](#SP_009) |
| [Consolidated Balance Sheets at December 31, 2022 and 2021](#a_001) | [F-2](#a_001) |
| [Consolidated Statements of Income for the Years Ended December 31, 2022 and 2021](#a_002) | [F-3](#a_002) |
| [Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2022 and 2021](#a_003) | [F-4](#a_003) |
| [Consolidated Statements of Equity Capital for the Years Ended December 31, 2022 and 2021](#a_004) | [F-5](#a_004) |
| [Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021](#a_005) | [F-6](#a_005) |
| [Notes to Consolidated Financial Statements](#a_006) | [F-7](#a_006) |

---

\# \# \#

Separate financial statements for PFS Bancorp have not been included in this prospectus because it has not engaged in any significant activities, has no significant assets, and has no contingent liabilities, revenue or expenses.

All financial statement schedules have been omitted as the required information either is not applicable or is included in the financial statements or related notes.

---

| | | |
|:---|:---|:---|
| ![](tm238313d1_s1-img05.jpg) | 4890 Owen Ayres Ct. <br> Suite 200 <br> Eau Claire, WI 54701 | 715 832 3407<br> wipfli.com |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Stockholders

Peru Federal Savings Bank

Peru, Illinois

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheets of Peru Federal Savings Bank and subsidiary (the "Bank") as of December 31, 2022 and 2021, and the related consolidated statements of income, comprehensive income (loss), equity capital and cash flows for the years then ended and the related notes to the consolidated financial statements (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Bank as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on the Bank's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Bank in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Bank is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Bank's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Bank's auditor since 2022.

![](tm238313d1_s1-img06.jpg)

Wipfli LLP

Eau Claire, Wisconsin

March 3, 2023

**Peru Federal Savings Bank**

**Consolidated Balance Sheets<br> December 31, 2022 and 2021<br> (In thousands)**

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents — cash and due from bank | $12651 | $21542 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Available-for-sale debt securities | 63329 | 71705 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Held-to-maturity debt securities | 3146 | 3054 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity securities | 88 | 112 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans, net of allowance for loan losses of $543 and $567 at December 31, 2022 and 2021 | 84916 | 80840 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Premises and equipment, net of accumulated depreciation of $2,608 and $2,476 at December 31, 2022 and 2021 | 2150 | 2159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal Home Loan Bank stock | 347 | 330 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest receivable | 592 | 566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash surrender value of bank-owned life insurance | 3783 | 3696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | 1956 | 307 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage servicing rights | 315 | 199 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax receivable | 98 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | 763 | 1046 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $174134 | $185556 |
| **Liabilities and Equity Capital** |  |  |
| &nbsp;&nbsp;&nbsp;**Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deposits |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Demand | $17248 | $18611 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Savings, NOW and money market | 87120 | 90320 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Time | 48339 | 46981 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | 152707 | 155912 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal Home Loan Bank advance |  | 5000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred compensation | 687 | 635 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax payable |  | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest payable and other liabilities | 601 | 518 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 153995 | 162116 |
| **Equity Capital** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | 23828 | 22997 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) | (3689) | 443 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total equity capital | 20139 | 23440 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and equity capital | $**174134** | $**185556** |

---

*See Notes to Consolidated Financial Statements*

**Peru Federal Savings Bank**

**Consolidated Statements of Income<br> Years Ended December 31, 2022 and 2021<br> (In Thousands)**

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Interest and Dividend Income** |  |  |
| &nbsp;&nbsp;&nbsp;Loans, including fees | $3306 | $3395 |
| &nbsp;&nbsp;&nbsp;Debt securities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxable | 768 | 648 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax-exempt | 499 | 469 |
| &nbsp;&nbsp;&nbsp;Dividends | 13 | 12 |
| &nbsp;&nbsp;&nbsp;Other | 217 | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest and dividend income | 4803 | 4584 |
| **Interest Expense** |  |  |
| &nbsp;&nbsp;&nbsp;Deposits | 640 | 611 |
| **Net Interest Income** | 4163 | 3973 |
| **Provision (Credit) for Loan Losses** | 61 | (6) |
| **Net Interest Income After Provision (Credit) for Loan Losses** | 4102 | 3979 |
| **Noninterest Income** |  |  |
| &nbsp;&nbsp;&nbsp;Commission income | 28 | 28 |
| &nbsp;&nbsp;&nbsp;Customer service fees | 368 | 339 |
| &nbsp;&nbsp;&nbsp;Net realized gain on loan sales | 140 | 144 |
| &nbsp;&nbsp;&nbsp;Loan servicing fees | 78 | 81 |
| &nbsp;&nbsp;&nbsp;Realized loss on sale of available-for-sale debt securities | (221) |  |
| &nbsp;&nbsp;&nbsp;Other | 116 | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest income | 509 | 660 |
| **Noninterest Expense** |  |  |
| &nbsp;&nbsp;&nbsp;Salaries and employee benefits | 2002 | 1962 |
| &nbsp;&nbsp;&nbsp;Occupancy | 244 | 232 |
| &nbsp;&nbsp;&nbsp;Depreciation | 145 | 152 |
| &nbsp;&nbsp;&nbsp;Data processing | 573 | 434 |
| &nbsp;&nbsp;&nbsp;Professional fees | 152 | 100 |
| &nbsp;&nbsp;&nbsp;Marketing | 129 | 124 |
| &nbsp;&nbsp;&nbsp;Printing and office supplies | 69 | 63 |
| &nbsp;&nbsp;&nbsp;Foreclosed assets, net | 13 |  |
| &nbsp;&nbsp;&nbsp;Deposit insurance premiums | 140 | 163 |
| &nbsp;&nbsp;&nbsp;Other | 158 | 132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest expense | 3625 | 3362 |
| **Income Before Income Taxes** | 986 | 1277 |
| **Provision for Income Taxes** | 155 | 275 |
| **Net Income** | $831 | $1002 |

---

*See Notes to Consolidated Financial Statements*

**Peru Federal Savings Bank**

**Consolidated Statements of Comprehensive Income (Loss)**

**Years Ended December 31, 2022 and 2021**

**(In Thousands)**

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Net Income** | $831 | $1002 |
| **Other Comprehensive Income (Loss)** |  |  |
| &nbsp;&nbsp;&nbsp;Unrealized losses on available-for-sale debt securities, net of taxes of $(1710) and $(349), for 2022 and 2021, Respectively | (4290) | (883) |
| &nbsp;&nbsp;&nbsp;Less reclassification adjustment for realized losses included in net income, net of taxes of $63 and $0 for 2022 and 2021, respectively | 158 |  |
| &nbsp;&nbsp;&nbsp;Other comprehensive income (loss) | (4132) | (883) |
| **Comprehensive Income (Loss)** | $**(3301)** | $119 |

---

*See Notes to Consolidated Financial Statements*

**Peru Federal Savings Bank**

**Consolidated Statements of Equity Capital<br> Years Ended December 31, 2022 and 2021<br> (In Thousands)**

---

| | | | |
|:---|:---|:---|:---|
|  | **Retained <br> Earnings** | **Accumulated <br> Other <br> Comprehensive <br> Income (loss)** | **Total** |
| **Balance, January 1, 2021** | $21995 | $1326 | $23321 |
| &nbsp;&nbsp;&nbsp;Net income | 1002 |  | 1002 |
| &nbsp;&nbsp;&nbsp;Other comprehensive loss |  | (883) | (883) |
| **Balance, December 31, 2021** | 22997 | 443 | 23440 |
| &nbsp;&nbsp;&nbsp;Net income | 831 |  | 831 |
| &nbsp;&nbsp;&nbsp;Other comprehensive loss |  | (4132) | (4132) |
| **Balance, December 31, 2022** | $23828 | $(3689) | $20139 |

---

*See Notes to Consolidated Financial Statements*

**Peru Federal Savings Bank**

**Consolidated Statements of Cash Flows<br> Years Ended December 31, 2021 and 2022<br> (In Thousands)**

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Operating Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net income | $831 | $1002 |
| &nbsp;&nbsp;&nbsp;Items not requiring (providing) cash |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation | 145 | 152 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision (credit) for loan losses | 61 | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of premiums and discounts on available-for-sale debt securities | 913 | 947 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | (2) | (107) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of equity securities | 24 | 112 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Realized loss on sale of available-for-sale debt securities | 221 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized gain on loan sales | (140) | (144) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Earnings on cash surrender value of life insurance | (87) | (85) |
| &nbsp;&nbsp;&nbsp;Changes in |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest receivable | (26) | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets and income tax receivable | 185 | 89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest payable and other liabilities | 84 | 211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 2209 | 2190 |
| **Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Purchases of available-for-sale debt securities | (17969) | (19348) |
| &nbsp;&nbsp;&nbsp;Proceeds from sales of available-for-sale debt securities | 6172 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from maturities of available-for-sale debt securities | 13273 | 16198 |
| &nbsp;&nbsp;&nbsp;Purchase of held-to-maturity debt securities | (987) | (1094) |
| &nbsp;&nbsp;&nbsp;Proceeds from maturities of held-to-maturity debt securities | 882 | 806 |
| &nbsp;&nbsp;&nbsp;Net change in loans | (4113) | 1348 |
| &nbsp;&nbsp;&nbsp;Purchase of premises and equipment | (136) | (34) |
| &nbsp;&nbsp;&nbsp;Purchase of FHLB stock | (17) | (76) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (2895) | (2200) |
| **Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net increase (decrease) in demand deposits, money market, |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW and savings accounts | (4563) | 15273 |
| &nbsp;&nbsp;&nbsp;Net decrease in certificates of deposit | 1358 | (2836) |
| &nbsp;&nbsp;&nbsp;Proceeds from Federal Home Loan Bank advance |  | 5000 |
| &nbsp;&nbsp;&nbsp;Repayment of Federal Home Loan Bank advance | (5000) | (4000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) financing activities | (8205) | 13437 |
| **Increase (Decrease) in Cash and Cash Equivalents** | (8891) | 13427 |
| **Cash and Cash Equivalents, Beginning of Year** | 21542 | 8115 |
| **Cash and Cash Equivalents, End of Year** | $12651 | $21542 |
| **Supplemental Cash Flows Information** |  |  |
| &nbsp;&nbsp;&nbsp;Interest paid | $624 | $613 |
| &nbsp;&nbsp;&nbsp;Income taxes paid | $300 | $278 |
| &nbsp;&nbsp;&nbsp;Real estate acquired in settlement of loans | $— | $— |

---

*See Notes to Consolidated Financial Statements*

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Note 1: Nature of Operations and Summary of Significant Accounting Policies** 

***Nature of Operations***

Peru Federal Savings Bank ("Bank") is a federal chartered mutual savings bank. The Bank is primarily engaged in providing a full range of banking and financial services to individual and corporate customers in northern Illinois, primarily LaSalle County, from its two facilities located in Peru, Illinois. The Bank is subject to competition from other financial institutions. The Bank is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities.

***Principles of Consolidation***

The consolidated financial statements include the accounts of the Bank and its wholly-owned subsidiary, PFSB Financial Services Inc. ("PFSB"). PFSB was inactive in 2021 and 2022. All significant intercompany accounts and transactions have been eliminated in consolidation.

***Use of Estimates***

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, mortgage servicing rights, and fair values of financial instruments.

***Cash Equivalents***

The Bank considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2022 and 2021, cash equivalents consisted of due from bank accounts.

At December 31, 2022 and 2021, the Bank's cash accounts exceeded federally insured limits by $1,869 and $8,601, respectively.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

***Debt Securities***

Certain debt securities that management has the positive intent and ability to hold to maturity are classified as "held to maturity" and recorded at amortized cost. Securities not classified as held to maturity are classified as "available for sale" and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss). Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

For debt securities with fair value below amortized cost when the Bank does not intend to sell a debt security, and it is more likely than not the Bank will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income (loss). For held-to-maturity debt securities, the amount of an other-than-temporary impairment recorded in other comprehensive income (loss) for the noncredit portion of a previous other-than- temporary impairment is amortized prospectively over the remaining life of the security on the basis of the timing of future estimated cash flows of the security.

***Equity Securities***

The Bank measures equity securities at fair value with changes in fair value recognized in net income. Gains and losses on the sale of equity securities are recorded on the trade date and are determined using the specific identification method.

***Loans Held for Sale***

Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to noninterest income. Gains and losses on loan sales are recorded on the statements of income.

***Loans***

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, and for loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of direct origination costs are recognized as income or expensed when received or incurred since capitalization of these fees and costs would not have a significant impact on the consolidated financial statements.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The Bank maintains lending policies and procedures designed to focus lending efforts on the type, location, and duration of loans most appropriate for its business model and markets. The Bank's principal lending activity is the origination of residential and commercial real estate loans, commercial loans, and consumer loans. The primary lending market is in LaSalle County, Illinois. Generally, loans are collateralized by assets of the borrower and guaranteed by the principals of the borrowing entity.

The Board of Directors reviews and approves the Bank's lending policy on an annual basis. Quarterly, the Board Loan Committee reviews the allowance for loan losses and reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans.

***Allowance for Loan Losses***

The allowance for loan losses ("allowance") represents management's estimate of the reserve necessary to adequately account for probable losses that could ultimately be realized from current loan exposures. In determining the adequacy of the allowance, management relies predominately on a disciplined credit review and approval process. The review process is directed by overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty.

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical charge-off experience and expected loss given default derived from the Bank's internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

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

Groups of loans with similar risk characteristics are collectively evaluated for impairment based on the group's historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

Risk characteristics applicable to each segment of the loan portfolio are described as follows.

*Residential 1-4 Family Real Estate:* The residential 1-4 family real estate are generally secured by owner-occupied 1-4 family residences. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers. Credit risk in these loans can be impacted by economic conditions within the Bank's market areas that might impact either property values or a borrower's personal income. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

*Commercial Real Estate:* Commercial real estate loans typically involve larger principal amounts, and repayment of these loans is generally dependent on the successful operations of the property securing the loan or the business conducted on the property securing the loan. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economies in the Bank's market areas.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

*Construction and Land Development Real Estate:* Construction and land development real estate loans are usually based upon estimates of costs and estimated value of the completed project and include independent appraisal reviews and a financial analysis of the developers and property owners. Sources of repayment of these loans may include permanent loans, sales of developed property or an interim loan commitment from the Bank until permanent financing is obtained. These loans are considered to be higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions, and the availability of long-term financing. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economies in the Bank's market areas.

*Commercial:* The commercial portfolio includes loans to commercial customers for use in financing working capital needs, equipment purchases and expansions. The loans in this category are repaid primarily from the cash flow of a borrower's principal business operation. Credit risk in these loans is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability from business operations. Commercial business loans also include Small Business Administration (SBA) Paycheck Protection Program (PPP) loans which are covered by a 100% government guaranty. As of December 31, 2022 and 2021, the Bank had PPP loans outstanding that totaled $0 and $116, respectively.

*Consumer:* The consumer loan portfolio consists of various term and line of credit loans such as automobile loans and loans for other personal purposes. Repayment for these types of loans will come from a borrower's income sources that are typically independent of the loan purpose. Credit risk is driven by consumer economic factors (such as unemployment and general economic conditions in the Bank's market area) and the creditworthiness of a borrower.

***Premises and Equipment***

Land is carried at cost. Depreciable assets are stated at cost less accumulated depreciation. Depreciation is charged to expense using the straight-line method over the estimated useful lives of the assets.

The estimated useful lives for each major depreciable classification of premises and equipment are as follows:

Buildings and improvements 5-50 years <br> Equipment 3-7 years

***Federal Home Loan Bank Stock***

Federal Home Loan Bank stock is a required investment for institutions that are members of the Federal Home Loan Bank system. The required investment in the common stock is based on a predetermined formula, carried at cost and evaluated for impairment.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

***Bank-owned Life Insurance***

The Bank has purchased life insurance policies on certain key executives. Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

***Mortgage Servicing Rights***

Mortgage servicing assets are recognized separately when rights are acquired through purchase or through sale of financial assets. Under the servicing assets and liabilities accounting guidance (ASC 860-50), servicing rights resulting from the sale or securitization of loans originated by the Bank are initially measured at fair value at the date of transfer. The Bank has elected to initially and subsequently measure the mortgage servicing rights for consumer mortgage loans using the fair value method. Under the fair value method, the servicing rights are carried in the balance sheet at fair value and the changes in fair value are reported in earnings in the period in which the changes occur.

Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. These variables change from quarter to quarter as market conditions and projected interest rates change and may have an adverse impact on the value of the mortgage servicing right and may result in a reduction to noninterest income.

Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned in loan servicing fees in non-interest income.

***Transfers of Financial Assets***

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021<br> (dollar amounts in thousands)**

***Income Taxes***

The Bank accounts for income taxes in accordance with income tax accounting guidance (ASC 740, *Income Taxes).* The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Bank determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

Tax positions are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to the management's judgment. With a few exceptions, the Bank is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2019.

The Bank recognizes interest and penalties on income taxes as a component of income tax expense.

The Bank files consolidated income tax returns with its subsidiary.

***Comprehensive Income (Loss)***

Comprehensive income (loss) consists of net income and other comprehensive income (loss), net of applicable income taxes. Other comprehensive income (loss) includes unrealized appreciation (depreciation) on available-for-sale securities and reclassification adjustment for realized losses included in net income.

***Revenue Recognition***

The majority of the Bank's revenues come from interest income and other sources, including loans and securities, which are outside the scope of Financial Accounting Standards Board Accounting Standards Update 2014-09, *Revenues from Contracts with Customers* (Topic 606). The Bank's services that fall within the scope of Topic 606 are presented within noninterest income in the accompanying consolidated statements of income and are recognized as revenue as the Bank satisfies its obligation to the customer.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

A description of the Bank's revenue streams accounted for under Topic 606 are as follows:

*Customer service fees.* The Bank generates revenues through fees charged to depositors related to deposit account maintenance fees, overdrafts, interchange income, wire transfers and additional miscellaneous services provided at the request of the depositor. For deposit-related services, revenue is recognized when performance obligations are satisfied, which is, generally, at a point in time.

*Commission Income.* Brokerage commissions and fees primarily relate to investment advisory and brokerage activities as well as the sale of other non-deposit investment products to customers of the Bank. The Banks's performance obligation for investment advisory services is generally satisfied, and related revenue recognized, over the period in which the services are provided. Fees earned for brokerage activities, such as facilitating securities transactions, are generally recognized at the time of transaction execution. Commissions or fees earned on the sale of other non-deposit investment products are primarily recognized on a monthly basis based on the executed sales dates. Payment for these services is generally received shortly after month end.

*Gains/Losses on Sales of Foreclosed Assets.* The Bank records a gain or loss from the sale of foreclosed assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Bank finances the sale of foreclosed assets to the buyer, the Bank assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Bank adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

**Rate Lock Commitments**

The Bank enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate lock commitment). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Rate lock commitments are recorded only to the extent of fees received since recording the estimated fair value of these commitments would not have a significant impact on the financial statements.

**Off-Balance-Sheet Instruments**

In the ordinary course of business, the Bank has entered into off-balance-sheet financial instruments, including commitments to extend credit, unfunded commitments under lines of credit, and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable.

**Legal Contingencies.**

Various legal claims arise from time to time in the normal course of business. In the opinion of management, any liability resulting from such proceedings would not have a material impact on the financial statements of the Bank.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Advertising**

Advertising costs are expensed as incurred.

**Future Change in Accounting Principle**

The Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2016-13, *Financial Instruments—Credit Losses (Topic 326).* The ASU introduces a new credit loss model, the current expected credit loss model (CECL), which requires earlier recognition of credit losses, while also providing additional transparency about credit risk.

The CECL model utilizes a lifetime "expected credit loss" measurement objective for the recognition of credit losses for loans, held-to-maturity securities, and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. For available for-sale securities where fair value is less than cost, credit-related impairment, if any, will be recognized in an allowance for credit losses and adjusted each period for changes in expected credit risk. This model replaces the multiple existing impairment models, which generally require that a loss be incurred before it is recognized. The new standard is effective for interim and annual periods beginning after December 15, 2022.

The CECL model represents a significant change from existing practice and may result in material changes to the Bank's accounting for financial instruments. The Bank has been evaluating the impacts this new standard will have on its consolidated financial statements and based on its methodologies that are anticipated to be implemented at adoption, the Bank is estimating an overall increase in its allowance for credit losses of approximately 10%. The actual amount determined from the adoption of this accounting standard will be recognized as a cumulative effect adjustment to the January 1, 2023 retained earnings balance.

**Note 2: Restriction on Cash and Due From Banks**

Effective March 12, 2021, the Federal Reserve's board of directors approved the final rule reducing the required reserve requirement ratios to zero percent, effectively eliminating the requirement to maintain reserve balances in cash or on deposit with the Federal Reserve Bank. This reduction in the required reserves does not have a defined timeframe and may be revised by the Federal Reserve's board in the future.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Note 3: Debt Securities**

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of debt securities are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Amortized <br> Cost** | **Gross**<br> **Unrealized<br> Gains**  | **Gross <br> Unrealized <br> Losses** | **Fair Value** |
| **Available-for-sale Debt Securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;December 31, 2022: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S Government and federal agencies | $5532 | $— | $(205) | $5327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage-backed: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Government sponsored enterprises (GSEs)- residential | 42224 | 4 | (4004) | 38224 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;State and political subdivisions | 20730 | 12 | (964) | 19778 |
|  | $68486 | $16 | $(5173) | $63329 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Amortized <br> Cost** | **Gross**<br> **Unrealized<br> Gains**  | **Gross <br> Unrealized <br> Losses** | **Fair Value** |
| **Available-for-sale Debt Securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;December 31, 2021: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S Government and federal agencies | $7548 | $77 | $(84) | $7541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage-backed: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Government sponsored enterprises (GSEs)- residential | 41730 | 300 | (437) | 41593 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;State and political subdivisions | 21805 | 783 | (17) | 22571 |
|  | $71083 | $1160 | $(538) | $71705 |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Amortized <br> Cost** | **Gross**<br> **Unrealized<br> Gains**  | **Gross <br> Unrealized <br> Losses** | **Fair Value** |
| **Held-to-maturity Debt Securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;December 31, 2022: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S Government and Federal agencies | $917 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $(143) | $774 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage-backed: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GSE residential | 5 |  |  | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certificates of Deposit | 2224 |  | (31) | 2193 |
|  | $3146 | $— | $(174) | $2972 |
| **Securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;December 31, 2021: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S Government and Federal agencies | $1056 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $(22) | $1034 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage-backed: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GSE residential | 18 |  |  | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certificates of Deposit | 1980 | 56 |  | 2036 |
|  | $3054 | $56 | $(22) | $3088 |

---

The amortized cost and fair value of available-for-sale securities and held-to-maturity debt securities at December 31, 2022, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Available-for-sale** | **Available-for-sale** | **Held-to-maturity** | **Held-to-maturity** |
|  | **Amortized<br> Cost** | **Fair<br> Value** | **Amortized<br> Cost** | **Fair<br> Value** |
| Within one year | $341 | $340 | $1236 | $1.219 |
| One to five years | 6014 | 5837 | 987 | 974 |
| Five to ten years | 10801 | 10195 | 918 | 774 |
| After ten years | 9106 | 8733 | 0 | 0 |
|  | 26262 | 25105 | 3141 | 2967 |
| Mortgage-backed securities | 42224 | 38224 | 5 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Totals | $68486 | $63329 | $3146 | $2972 |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $11,580 at December 31, 2022 and $14,256 at December 31, 2021.

Gross gains of $0 and gross losses of $221 resulting from sales of available-for-sale debt securities were realized during the years ended December 31, 2022. There were no sales of securities during 2021.

Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. Total fair value of these investments at December 31, 2022 and 2021, was $59,538 and $31,815. At December 31, 2022, 243 debt securities have unrealized losses with aggregate depreciation of 8.2% from the Bank's amortized cost basis. These unrealized losses relate principally to the changes in interest rates and are not due to changes in the financial condition of the issuer, the quality of the underlying assets, or applicable credit enhancements. In analyzing whether unrealized losses on debt securities are other than temporary, management considers whether the securities are issued by a government body or agency, whether a rating agency has downgraded the securities, industry analysts' reports, the financial condition and performance of the issuer, and the quality of any underlying assets or credit enhancements. Since management has the ability to hold debt securities for the foreseeable future, no declines are deemed to be other than temporary.

The following table shows the Bank's investments' gross unrealized losses and fair value of the Bank's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2022 and 2021:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Less than 12 Months** | **Less than 12 Months** | **12 Months or More** | **12 Months or More** | **Total** | **Total** |
|  | **Fair<br> Value** | **Unrealized<br> Losses** | **Fair<br> Value** | **Unrealized<br> Losses** | **Fair<br> Value** | <br> **Unrealized<br> Losses** |
| **Available-for-sale Debt Securities:**<br>|  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Government and federal agencies | $5327 | $(205) | $— | $— | $5327 | $(205) |
| &nbsp;&nbsp;&nbsp;State and political subdivisions | 14182 | (720) | 1522 | (244) | 15704 | (964) |
| &nbsp;&nbsp;&nbsp;Mortgage backed securities-GSE residential | 17308 | (1155) | 20425 | (2849) | 37733 | (4004) |
| **Total temporarily impaired AFS securities** | $36817 | $(2080) | $21947 | $(3093) | $58764 | $(5173) |
| **Held-to-maturity Debt** |  |  |  |  |  |  |
| **(HTM) Securities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Certificates of Deposit | $1700 | $(31) |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $1700 | $(31) |
| &nbsp;&nbsp;&nbsp;U.S. Government and federal agencies |  |  | $774 | $(143) | $774 | $(143) |
| **Total temporarily impaired HTM securities** | $**1700** | $(31) | $774 | $(143) | $1774 | $(174) |
| **Total temporarily impaired securities** | $38517 | $(2111) | $22721 | $(3236) | $60538 | $(5347) |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Less than 12 Months** | **Less than 12 Months** | **12 Months or More** | **12 Months or More** | **Total** | **Total** |
|  | **Fair <br> Value** | **Unrealized Losses** | **Fair<br> Value** | **Unrealized Losses** | **Fair Value** | **Unrealized Losses** |
| **Available-for-sale Debt Securities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Government and federal agencies | $3581 | $(80) | $372 | $(4) | $3953 | $(84) |
| &nbsp;&nbsp;&nbsp;State and political subdivisions | 2067 | (17) |  |  | 2067 | (17) |
| &nbsp;&nbsp;&nbsp;Mortgage backed securities-GSE residential | 18839 | (270) | 5922 | (167) | 24761 | (437) |
| **Total temporarily impaired AFS securities** | $24487 | $(367) | $6294 | $(171) | $30781 | $(538) |
| **Held-to-maturity Debt** |  |  |  |  |  |  |
| **(HTM) Securities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Certificates of Deposit | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— |
| &nbsp;&nbsp;&nbsp;U.S. Government and federal agencies | 1034 | (22) |  |  | 1034 | (22) |
| **Total temporarily impaired HTM securities** | $**1034** | $(22) | $— | $— | $1034 | $(22) |
| **Total temporarily impaired securities** | $25521 | $(389) | $6294 | $(171) | $31815 | $(560) |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

***Note 4: Equity Securities***

Equity securities comprised the following as of December 31, 2022 and 2021 and are included in the consolidated balance sheet:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Community Development Corp. Stock | $50 | $50 |
| FHLMC Preferred Stock | 38 | 62 |
| Total | $88 | $112 |

---

Community Development Corp. Stock is considered an equity security without a readily determinable fair value. The FHLMC Preferred Stock is presented on the balance sheet at fair value. The table below details changes in the carrying amount of the FHLMC Preferred Stock for the years ended December 31, 2022 and 2021.

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Net gain and losses recognized during the period on equity securities | $(24) | $(157) |
| Less: Net gains and losses recognized during the period on equity securities sold during the period |  |  |
| Unrealized gains and losses recognized during the period on equity securities still held at the reporting date | $(24) | $(157) |

---

**Note 5: Loans and Allowance for Loan Losses** 

Classes of loans at December 31, include:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Mortgage loans on real estate |  |  |
| &nbsp;&nbsp;&nbsp;Residential 1-4 family | $61125 | $56722 |
| &nbsp;&nbsp;&nbsp;Commercial | 17897 | 17721 |
| &nbsp;&nbsp;&nbsp;Construction and land development | 1518 | 2034 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total mortgage loans on real estate | 80540 | 76477 |
| Commercial loans | 2116 | 2202 |
| Consumer | 2803 | 2728 |
|  | 85459 | 81407 |
| Less |  |  |
| &nbsp;&nbsp;&nbsp;Allowance for loan losses | 543 | 567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loans | $84916 | $80840 |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2022 and 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** |
|  | **Mortgage Loans on Real Estate** | **Mortgage Loans on Real Estate** | **Mortgage Loans on Real Estate** | |
|  | **Residential <br> 1-4 Family** | **Commercial** | **Construction**<br> **and Land**<br> **Development** |<br>**Commercial** |
| **Allowance for loan losses:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Balance, beginning of year | $252 | $218 | $14 | $67 |
| &nbsp;&nbsp;&nbsp;Provision charged to expense | 11 |  | (3) | 53 |
| &nbsp;&nbsp;&nbsp;Losses charged off | (1) |  |  | (84) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recoveries |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Balance, end of year | $262 | $218 | $11 | $36 |
| &nbsp;&nbsp;&nbsp;Ending balance: individually evaluated for impairment | $— | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;Ending balance: collectively evaluated for impairment | $262 | $218 | $11 | $36 |
| **Loans:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Ending balance | $61125 | $17897 | $1518 | $2116 |
| &nbsp;&nbsp;&nbsp;Ending balance: individually evaluated for impairment | $623 | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;Ending balance: collectively evaluated for impairment | $60502 | $17897 | $1518 | $2116 |

---

---

| | | |
|:---|:---|:---|
| | **2022 (Continued)** | **2022 (Continued)** |
| | **Consumer** | **Total** |
| **Allowance for loan losses:** |  |  |
| &nbsp;&nbsp;&nbsp;Balance, beginning of year | $16 | $567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision charged to expense |  | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Losses charged off |  | (85) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recoveries |  |  |
| &nbsp;&nbsp;&nbsp;Balance, end of year | $16 | $543 |
| &nbsp;&nbsp;&nbsp;Ending balance: individually evaluated for impairment | $— | $— |
| &nbsp;&nbsp;&nbsp;Ending balance: collectively evaluated for impairment | $16 | $543 |
| **Loans:** |  |  |
| &nbsp;&nbsp;&nbsp;Ending balance | $2803 | $85459 |
| &nbsp;&nbsp;&nbsp;Ending balance: individually evaluated for impairment | $— | $623 |
| &nbsp;&nbsp;&nbsp;Ending balance: collectively evaluated for impairment | $2803 | $84836 |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** |
|  | **Mortgage Loans on Real Estate** | **Mortgage Loans on Real Estate** | **Mortgage Loans on Real Estate** | |
|  | **Residential <br> 1-4 Family** | **Commercial** | **Construction <br> and Land <br> Development** |<br>**Commercial** |
| **Allowance for loan losses:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Balance, beginning of year | $238 | $218 | $20 | $85 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision charged to expense | 17 |  | (6) | (18) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Losses charged off | (3) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recoveries |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Balance, end of year | $252 | $218 | $14 | $67 |
| &nbsp;&nbsp;Ending balance: individually evaluated for impairment | $1 | $— | $— | $— |
| &nbsp;&nbsp;Ending balance: collectively evaluated for impairment | $251 | $218 | $14 | $67 |
| **Loans:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Ending balance | $56722 | $17721 | $2034 | $2202 |
| &nbsp;&nbsp;Ending balance: individually evaluated for impairment | $697 | $— | $— | $99 |
| &nbsp;&nbsp;Ending balance: collectively evaluated for impairment | $56025 | $17721 | $2034 | $2103 |

---

---

| | | |
|:---|:---|:---|
|  | **2021 (Continued)** | **2021 (Continued)** |
|  | **Consumer** | **Total** |
| **Allowance for loan losses:** |  |  |
| &nbsp;&nbsp;&nbsp;Balance, beginning of year | $15 | $576 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision charged to expense | 1 | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Losses charged off |  | (3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recoveries |  |  |
| &nbsp;&nbsp;&nbsp;Balance, end of year | $16 | $567 |
| &nbsp;&nbsp;Ending balance: individually evaluated for impairment | $— | $1 |
| &nbsp;&nbsp;Ending balance: collectively evaluated for impairment | $16 | $566 |
| **Loans:** |  |  |
| &nbsp;&nbsp;&nbsp;Ending balance | $2728 | $81407 |
| &nbsp;&nbsp;Ending balance: individually evaluated for impairment | $— | $796 |
| &nbsp;&nbsp;Ending balance: collectively evaluated for impairment | $2728 | $80611 |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

Management's opinion as to the ultimate collectability of loans is subject to estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers.

***Credit Quality Indicators***

The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. All commercial and land development loans are graded at inception of the loan. Subsequently, analyses are performed on an annual basis and grade changes are made, as necessary. Interim grade reviews may take place if circumstances of the borrower warrant a timelier review. The Bank utilizes an internal asset classification system as a means of reporting problem and potential problem loans. The Bank uses the following defnitions for risk ratings:

**Pass —** Loans classified as pass are well protected by the ability of the borrower to pay or by the value of the asset or underlying collateral.

**Special Mention —** Loans classified as watch represent loans with the minimum level of acceptable credit risk and servicing requirements and the borrower has the capacity to perform according to the terms and repayment is expected. However, one or more elements of uncertainty exist.

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

**Doubtful —** Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

**Loss —** Loans classified as loss are the portion of the loan that is considered uncollectible so that its continuance as an asset is not warranted. The amount of the loss determined will be charged-off.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

The following tables present the credit risk profile of the Bank's loan portfolio based on internal rating category and payment activity as of December 31, 2021 and 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** |
|  | **Commercial <br> Real Estate** | **Construction <br> and Land <br> Development** | **Commercial** | **Total** |
| Pass | $16905 | $1518 | $1868 | $20291 |
| Special Mention | 992 |  | 248 | 1240 |
| Substandard |  |  |  |  |
| Doubtful |  |  |  |  |
| Loss |  |  |  |  |
| Total | $17897 | $1518 | $2116 | $21531 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** |
|  | **Commercial <br> Real Estate** | **Construction <br> and Land <br> Development** | **Commercial** | **Total** |
| Pass | $16334 | $2034 | $2103 | $20471 |
| Special Mention | 1387 |  |  | 1387 |
| Substandard |  |  | 99 | 99 |
| Doubtful |  |  |  |  |
| Loss |  |  |  |  |
| Total | $17721 | $2034 | $2202 | $21957 |

---

The bank considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer classes, the Bank also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity:

&nbsp;&nbsp;&nbsp;**December 31, 2022**

---

| | | | |
|:---|:---|:---|:---|
|  | **Residential** | **Consumer** | **Total** |
| Performing | $60502 | $2803 | $63305 |
| Non-Performing | 623 |  | 623 |
| &nbsp;&nbsp;&nbsp;Total | $61125 | $2803 | $63928 |
| **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Residential** | **Consumer** | **Total** |
| Performing | $56025 | $2728 | $58754 |
| Non-Performing | 697 |  | 697 |
| &nbsp;&nbsp;&nbsp;Total | $56722 | $2728 | $59451 |

---

The Bank evaluates the loan risk grading system definitions and allowance for loan loss methodology on an ongoing basis. No significant changes were made to either during the past year.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

The following tables present the Bank's loan portfolio aging analysis as of December 31, 2022 and 2021:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **30-59 Days<br> Past Due** | **60-89 Days<br> Past Due** | **Greater Than<br> 90 Days** | **2022<br> **Total Past<br> Due** | **Current** | **Total Loans<br> Receivable** | **Total Loans <br> > 90 Days &<br> Accruing** |
| Mortgage loans on real estate: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential 1-4 family | $1141 | $308 | $75 | $1524 | $59601 | $61125 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial | 46 |  |  | 46 | 17851 | 17897 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Construction and land development |  |  |  |  | 1518 | 1518 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total real estate loans | 1187 | 308 | 75 | 1570 | 78970 | 80540 |  |
| Commercial |  |  |  |  | 2116 | 2116 |  |
| Consumer |  |  |  |  | 2803 | 2803 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $1187 | $308 | $75 | $1570 | $83889 | $85459 | $— |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **30-59 Days<br> Past Due** | **60-89 Days<br> Past Due** | **Greater Than<br> 90 Days** | **2021<br> Total Past<br> Due** | **Current** | **Total Loans<br> Receivable** | **Total Loans<br> > 90 Days** &<br> Accounting** |
| Mortgage loans on real estate: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential 1-4 family | $684 | $262 | 99 | $1045 | $55677 | $56722 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial |  |  |  |  | 17721 | 17721 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Construction and land development |  |  |  |  | 2034 | 2034 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total real estate loans | 684 | 262 | 99 | 1045 | 75432 | 76477 |  |
| Commercial |  |  | 99 | 99 | 2103 | 2202 |  |
| Consumer | 11 |  |  | 11 | 2717 | 2728 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $695 | $262 | $198 | $1155 | $80252 | $81407 | $— |

---

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events it is probable the Bank will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

The following table presents impaired loans, including troubled debt restructurings of $506 and $516 for the years ended December 31, 2022 and 2021:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Recorded<br> Balance** | **Unpaid <br> Principal <br> Balance** | **Specific<br> Allowance** | **Average<br> Investment in<br> Impaired <br> Loans** | **Interest <br> Income <br> Recognized** | **Interest Income<br> Recognized<br> Cash Basis** |
| Loans without a specific allowance |  |  |  |  |  |  |
| Mortgage loans on real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Residential 1-4 family | $623 | $623 | $— | $632 | $23 | $29 |
| &nbsp;&nbsp;&nbsp;Commercial |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |  |  |  |  |
| Commercial loans |  |  |  |  |  |  |
| Consumer |  |  |  |  |  |  |
| Loans with a specific allowance |  |  |  |  |  |  |
| Mortgage loans on real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Residential 1-4 family | $— | $— | $— | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;Commercial |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |  |  |  |  |
| Commercial loans |  |  |  |  |  |  |
| Consumer |  |  |  |  |  |  |
| Total |  |  |  |  |  |  |
| Mortgage loans on real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Residential 1-4 family | $623 | $623 | $— | $632 | $23 | $29 |
| &nbsp;&nbsp;&nbsp;Commercial |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |  |  |  |  |
| Commercial loans |  |  |  |  |  |  |
| Consumer |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans | $623 | $623 | $— | $632 | $23 | $29 |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Recorded <br> Balance** | **Unpaid<br> Principal<br> Balance** | **Specific<br> Allowance** | **Average<br> Investment in<br> Impaired <br> Loans** | **Interest<br> Income<br> Recognized** | **Interest <br> Income<br> Recognized<br> Cash Basis** |
| Loans without a specific allowance |  |  |  |  |  |  |
| Mortgage loans on real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Residential 1-4 family | $652 | $652 | $— | $669 | $30 | $30 |
| &nbsp;&nbsp;&nbsp;Commercial |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |  |  |  |  |
| Commercial loans | 99 | 99 |  | 99 | 2 | 2 |
| Consumer |  |  |  |  |  |  |
| Loans with a specific allowance |  |  |  |  |  |  |
| Mortgage loans on real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Residential 1-4 family | $45 | $45 | $1 | $45 | $2 | $2 |
| &nbsp;&nbsp;&nbsp;Commercial |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |  |  |  |  |
| Commercial loans |  |  |  |  |  |  |
| Consumer |  |  |  |  |  |  |
| Total |  |  |  |  |  |  |
| Mortgage loans on real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Residential 1-4 family | $697 | $697 | $1 | $714 | $32 | $32 |
| &nbsp;&nbsp;&nbsp;Commercial |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Construction and land development |  |  |  |  |  |  |
| Commercial loans | 99 | 99 |  | 99 | 2 | 2 |
| Consumer |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans | $796 | $796 | $1 | $813 | $34 | $34 |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

The following table presents the Bank's nonaccrual loans at December 31, 2022 and 2021. This table excludes performing troubled debt restructurings.

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Residential 1-4 family | $117 | $169 |
| Commercial real estate |  |  |
| Construction and land development |  |  |
| Commercial |  | 99 |
| Consumer |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $117 | $268 |

---

At December 31, 2022 and 2021, the Bank had loans that were modified in troubled debt restructurings and impaired. The modification of terms of such loans included one or a combination of the following: an extension of maturity, a reduction of the stated interest rate or a permanent reduction of the recorded investment in the loan.

There were no new loans restructured with a modified term during 2022 or 2021.

During the years ended December 31, 2022 and 2021, there were no defaults of loans that had been modified as a troubled debt restructuring in the 12 month period prior to default. The criteria for return to accrual status is six months performance under the existing modified terms.

The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceeds were in process is $0 and $76 at December 31, 2022 and 2021, respectively.

**Note 6: Premises and Equipment**

Major classifications of premises and equipment, stated at cost, are as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Land | $732 | $732 |
| Buildings and improvements | 3015 | 2905 |
| Equipment | 1011 | 998 |
|  | 4758 | 4635 |
| Less accumulated depreciation | (2608) | (2476) |
| &nbsp;&nbsp;&nbsp;Net premises and equipment | $2150 | $2159 |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Note 7: Mortgage Servicing Rights**

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage loans serviced for others was $26,519 and $28,474 at December 31, 2022 and 2021, respectively.

The following summarizes the activity in mortgage servicing rights measured using the fair value method for the year ended December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| Fair value as of the beginning of year | $199 | $169 |
| Additions |  |  |
| &nbsp;&nbsp;&nbsp; Servicing obligations that result from asset transfers | 7 | 22 |
| Less loans refinanced | (18) | (20) |
| Changes in fair value due to changes in valuation inputs or assumptions | 127 | 28 |
| Fair value at the end of year | $315 | $199 |

---

The estimated fair value of mortgage servicing rights is determined using a valuation model that calculates the present value of expected future servicing and ancillary income, net of expected servicing costs. The model incorporates various assumptions, such as discount rates and prepayment speeds based on market data from independent organizations. Information about the estimated fair value of mortgage servicing rights at December 31, 2022 follows:

---

| | |
|:---|:---|
|  | **2022** |
| Range of discount rates | 9.0-11.5% |
| Range of prepayment speeds | 104-356 |
| Weighted average default rate | 1.23% |

---

Management did not utilize a valuation model to calculate the fair value of mortgage servicing rights at December 31, 2021 but utilized market information to determine fair value.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Note 8: Time Deposits**

Time deposits in denominations of $250 or more were $7,908 on December 31, 2022 and $6,520 on December 31, 2021.

At December 31, 2022, the scheduled maturities of time deposits are as follows:

---

| | |
|:---|:---|
| 2023 | $27543 |
| 2024 | 14005 |
| 2025 | 2797 |
| 2026 | 2426 |
| 2027 and thereafter | 1568 |
|  | $48339 |

---

**Note 9: Borrowings**

Borrowed funds consist of the following at December 31, 2022 and 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2021** | **2021** |
|  | **Rates** | **Amount** | **Rates** | **Amount** |
| Federal Home Loan Bank (FHLB) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Fixed Rate, fixed term advances |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | 0.00% | $5000 |
| Total |  | $- |  | $5000 |

---

The Bank has a master contract agreement with the Federal Home Loan Bank that provides for borrowing up to the maximum range of 60-80% of the book value of the Bank's qualifying loans based on the pledged loan class and range of 90-98% of qualifying investment securities pledged. The FHLB provides both fixed and floating rate advances. Floating rates are based on, but not directly tied to, short-term market rates of interest, such as London Interbank Offered Rate (LIBOR), federal funds, or treasury bill rates. Advances with call provisions permit the FHLB to request payment beginning on the call date and quarterly thereafter. FHLB advances are subject to a prepayment penalty if they are repaid prior to maturity.

At December 31, 2022, the Bank's available and unused portion of this borrowing agreement totaled approximately $46.2 million.

At December 31, 2022 and December 31, 2021, the Bank's available and unused unsecured line of credit with Banker's Bank of Wisconsin totaled $4.0 million.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements<br> December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Note 10: Income Taxes**

The Bank files income tax returns in the U.S. federal jurisdiction and the State of Illinois. During the years ended December 31, 2022 and 2021, the Bank recognized no interest or penalties.

The provision for income taxes includes these components:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Taxes currently payable | $157 | $382 |
| Deferred income taxes | (2) | (107) |
| &nbsp;&nbsp;&nbsp;Income tax expense | $155 | $275 |

---

A reconciliation of income tax expense at the statutory rate to the Bank's actual income tax expense is shown below:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Computed at the statutory rate (21%) | $207 | $268 |
| Increase (decrease) resulting from |  |  |
| &nbsp;&nbsp;&nbsp;Tax exempt interest | (101) | (93) |
| &nbsp;&nbsp;&nbsp;State tax expense | 17 | 26 |
| &nbsp;&nbsp;&nbsp;Increase in cash surrender value | (18) | (18) |
| &nbsp;&nbsp;&nbsp;Other | 50 | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Actual tax expense | $155 | $275 |

---

The tax effects of temporary differences related to deferred taxes shown on the consolidated balance sheets were:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Deferred tax assets |  |  |
| &nbsp;&nbsp;&nbsp;Allowance for loan losses | $155 | $162 |
| &nbsp;&nbsp;&nbsp;Deferred compensation | 196 | 181 |
| &nbsp;&nbsp;&nbsp;Other-than-temporary impairment losses | 205 | 205 |
| &nbsp;&nbsp;&nbsp;Unrealized loss on available-for-sale securities | 1468 |  |
| &nbsp;&nbsp;&nbsp;Other | 87 | 80 |
|  | 2111 | 628 |
| Deferred tax liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation | (49) | (69) |
| &nbsp;&nbsp;&nbsp;FHLB stock dividend | (16) | (16) |
| &nbsp;&nbsp;&nbsp;Unrealized gain on available-for-sale securities |  | (179) |
| &nbsp;&nbsp;&nbsp;Mortgage servicing rights | (90) | (57) |
|  | (155) | (321) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net deferred tax asset (liability) | $1956 | $307 |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Note 11: Accumulated Other Comprehensive Income (Loss)**

The components of accumulated other comprehensive income (loss), included in equity capital, are as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Net unrealized gain (loss) on available-for-sale debt securities | $(5157) | $622 |
| Tax effect | 1468 | (179) |
| &nbsp;&nbsp;&nbsp;Net-of-tax amount | $(3689) | $443 |

---

**Note 12: Changes in Accumulated Other Comprehensive Income (AOCI) by Component**

Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the year ended December 31, 2022 and 2021 were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Amounts**<br>**Reclassified**<br>**from AOCI**<br>**2022** | **Amounts**<br>**Reclassified**<br>**from AOCI**<br>**2021** | <br>**Affected Line Item in the**<br>**Statements of Income** |
| Realized losses on available-for-sale debt securities | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(221) | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | Realized loss on sale of available-for-sale debt securities |
| Tax effect | (63) |  | Tax expense |
| Net reclassification out of AOCI | $(158) | $— | Net reclassified amount |

---

**Note 13: Regulatory Matters**

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under U.S. GAAP, regulatory reporting requirements and regulatory capital standards. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, the Bank's regulators could require adjustment to regulatory capital not reflected in these consolidated financial statements.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

Quantitative measures established by regulatory reporting standards ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined) to risk weighted assets (as defined), common equity Tier I capital (as defined) to total risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined).

Management believes, as of December 31, 2021 and 2022, that the Bank meets all capital adequacy requirements to which it is subject. As of December 31, 2022, the most recent notification from regulatory agencies categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum capital ratios as set forth in the able below. There are no conditions or events since that notification that management believes have changed the Bank's category.

The Bank's actual capital amounts and ratios are also presented in the table.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | | | | | **Minimum to Be Well** | **Minimum to Be Well** |
|  | | | | | **Capitalized Under Prompt** | **Capitalized Under Prompt** |
|  | | | **Minimum Capital** | **Minimum Capital** | **Corrective Action** | **Corrective Action** |
|  | **Actual** | **Actual** | **Requirement** | **Requirement** | **Provisions** | **Provisions** |
|  | **Amount** | **Ratio** | **Amount** | **Ratio** | **Amount** | **Ratio** |
| As of December 31, 2022: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Leverage ratio (to average assets) | $23828 | 13.8% | $6902 | 4.0% | $8627 | 5.0% |
| &nbsp;&nbsp;&nbsp;Common Equity Tier 1 (to risk weighted assets) | $23828 | 28.1% | $3820 | 4.5% | $5518 | 6.5% |
| &nbsp;&nbsp;&nbsp;Tier 1 Capital ratio (to risk weighted assets) | $23828 | 28.1% | $5093 | 6.0% | $6791 | 8.0% |
| &nbsp;&nbsp;&nbsp;Total Capital (to risk-weighted assets) | $24371 | 28.7% | $6791 | 8.0% | $8489 | 10.0% |
| As of December 31, 2021: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Leverage ratio (to average assets) | $22997 | 12.6% | $7331 | 4.0% | $9164 | 5.0% |
| &nbsp;&nbsp;&nbsp;Common Equity Tier 1 (to risk weighted assets) | $22997 | 28.1% | $3677 | 4.5% | $5312 | 6.5% |
| &nbsp;&nbsp;&nbsp;Tier 1Capital ratio (to risk-weighted assets) | $22997 | 28.1% | $4903 | 6.0% | $6537 | 8.0% |
| &nbsp;&nbsp;&nbsp;Total Capital (to risk-weighted assets) | $23564 | 28.8% | $6537 | 8.0% | $8172 | 10.0% |

---

The net unrealized gain or loss on available-for-sale securities, net of tax is not included in computing regulatory capital.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Note 14: Related Party Transactions**

At December 31, 2022 and 2021, the Bank had loans outstanding to executive officers, directors, significant shareholders, and their affiliates (related parties), in the amount of $1,195 and $1,431, respectively.

Deposits from related parties held by the Bank at December 31, 2022 and 2021 totaled $934 and $1,214, respectively.

In management's opinion, such loans and other extensions of credit and deposits were made in the ordinary course of business and were made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons. Further, in management's opinion, these loans did not involve more than normal risk of collectability or present other unfavorable features.

A summary of loans to directors, executive officers, and their affiliates as of December 31, 2022 and 2021 is as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Beginning balance | $1431 | $1407 |
| New Loans |  | 185 |
| Repayments | (236) | (161) |
| Ending balance | $1195 | $1431 |

---

The Bank's board approved law firm is Duncan & Brandt, P.C, which is solely owned by the bank's Vice Chairman Jonathan Brandt. The Bank pays an annual retainer to Duncan & Brandt of $51 and $49 for the years ended December 31, 2022 and 2021. In addition to the annual retainer, the firm received various fees for legal services rendered in the normal course of business of $18 and $24 for the years ended December 31, 2022 and 2021.

**Note 15: Employee Benefits**

The Bank has a retirement savings 401(k) plan covering substantially all employees. Employees may contribute a percentage of their compensation, up to the maximum allowable by the IRS, with the Bank matching 50 percent of the employee's contribution on the first 5 percent of the employee's compensation. Employer contributions charged to expense for 2022 and 2021 were $73 and $79, respectively.

Also, the Bank has deferred compensation agreements with directors. The agreements provide for the payment of benefits at termination or retirement. The charge to expense for the agreements was $17 and $14 for 2022 and 2021, respectively. The liability accrued for these plans totaled $687 and $635 at December 31, 2022 and 2021, respectively.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Note 16: Disclosures About Fair Value of Assets**

ASC Topic 820, Fair value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This accounting standard also emphasizes that fair value (i.e., the price that would be received in a orderly transaction that is not a forced liquidation or distressed sale at the measurement date), among other things, is based on exit price versus entry price, should include assumptions about risk such as nonperformance risk in liability fair values, and is a market-based measurement, not an entity-specific measurement. When considering the assumptions that market participants would use in pricing an asset or liability, this accounting standard establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

The fair value hierarchy prioritizes inputs used to measure fair value into three broad levels:

---

| | |
|:---|:---|
| **Level 1** | In general, fair values determined by Level 1 inputs use quoted market prices for identical assets or liabilities that the entity can access at measurement date. |
| **Level 2** | Fair Values determined by Level 2 inputs use inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in markets, quoted prices for identical or similar assets or liabilities in markets where there are few transactions and inputs other than quoted prices that observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. |
| **Level 3** | Unobservable inputs for the asset or liability and included situations where there is little, if any, market activity for the asset or liability. |

---

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Bank's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgement and considers factors specific to the asset or liability.

Some assets and liabilities, such as securities available for sale, are measured at fair value on a recurring basis under accounting principals generally accepted in the United States. Other assets and liabilities, such as impaired loans, may be measured at fair value on a nonrecurring basis.

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the year ended December 31, 2022.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements <br> December 31, 2022 and 2021**

**(dollar amounts in thousands)**

***Equity Securities***

Equity securities with a readily determinable fair value are measured at fair value on a recurring basis. The fair value measurement of equity securities with a readily determinable fair value are based on the quoted price of the security and is considered a Level 1 fair value measurement. Equity securities without a readily determinable fair value are measured at fair value on a nonrecurring basis when transaction prices for identical or similar securities are identified. Fair value measurements on equity securities without a readily determinable fair value are generally considered a Level 2 fair value measurement.

***Available-for-sale Debt Securities***

Securities available for sale may be classified as Level 1, Level 2, or Level 3 measurements within the fair value hierarchy. Level 1 securities included debt securities traded on a national exchange. The fair value measurement of a Level 1 security is based on the quoted price of the security. Level 2 securities include U.S. government and agency securities, obligations of states and political subdivisions, corporate debt securities, and mortgage related securities. The fair value measurement of a Level 2 security is obtained from an independent pricing service and is based on recent sales of similar securities and other observable market data. Level 3 securities include trust preferred securities that are not traded in a market. The fair value measurement of Level 3 securities are determined by the Bank's Chief Financial Officer (CFO) and reported to the Bank's board of directors. Fair values are calculated using discounted cash flow models that incorporate various assumptions, including expected cash flows and market credit spreads. When comparable sales are available, these are used to validate the models used. Other available industry data, such as information regarding defaults and deferrals, are incorporated into the expected cash flows.

***Mortgage Servicing Rights***

Management measures mortgage servicing rights through the completion of a proprietary model. Inputs to the model are developed by the accounting staff and are reviewed by management. The model is tested annually using baseline data to check its accuracy.

Mortgage servicing rights are measured at fair value on a recurring basis. Serviced loan pools are stratified by year of origination, and a fair value measurement is obtained for each stratum from an independent firm. The measurement is based on recent sales of mortgage servicing rights with similar characteristics. Since the fair value measurement is based on observable market data, it is considered a Level 2 measurement.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

***Recurring Measurements***

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2022 and 2021.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Fair Value Measurements Using** | **Fair Value Measurements Using** | **Fair Value Measurements Using** |
|  |<br>**Fair Value** | **Quoted Prices in<br> Active Markets for<br> Identical Assets<br> (Level 1)** | **Significant Other<br> Observable Inputs<br> (Level 2)** | **Significant<br> Unobservable Inputs<br> (Level 3)** |
| **December 31, 2022:** |  |  |  |  |
| **Available-for Sale debt securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**U.S. Government and federal agencies** | $5327 | $1523 | $3804 | $— |
| &nbsp;&nbsp;&nbsp;Mortgage-backed: GSE - residential | 38224 |  | 38224 |  |
| &nbsp;&nbsp;&nbsp;State and political Subdivision | 19778 |  | 19778 |  |
| **Total Available-For-sale debt securities** | $**63329** | $**1523** | $**61806** | $**—** |
| **Equity securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FHLMC stock | $38 | $38 | $— | $— |
| **Mortgage servicing rights** | 315 |  | 315 |  |
| **Total** | $**63682** | $**1561** | $**62121** | $**—** |
| **December 31, 2021:** |  |  |  |  |
| **Available-for Sale debt securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**U.S. Government and federal agency** | $7541 | $— | $7541 | $— |
| &nbsp;&nbsp;&nbsp;Mortgage-backed: GSE - residential | 41593 |  | 41593 |  |
| &nbsp;&nbsp;&nbsp;State and political subdivision | 22571 |  | 22571 |  |
| **Total Available-for-sale debt securities** | $**71705** | $**—** | $**71705** | $**—** |
| **Equity securities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FHLMC Stock | $62 | $62 | $— | $— |
| **Mortgage servicing rights** | 199 |  | 199 |  |
| **Total** | $**71966** | $**62** | $**71904** | $**—** |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

The Bank estimates the fair value of all financial instruments regardless of whether such instruments are measured at fair value. The following methods and assumptions were used by the Bank to estimate fair value of financials instruments not previously discussed.

*Cash and cash equivalents —* Fair value approximates the carrying value.

*Loans —* Fair value of variable rate loans that reprice frequently is based on carrying values. Fair value of other loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings. Fair value of impaired and other non-performing loans is estimated using discounted expected cash flows or fair value of the underlying collateral, if applicable.

*FHLB stock —* Fair value is the redeemable (carrying) value based on the redemption provisions of the Federal Home Loan Bank.

*Accrued interest receivable and payable —* Fair value approximates the carrying value.

*Cash surrender value of bank-owned life insurance —* Fair value is based on reported values of the assets.

*Deposits—* Fair value of deposits with no state maturity, such as demand deposits, savings, and money market accounts, by definition, is the amount payable on demand on the reporting date. Fair value of fixed rate time deposits is estimated using discounted cash flows applying interest rates currently being offered on similar time deposits.

The carrying value and estimated fair value of financial instruments follow:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Carrying Value** | **Level 1** | **Level 2** | **Level 3** |
| Financial assets: |  |  |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $12651 | $12651 | $— | $— |
| &nbsp;&nbsp;Available-for-sale securities | 63329 | 1523 | 61806 |  |
| &nbsp;&nbsp;Held-to-maturity securities | 3146 |  | 2972 |  |
| &nbsp;&nbsp;Equity securities | 38 | 38 |  |  |
| &nbsp;&nbsp;Loans | 84916 |  |  | 78986 |
| &nbsp;&nbsp;Interest receivable | 592 | 592 |  |  |
| &nbsp;&nbsp;Federal Home Loan Bank Stock | 347 |  |  | 347 |
| &nbsp;&nbsp;Cash surrender value of bank-owned life insurance | 3783 |  |  | 3783 |
| Financial liabilities: |  |  |  |  |
| &nbsp;&nbsp;Deposits | 152707 |  |  | 128989 |
| &nbsp;&nbsp;Interest payable | 19 | 19 |  |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Carrying Value** | **Level 1** | **Level 2** | **Level 3** |
| Financial assets: |  |  |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $21542 | $21542 | $— | $— |
| &nbsp;&nbsp;Available-for-sale securities | 71705 |  | 71705 |  |
| &nbsp;&nbsp;Held-to-maturity securities | 3054 |  | 3088 |  |
| &nbsp;&nbsp;Equity securities | 62 | 62 |  |  |
| &nbsp;&nbsp;Loans | 80840 |  |  | 80918 |
| &nbsp;&nbsp;Interest receivable | 566 | 566 |  |  |
| &nbsp;&nbsp;Federal Home Loan Bank Stock | 330 |  |  | 330 |
| &nbsp;&nbsp;&nbsp;Cash surrender value of bank-owned life insurance | 3696 |  |  | 3696 |
| Financial liabilities: |  |  |  |  |
| &nbsp;&nbsp;Deposits | 155912 |  |  | 152450 |
| &nbsp;&nbsp;Interest payable | 3 | 3 |  |  |

---

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

***Nonrecurring Measurements***

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2022 and 2021.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Fair Value Measurements Using** | **Fair Value Measurements Using** | **Fair Value Measurements Using** |
|  |<br><br><br>**Fair Value** | **Quoted Prices**<br>**in Active**<br>**Markets for**<br>**Identical**<br>**Assets**<br>**(Level 1)** |<br>**Significant**<br>**Other**<br>**Observable**<br>**Inputs**<br>**(Level 2)** |<br>**Significant**<br>**Unobservable**<br>**Inputs**<br>**(Level 3)** |
| **December 31, 2022:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Impaired loans (collateral dependent) | $— | $— | $— | $— |
| **December 31, 2021:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Impaired loans (collateral dependent) | $44 | $— | $— | $44 |

---

During 2021, loans with a carrying amount of $45 were considered impaired and were written down to their estimated fair value of $44 by recognizing a specific valuation allowance of $1.

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

***Impaired Loans (Collateral Dependent)***

The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

The Bank considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by management. Appraisals are reviewed for accuracy and consistency. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the management by comparison to historical results.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Note 17: Commitments, Credit Risk and Contingencies**

The Bank grants commercial, residential and consumer loans to customers located primarily in LaSalle County, Illinois. Although the Bank has a diversified loan portfolio, a substantial portion of its debtors' ability to honor their contracts is dependent upon economic conditions in this county.

***Lines of Credit***

Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, commercial real estate, and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on-balance-sheet instruments.

At December 31, 2022, the Bank had granted unused lines of credit to borrowers aggregating approximately $2,008 and $931 for commercial lines and open-end consumer lines, respectively. At December 31, 2021, the Bank had granted unused lines of credit to borrowers aggregating approximately $1,939 and $1,000 for commercial lines and open-end consumer lines, respectively.

**Note 18: Government Assistance**

On October 31<sup>st</sup>, 2012 the Bank entered into a settlement agreement on the foreclosure of the Country Aire Subdivision in LaSalle, IL whereby the Bank assumed the rights and responsibility as the developer of this subdivision. This subdivision was granted a Tax Incremental Financing (TIF) district by the City of LaSalle in 2004. The previous developer did not complete the terms of the TIF agreement, thus the Bank entered into an agreement with the City of LaSalle to meet the requirements of the TIF agreement and then receive the incentives upon completion of all terms of the agreement. The City of LaSalle accepted the subdivision on October 25, 2016. Because the incentives are based on the incremental taxes generated from the sale of the lots and the building of homes the Bank continued to market and sell lots with the final contract in 2019. At December 31, 2019 the Bank had met all the requirements and had all lots sold therefore a TIF receivable was recorded for the estimated value of funds to be received from the City of Lasalle over the remaining term of the TIF district. Each year end the Bank evaluates the TIF receivable based on the 3<sup>rd</sup> party TIF administrator's estimated value of homes, their incremental taxes and the developer's share of the incremental taxes. The receivable for these funds are included in Other Assets on the Consolidated Balance Sheets and changes to the valuation are adjusted through Other Non-interest Income on the Consolidated Statements of Income.

**Peru Federal Savings Bank**

**Notes to Consolidated Financial Statements**

**December 31, 2022 and 2021**

**(dollar amounts in thousands)**

**Note 19: Subsequent Event**

*Plan of Conversion and Change in Corporate Form*

The Board of Directors of the Bank intends to adopt a plan of conversion (Plan) in the first quarter of 2023. The Plan is subject to the approval of the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency and must be approved by the affirmative vote of at least a majority of the total votes eligible to be cast by the voting members of the Bank at a special meeting. The Plan sets forth that the Bank proposes to convert into a stock savings bank structure with the establishment of a stock holding company (PFS Bancorp, Inc.), as parent of the Bank. The Bank will convert to the stock form of ownership, followed by the issuance of all of the Bank's outstanding stock to PFS Bancorp, Inc., Pursuant to the Plan, the Bank will determine the total offering value and number of shares of common stock based upon an independent appraiser's valuation. The stock will be priced at $10.00 per share. In addition, the Bank's Board of Directors will adopt an employee stock ownership plan (ESOP) which will subscribe for up to 8% of the common stock sold in the offering.

PFS Bancorp, Inc. will be organized as a corporation under the laws of the State of Maryland and will own all of the outstanding common stock of the Bank upon completion of the conversion.

The conversion will be accounted for as a change in corporate form with the historic basis of the Bank's assets, liabilities, and equity unchanged as a result.

PFS Bancorp, Inc. will be an emerging growth company, and, for as long as it continues to be an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to "emerging growth companies." PFS Bancorp, Inc. intends 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. Accordingly, its financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

*Loan matter requiring attention*

The Bank has a $1.3 million local participation loan in which the lead Bank notified the Bank in February 2023 of the borrowers deteriorating financial position and the entity is considering a Chapter 11 bankruptcy. Prior to December 31, 2022 the borrower had been paying per the terms of their loan agreements and the Bank had no knowledge of their financial struggles. The Bank holds two loans, one with a principal balance approximately of $905,000 representing a 10.3% participant interest, secured by commercial real estate and one with a principal of approximately $396,000 representing a 25% participant interest, secured by commercial real estate. Once notified of the borrowers struggles and the potential for a Chapter 11 bankruptcy, the Bank moved these two loans to non-accrual status and to a substandard classification. The Bank is working with the lead bank to obtained updated appraisals and additional information to make a determination on the need for a specific reserve in the allowance for loan losses related to these two loans. At the date of these financial statements no reserve has been determined.

Subsequent events have been evaluated through March 3, 2023, which is the date the consolidated financial statements were available to be issued.

**No person has been authorized to give any information or to make any representation other than as contained in this prospectus and, if given or made, such other information or representation must not be relied upon as having been authorized by PFS** **Bancorp, Inc. or Peru Federal Savings Bank. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any person in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of this prospectus nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of PFS Bancorp, Inc. or Peru Federal Savings Bank since any date as of which information is furnished herein or since the date of this prospectus.**

**Up to 2,070,000 Shares**

**(Subject to Increase to up to 2,380,500 Shares)**

![A picture containing text, clipart Description automatically generated](tm238313d1_s1-img01.jpg)

**(Proposed Holding Company for Peru Federal Savings Bank)**

**COMMON STOCK**

**par value $0.01 per share**

**PROSPECTUS**

![](tm238313d1_s1-img07.jpg)

**May ___, 2023**

**These securities are not deposits or accounts and are not federally insured or guaranteed.**

**Until __________, 2023, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.**

**PART II**

**INFORMATION NOT REQUIRED IN PROSPECTUS**

**Item 13.** **Other Expenses of Issuance and Distribution**

---

| | |
|:---|:---|
|  | Estimated<br> Amount |
| Registrant's Legal Fees and Expenses | $475000 |
| Registrant's Accounting Fees and Expenses | 215000 |
| Marketing Agent's Fees and Expenses | 430000 |
| Records Management Agent's Fees and Expenses | 38000 |
| Independent Appraiser's Fees and Expenses | 50000 |
| Printing, Postage, Mailing and EDGAR Fees and Expenses | 172000 |
| Filing Fees (OTC, SEC, FINRA) | 10000 |
| Transfer Agent's Fees and Expenses | 35000 |
| Business Plan Consultant's Fees and Expenses | 50000 |
| Proxy Solicitation Fees and Expenses | 15000 |
| Other | 10000 |
| Total | $1500000 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Estimated at the adjusted maximum of the offering range, assuming all shares are sold in the subscription offering and the community
offering.

**Item 14.** **Indemnification of Directors and Officers**

Article 10 of the Articles of Incorporation of PFS Bancorp, Inc. (the "Corporation") sets forth the circumstances under which directors, officers, employees and agents of the Corporation may be insured or indemnified against liability which they may incur in their capacities as such:

**<u>ARTICLE 10. Indemnification, etc. of Directors and Officers.</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A. Indemnification.** The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its request any other entity, to the fullest extent required or permitted by the Maryland General Corporation Law (the "MGCL") now or hereafter in force, including the advancement of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B. Procedure.** If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both (i) an undertaking as required by law to repay such advances if it shall ultimately be determined that the standard of conduct has not been met and (ii) a written affirmation by the indemnitee of his or her good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel,

or its stockholders) to have made a determination before the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct, or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise, shall be on the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C. Non-Exclusivity.** The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation's Bylaws, any agreement, any vote of stockholders or the Board of Directors, or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D. Insurance.** The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the MGCL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E. Miscellaneous.** The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A and B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director or officer and shall inure to the benefit of the indemnitee's heirs, executors and administrators.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F. Limitations Imposed by Federal Law.** Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made by the Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law, including, without limitation, Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.

Any repeal or modification of this Article 10 by the stockholders of the Corporation or the Board of Directors shall not in any way diminish any rights to indemnification or advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this Article 10 is in force.

**Item 15.** **Recent Sales of Unregistered Securities**

Not Applicable.

**Item 16.** **Exhibits and Financial Statement Schedules**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) List of Exhibits

---

| | |
|:---|:---|
| [1.1](tm238313d1_ex1-1.htm) | [Engagement Letter between Peru Federal Savings Bank and Keefe, Bruyette & Woods, Inc. (Marketing Agent Services)](tm238313d1_ex1-1.htm) |
| [1.2](tm238313d1_ex1-2.htm) | [Engagement Letter between Peru Federal Savings Bank and Keefe, Bruyette & Woods, Inc. (Stock Information Center Manager Services)](tm238313d1_ex1-2.htm) |
| 1.3 | Form of Agency Agreement Among Peru Federal Savings Bank and Keefe, Bruyette & Woods, Inc.\* |
| [2](tm238313d1_ex2.htm) | [Plan of Conversion](tm238313d1_ex2.htm) |
| [3.1](tm238313d1_ex3-1.htm) | [Articles of Incorporation of PFS Bancorp, Inc.](tm238313d1_ex3-1.htm) |
| [3.2](tm238313d1_ex3-2.htm) | [Bylaws of PFS Bancorp, Inc.](tm238313d1_ex3-2.htm) |
| [4](tm238313d1_ex4.htm) | [Form of Common Stock Certificate of PFS Bancorp, Inc.](tm238313d1_ex4.htm) |

---

---

| | |
|:---|:---|
| [5](tm238313d1_ex5.htm) | [Opinion of Luse Gorman, PC regarding legality of securities being registered](tm238313d1_ex5.htm) |
| [8.1](tm238313d1_ex8-1.htm) | [Federal Income Tax Opinion of Luse Gorman, PC](tm238313d1_ex8-1.htm) |
| [8.2](tm238313d1_ex8-2.htm) | [State Income Tax Opinion of Wipfli LLP](tm238313d1_ex8-2.htm) |
| 10.1 | Form of Employment Agreement between Peru Federal Savings Bank and Eric J. Heagy\* |
| 10.2 | Form of Employment Agreement between Peru Federal Savings Bank and Dale R. Tieman\* |
| 10.3 | Form of Employment Agreement between Peru Federal Savings Bank and Christopher J. Vaske\* |
| [10.4](tm238313d1_ex10-4.htm) | [Form of Salary Continuation Agreement for Eric J. Heagy](tm238313d1_ex10-4.htm) |
| [10.5](tm238313d1_ex10-5.htm) | [Form of Peru Federal Savings Bank Amended and Restated Supplemental Life Insurance Agreement](tm238313d1_ex10-5.htm) |
| 10.6 | Peru Federal Savings Bank Amended and Restated Deferred Compensation Plan\* |
| [16](tm238313d1_ex16.htm) | [Letter from BKD, LLP with respect to change in accountants](tm238313d1_ex16.htm) |
| [21](tm238313d1_ex21.htm) | [Subsidiaries of PFS Bancorp, Inc.](tm238313d1_ex21.htm) |
| 23.1 | Consent of Luse Gorman, PC (contained in Opinions included as [Exhibits 5](tm238313d1_ex5.htm) and [8.1](tm238313d1_ex8-1.htm)) |
| [23.2](tm238313d1_ex23-2.htm) | [Consent of Feldman Financial Advisors, Inc.](tm238313d1_ex23-2.htm) |
| [23.3](tm238313d1_ex23-3.htm) | [Consent of Wipfli LLP](tm238313d1_ex23-3.htm) |
| [24](#sign_001) | [Power of Attorney (set forth on signature page)](#sign_001) |
| [99.1](tm238313d1_ex99-1.htm) | [Engagement letter between Peru Federal Savings Bank and Feldman Financial Advisors, Inc. with respect to independent appraisal services](tm238313d1_ex99-1.htm) |
| [99.2](tm238313d1_ex99-2.htm) | [Letter of Feldman Financial Advisors, Inc. with respect to value of subscription rights](tm238313d1_ex99-2.htm) |
| [99.3](tm238313d1_ex99-3.htm) | [Appraisal Report of Feldman Financial Advisors, Inc.](tm238313d1_ex99-3.htm) |
| [99.4](tm238313d1_ex99-4.htm) | [Marketing Materials](tm238313d1_ex99-4.htm) |
| [99.5](tm238313d1_ex99-5.htm) | [Stock Order and Certification Form](tm238313d1_ex99-5.htm) |
| [107](tm238313d1_ex-filingfees.htm) | [Filing fees exhibit](tm238313d1_ex-filingfees.htm) |

---

\* To be filed by amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Financial Statement Schedules

Financial statement schedules are not filed because the required information is inapplicable or is included in the consolidated financial statements and related notes.

**Item 17.** **Undertakings**

The undersigned Registrant hereby undertakes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial *bona fide* offering thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Peru, State of Illinois, on March 10, 2023.

---

| | |
|:---|:---|
|  | **PFS BANCORP, INC.** |
| By: | /s/ Eric J. Heagy |
|  | Eric J. Heagy |
|  | President, Chief Executive Officer, Chief Financial Officer and Treasurer (Duly Authorized Representative) |

---

**POWER OF ATTORNEY**

We, the undersigned directors and officers of PFS Bancorp, Inc. (the "Corporation") hereby severally constitute and appoint Eric J. Heagy, as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said individual may deem necessary or advisable to enable the Corporation to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with the registration statement on Form S-1 relating to the offering of the Corporation's common stock, including specifically, but not limited to, power and authority to sign for us in our names in the capacities indicated below the registration statement and any and all amendments (including post-effective amendments) thereto; and we hereby approve, ratify and confirm all that said individual shall do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| Signature | Title | Date |
| /s/ Eric J. Heagy | President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director (Principal Executive, Financial and Accounting Officer) | March 10, 2023 |
| Eric J. Heagy | President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director (Principal Executive, Financial and Accounting Officer) |  |
| /s/ Michael J. Rooney | Chairman of the Board | March 10, 2023 |
| Michael J. Rooney |  |  |
| /s/ Jonathan F. Brandt | Vice Chairman of the Board | March 10, 2023 |
| Jonathan F. Brandt |  |  |
| /s/ James J. Brady, IV | Director | March 10, 2023 |
| James J. Brady, IV |  |  |
| /s/ Cynthia L. Kurkowski | Director | March 10, 2023 |
| Cynthia L. Kurkowksi |  |  |
| /s/ Dale R. Tieman | Executive Vice President, Chief Operations Officer, Corporate Secretary and Director | March 10, 2023 |
| Dale R. Tieman | Executive Vice President, Chief Operations Officer, Corporate Secretary and Director |  |

---

## Exhibit 1.1

**Exhibit 1.1**

![](tm238313d1_ex1-1img001.jpg)

January 19, 2023

Peru Federal Savings Bank

1730 Fourth Street

Peru, IL 61354

Attention: Mr. Eric J. Heagy

&nbsp;&nbsp;&nbsp;&nbsp;President & Chief Executive Officer

Ladies and Gentlemen:

This letter confirms the engagement of Keefe, Bruyette & Woods, Inc. ("KBW") to act as the exclusive financial advisor to Peru Federal Savings Bank (the "Bank") proposed conversion from the mutual to the stock form of organization pursuant to the Bank's proposed Plan of Conversion (the "Conversion"), including the offer and sale of certain shares of the common stock (the "Common Stock") of a holding company (the "Holding Company") to be formed by the Bank to eligible persons in a Subscription Offering, with any remaining shares offered to the general public in a Community Offering (as defined herein) (a Subscription Offering, a Community Offering and any Syndicated Community Offering (as defined herein) are collectively referred to herein as the "Offerings"). In addition, KBW will act as Conversion Agent in connection with the Offerings pursuant to the terms of a separate agreement between the Bank and KBW. The Bank and the Holding Company are collectively referred to herein as the "Company". This letter sets forth the terms and conditions of our engagement.

1. <u>Advisory/Offering Services</u>

As the Company's exclusive financial advisor, KBW will provide financial and logistical advice to the Company and will assist the Company's management, legal counsel, accountants and other advisors in connection with the Conversion and the Offerings, and related issues. We anticipate our services will include the following, each as may be necessary and as the Company may reasonably request:

&nbsp;&nbsp;&nbsp;&nbsp;1. Providing advice on the financial and securities market implications of the Conversion and any related corporate documents, including
the Plan of Conversion;

&nbsp;&nbsp;&nbsp;&nbsp;2. Assisting in structuring the Offerings, including developing and assisting in implementing a marketing strategy for the Offerings;

&nbsp;&nbsp;&nbsp;&nbsp;3. Serving as sole bookrunning manager in connection with the Offerings;

&nbsp;&nbsp;&nbsp;&nbsp;4. Reviewing all offering documents related to the Offerings, including the prospectus (the "Prospectus") and any related
offering materials, stock order forms, letters, brochures and other related offering materials (it being understood that preparation and
filing of such documents will be the responsibility of the Company and its counsel);

&nbsp;&nbsp;&nbsp;&nbsp;5. Assisting the Company in preparing for and scheduling meetings with potential investors and broker-dealers, as necessary;

Keefe, Bruyette & Woods • 70 West Madison, Suite 2401 • Chicago, IL 60602

312.423.8200 • 800.929.6113 • Fax 312.423.8232 • www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 2 of 9

&nbsp;&nbsp;&nbsp;&nbsp;6. Assisting the Company in analyzing proposals from outside vendors retained in connection with the Offerings, including printers, transfer
agents and appraisal firms;

&nbsp;&nbsp;&nbsp;&nbsp;7. Assisting the Company in the drafting and distribution of press releases as required or appropriate in connection with the Offerings;

&nbsp;&nbsp;&nbsp;&nbsp;8. Meeting with the board of directors of the Company (the "Board of Directors") and/or management of the Company to discuss
any of the above services; and

&nbsp;&nbsp;&nbsp;&nbsp;9. Performing such other financial advisory and investment banking services in connection with the Conversion and the Offerings as may
be agreed upon by KBW and the Company.

2. <u>Due Diligence Review</u>

The Company acknowledges and agrees that KBW's obligation to perform the services contemplated by this Agreement shall be subject to the satisfactory completion of such investigations and inquiries relating to the Company, and its directors, officers, agents and employees, as KBW and their counsel in their sole discretion may deem appropriate under the circumstances (the "Due Diligence Review").

The Company agrees it will make available to KBW all information, whether or not publicly available, which KBW reasonably requests (the "Information"), and will permit KBW to discuss with the Board of Directors and management the operations and prospects of the Company. KBW will treat all Confidential Information (as defined herein) as confidential in accordance with the provisions of Section 9 hereof. The Company recognizes and confirms that KBW (a) will use and rely on and assume the accuracy and completeness of the Information in performing the services contemplated by this Agreement without having independently verified or analyzed the accuracy or completeness of same, and (b) does not assume responsibility or liability for the accuracy or completeness of the Information or to conduct any independent verification or any appraisal or physical inspection of properties or assets. The Company acknowledges and agrees that KBW will rely upon Company management as to the reasonableness and achievability of any financial and operating forecasts and projections provided to KBW or which KBW is directed to use, and that KBW will assume, at the Company's direction, that all financial forecasts and projections have been reasonably prepared by Company management on a basis reflecting the best then currently available estimates and judgments of management as to the expected future financial performance of the Company, and that such forecasts and projections will be realized in the amounts and in the time periods currently estimated.

3. <u>Regulatory Filings</u>

The Company will cause the registration statement (the "Registration Statement") and the Prospectus to be filed with the Securities and Exchange Commission (the "SEC") and will cause all other offering documents in respect of the Conversion and the Offerings to be filed, as necessary or appropriate, with applicable regulatory agencies including the SEC, the Financial Industry Regulatory Authority ("FINRA"), and the appropriate federal and/or state bank regulatory agencies. In addition, the Company and KBW agree that the Company's counsel shall serve as counsel with respect to blue sky matters in connection with the Offerings, and that the Company shall cause such counsel to prepare a Blue Sky Memorandum related to the Offerings including KBW's participation therein and shall furnish KBW a copy thereof addressed to KBW or upon which counsel shall state KBW may rely.

Keefe, Bruyette & Woods • 70 West Madison, Suite 2401 • Chicago, IL 60602

312.423.8200 • 800.929.6113 • Fax 312.423.8232 • www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 3 of 9

4. <u>Fees</u>

For the services hereunder, the Company shall pay the following non-refundable cash fees to KBW, in the amounts and at the times set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Management Fee:</u> A non-refundable cash fee in an amount of $25,000 (the "Management Fee")
shall be payable by the Company to KBW, as follows: (i) $12,500 shall be paid immediately upon the execution of this Agreement and
(ii) the remaining $12,500 shall be paid immediately upon the initial filing of the Registration Statement (whether or not such filing
is publicly available). Each payment in respect of the Management Fee shall be deemed to have been earned in full when due. Should the
Offerings or this Agreement be terminated for any reason, KBW shall be deemed to have earned in full, and be entitled to be paid in full,
all fees then due and payable as of such date of termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Success Fee:</u> A Success Fee of $300,000 shall be paid based shares of Common Stock sold the Subscription
and the Community Offering. The obligation to pay to KBW the full Success Fee upon completion of the Subscription Offering and any Community
Offering shall survive any termination of this agreement, including any termination occurring prior to the completion of such Offerings.
The Management Fee described in 4(a) will be credited against this Success Fee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Fees for Syndicated Community Offering</u>: If any shares of the Common Stock remain unsold after the
completion of the Subscription Offering and any Community Offering, at the request of the Company, KBW will seek to form a syndicate of
registered broker-dealers (a "Syndicated Community Offering"), to assist on a best efforts basis, subject to the terms and
conditions set forth in a selected dealers agreement to be entered into by and between the Company and KBW. KBW will endeavor to distribute
the Common Stock among broker-dealers in a fashion which best meets the distribution objectives of the Company and the Conversion. In
the event of a Syndicated Community Offering, KBW will be paid a transaction fee not to exceed 6% of the aggregate purchase price of the
shares of Common Stock sold in the Syndicated Community Offering. From this fee, KBW will pass onto selected broker-dealers (if any),
who assist in the Syndicated Community Offering, an amount competitive with gross underwriting discounts charged at such time for comparable
amounts of stock sold at a comparable price per share in a similar market environment. Fees with respect to purchases affected with the
assistance of a broker/dealer other than KBW shall be transmitted by KBW to such broker/dealer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In connection with the Subscription Offering, if, as a result of any resolicitation of subscribers undertaken
by the Company, KBW reasonably determines that it is required or requested to provide significant services, KBW will be entitled to additional
compensation for such services, which additional compensation will not exceed $25,000.

Keefe, Bruyette & Woods • 70 West Madison, Suite 2401 • Chicago, IL 60602

312.423.8200 • 800.929.6113 • Fax 312.423.8232 • www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 4 of 9

The terms of any Agency Agreement (as defined herein) to be entered into between the Company and KBW in connection with the Offerings shall contain fee provisions no less favorable to KBW than those set forth above. To the extent required under applicable FINRA rules and regulations, the payment of compensation by the Company to KBW pursuant to this Section 4 is subject to FINRA's review thereof.

5. <u>Additional Services</u>

KBW further agrees to provide general financial advisory assistance to the Company that is not in the context of any contemplated transaction, for a period of three years following completion of the Offerings, including general strategic planning, the creation of a capital management strategy designed to enhance the value of the Company, including the formation of a dividend policy and share repurchase program, assistance with shareholder relations matters, general advice on mergers and acquisitions, and other related financial matters, without the payment by the Company of any fees in addition to those set forth in Section 4 hereof. Nothing in this Agreement shall require the Company to obtain such services from KBW. If KBW acts as a financial advisor to the Company in connection with any specific transactions, the terms of such engagement will be set forth in a separate agreement between the Company and KBW.

6. <u>Expenses</u>

The Company will bear all expenses of the proposed Offerings customarily borne by issuers, including, without limitation, regulatory filing fees, SEC, "Blue Sky," and FINRA filing and registration fees; the fees of the Company's accountants, attorneys, appraiser, business plan consultant, transfer agent and registrar, printing, mailing and marketing and syndicate expenses associated with the Offerings; the fees set forth in Section 4; and fees for "Blue Sky" legal work. If KBW incurs any expenses on behalf of Company in connection with the matters contemplated by this Agreement, the Company will reimburse KBW for such expenses.

KBW will also be reimbursed for its reasonable out-of-pocket expenses, not to exceed $30,000 (subject to the provisions of this paragraph), related to the Offerings, including, but not limited to, costs of travel, meals and lodging, clerical assistance, photocopying, telephone, facsimile, and couriers. KBW will also be reimbursed for fees and expenses of its counsel not to exceed $100,000 (subject to the provisions of this paragraph). These expense caps assume no unusual circumstances or delays, and no resolicitation in connection with the Offerings. The Company acknowledges and agrees that, in the event unusual circumstances arise or a delay or resolicitation occurs (including but not limited to a delay in the Offerings which would require an update of the financial information in tabular form to reflect a period later than that set forth in the original filing of the offering documents), such expense caps may be increased by additional amounts, not to exceed an additional $10,000 in the case of additional out-of-pocket expenses of KBW and an additional $15,000 in the case of additional fees and expenses of KBW's legal counsel. In no event shall out-of-pocket expenses, including fees and expenses of counsel, exceed $155,000. The provisions of this paragraph shall not apply to or in any way impair or limit the indemnification or contribution provisions contained herein.

Keefe, Bruyette & Woods • 70 West Madison, Suite 2401 • Chicago, IL 60602

312.423.8200 • 800.929.6113 • Fax 312.423.8232 • www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 5 of 9

7. <u>Limitations</u>

The Company acknowledges that all opinions and advice (written or oral) given by KBW to the Company in connection with KBW's engagement are intended solely for the benefit and use of the Company for the purposes of its evaluation of the proposed Offerings. Unless otherwise expressly stated in an opinion letter issued by KBW or otherwise expressly agreed, no one other than the Company is authorized to rely upon this engagement of KBW or any statements or conduct by KBW. The Company agrees that any such opinion or advice, as well as this Agreement (including any of the terms hereof) shall not be used, reproduced, disseminated, quoted or referred to at any time, in any manner, or for any purpose, nor shall any public references to KBW be made by the Company or any of its representatives, without the prior written consent of KBW.

It is expressly understood and agreed that KBW is not undertaking to provide any advice relating to legal, regulatory, accounting or tax matters. In furtherance thereof, the Company acknowledges and agrees that (a) it and its affiliates have relied and will continue to rely on the advice of its own legal, tax and accounting advisors for all matters relating to the Conversion and the Offerings, and all other matters and (b) neither it, or any of its affiliates, has received, or has relied upon, the advice of KBW or any of its affiliates regarding matters of law, regulation, taxation or accounting.

The Company acknowledges and agrees that KBW has been retained to act solely as financial advisor to the Company and not as an advisor to or agent of any other person, and the Company's engagement of KBW is not intended to confer rights upon any person not a party to this Agreement (including shareholders, employees or creditors of the Company) as against KBW or its affiliates, or their respective directors, officers, employees or agents. In such capacity, KBW shall act as an independent contractor, and any duties arising out of its engagement shall be owed solely to the Company. It is understood that KBW's responsibility to the Company is solely contractual in nature and KBW does not owe the Company, or any other party, any fiduciary duty as a result of this Agreement.

The Company acknowledges that KBW is a securities firm engaged in securities trading and brokerage activities and providing investment banking and financial advisory services. In the ordinary course of business, KBW and its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in the Company's debt or equity securities, or the debt or equity securities of the Company's affiliates or other entities that may be involved in the transactions contemplated by this Agreement. In addition, KBW and its affiliates may from time to time perform various investment banking and financial advisory services for other clients and customers who may have conflicting interests with respect to the Company. The Company acknowledges that KBW and its affiliates have no obligation to use in connection with this engagement or to furnish the Company confidential information obtained from other companies.

8. <u>Benefit</u>

This Agreement shall inure to the benefit of the parties hereto and their respective successors, and the obligations and liabilities assumed hereunder by the parties hereto shall be binding upon their respective successors; provided, however, that this Agreement shall not be assignable without the mutual consent of KBW and the Bank.

Keefe, Bruyette & Woods • 70 West Madison, Suite 2401 • Chicago, IL 60602

312.423.8200 • 800.929.6113 • Fax 312.423.8232 • www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 6 of 9

9. <u>Confidentiality</u>

KBW acknowledges that a portion of the Information provided to it in connection with its engagement hereunder may contain confidential and proprietary business information concerning the Company (such Information, the "Confidential Information"). KBW agrees that, except as contemplated in connection with the performance of its services under this agreement, as authorized by the Company or as required by law, regulation or legal process, it will treat as confidential all Confidential Information; provided, however, that KBW may disclose such Confidential Information to its agents and advisors who are assisting or advising KBW in performing its services hereunder and who have been instructed to be bound by the terms and conditions of this paragraph. As used herein, the term "Confidential Information" shall not include information which (a) is or becomes available to the public other than as a result of a disclosure by KBW or its representatives in violation of this Agreement, (b) was available to KBW on a non-confidential basis prior to its disclosure to KBW or its representatives by the Company, or (c) becomes available to KBW on a non-confidential basis from a person other than the Company who is not known to KBW to be bound not to disclose such information pursuant to a contractual obligation of confidentiality to the Company.

The Company hereby acknowledges and agrees that all presentation materials and financial models used by KBW in performing its services hereunder have been developed by and are proprietary to KBW. The Company agrees that it will not reproduce or distribute all or any portion of such models or presentations without the prior written consent of KBW.

10. <u>Advertisements</u>

The Company agrees that, following the closing of the Offerings, KBW has the right to place advertisements in financial and other newspapers and journals at its own expense, describing its services to the Company and a general description of such offering. In addition, the Company agrees to include in any press release or public announcement announcing any such offering a reference to KBW's role as financial advisor and sole bookrunning manager with respect to such offering, provided that the Company will submit a copy of any such press release or public announcement to KBW for its prior approval, which approval shall not be unreasonably withheld or delayed.

Keefe, Bruyette & Woods • 70 West Madison, Suite 2401 • Chicago, IL 60602

312.423.8200 • 800.929.6113 • Fax 312.423.8232 • www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 7 of 9

11. <u>Indemnification</u>

As KBW will be acting on behalf of the Company in connection with the Conversion and the Offerings, the Company agrees to indemnify and hold harmless KBW and its affiliates, the respective partners, directors, officers, employees and agents of KBW and its affiliates and each other person, if any, controlling KBW or any of its affiliates and each of their successors and assigns (KBW and each such person being an "Indemnified Party") to the fullest extent permitted by law, from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, or otherwise related to or arising out of the Conversion or the Offerings or the engagement of KBW pursuant to, or the performance by KBW of the services contemplated by, this Agreement, and will reimburse any Indemnified Party for all expenses (including legal fees and expenses) as they are incurred, including expenses incurred in connection with the investigation, preparing for or defending any such action or claim whether or not in connection with pending or threatened litigation, or any action or proceeding arising therefrom, whether or not KBW is a party; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense (a) arises out of or is based upon any untrue statement of a material fact or the omission of a material fact required to be stated therein or necessary to make not misleading any statements contained in any final prospectus, or any amendment or supplement thereto, made in reliance on and in conformity with written information furnished to the Company by KBW expressly for use therein or (b) to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court of competent jurisdiction to have resulted primarily from KBW's gross negligence or bad faith of KBW.

If the indemnification provided for in the foregoing paragraph is judicially determined to be unavailable (other than in accordance with the terms hereof) to any person otherwise entitled to indemnity in respect of any losses, claims, damages or liabilities referred to herein, then, in lieu of indemnifying such person hereunder, the Company shall contribute to the amount paid or payable by such person as a result of such losses, claims, damages or liabilities (and expenses relating thereto) (i) in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and KBW, on the other hand, of the engagement provided for in this Agreement or (ii) if the allocation provided for in clause (i) above is not available, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (i) but also the relative fault of each of the Company and KBW, as well as any other relevant equitable considerations; <u>provided, however</u>, in no event shall KBW's aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by KBW under this Agreement. For the purposes of this Agreement, the relative benefits to the Company and to KBW of the engagement under this Agreement shall be deemed to be in the same proportion as (a) the total value paid or contemplated to be paid or received or contemplated to be received by the Company in the Conversion and the Offerings that are the subject of the engagement hereunder, whether or not consummated, bears to (b) the fees paid or to be paid to KBW under this Agreement.

The Company also agrees that neither KBW, nor any of its affiliates nor any officer, director, employee or agent of KBW or any of its affiliates, nor any person controlling KBW or any of its affiliates, shall have any liability to the Company for or in connection with such engagement except for any such liability for losses, claims, damages, liabilities or expenses incurred by the Company which are finally judicially determined to have resulted primarily from KBW's bad faith or gross negligence. The foregoing agreement shall be in addition to any rights that KBW, the Company or any Indemnified Party may have at common law or otherwise, including, but not limited to, any right to contribution. For the sole purpose of enforcing and otherwise giving effect to the indemnification and contribution provisions of this agreement, the Company hereby consents to personal jurisdiction and service and venue in any court in which any claim which is subject to this agreement is brought against KBW or any other indemnified party.

Keefe, Bruyette & Woods • 70 West Madison, Suite 2401 • Chicago, IL 60602

312.423.8200 • 800.929.6113 • Fax 312.423.8232 • www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 8 of 9

The Company agrees that it will not, without the prior written consent of KBW, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not KBW is an actual or potential party to such claim, action, suit, or proceeding) unless such settlement, compromise or consent includes an unconditional release of KBW from all liability arising out of such claim, action, suit or proceeding.

12. <u>Definitive Agreement</u>

This Agreement reflects KBW's present intention of proceeding to work with the Company on the proposed Offerings. No legal and binding obligation is created on the part of the Company or KBW with respect to the subject matter hereof, except as to (i) the agreement to maintain the confidentiality of Confidential Information set forth in Section 9, (ii) the payment of certain fees as set forth in Section 4, (iii) the payment of expenses as set forth in Section 6, (iv) the limitations set forth in Section 7, (v) the limitations of liability, the indemnification and contribution obligations and the other provisions set forth in Section 11 and (iv) those terms as may be set forth in a mutually agreed upon agency agreement between KBW and the Company to be executed prior to commencement of the Offerings (the "Agency Agreement"), all of which, notwithstanding anything to the contrary that may be contained herein, shall constitute the binding obligations of the parties hereto and which shall survive any termination of this Agreement or the completion of the services furnished hereunder and shall remain operative and in full force and effect.

The Company acknowledges and agrees that KBW's provision of services in connection with the Conversion and the Offerings, as contemplated herein, is expressly subject to (a) satisfactory completion of Due Diligence Review by KBW, (b) the preparation of a Registration Statement and Prospectus and other offering materials that are satisfactory to KBW in form and substance, (c) compliance with all applicable legal and regulatory requirements to the reasonable satisfaction of KBW and its counsel, (d) market conditions (including at the time of any of the proposed Offerings), (e) approval of KBW's internal committee and (f) any other conditions that KBW may deem appropriate for the transactions contemplated hereby.

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and can be altered only by written consent signed by the parties. This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. **Any right to trial by jury with respect to any claim or action arising out of this Agreement or conduct in connection with the engagement is hereby waived by the parties hereto.**

Keefe, Bruyette & Woods • 70 West Madison, Suite 2401 • Chicago, IL 60602

312.423.8200 • 800.929.6113 • Fax 312.423.8232 • www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 9 of 9

If the foregoing correctly sets forth our mutual understanding, please so indicate by signing and returning an original copy of this Agreement to the undersigned.

Very truly yours,

KEEFE, BRUYETTE & WOODS, INC.

---

| | | | |
|:---|:---|:---|:---|
| By: | ![](tm238313d1_ex1-1img002.jpg) | Date: | January 19, 2023 |
|  | Patricia A. McJoynt |  |  |
|  | Managing Director |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| PERU FEDERAL SAVINGS BANK | PERU FEDERAL SAVINGS BANK |  |  |
| By: | /s/ Eric J. Heagy | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date: | January 30, 2023 |
|  | Eric J. Heagy |  |  |
|  | President & Chief Executive Officer |  |  |

---

Keefe, Bruyette & Woods • 70 West Madison, Suite 2401 • Chicago, IL 60602

312.423.8200 • 800.929.6113 • Fax 312.423.8232 • www.kbw.com

## Exhibit 1.2

**Exhibit 1.2**

![](tm238313d1_ex1-2img001.jpg)

January 19, 2023

Peru Federal Savings Bank

1730 Fourth Street

Peru, IL 61354

 <br> Attention: Mr. Eric J. Heagy <br> President & Chief Executive Officer

Re: Services of Conversion Agent and Data Processing Records Management Agent

Ladies and Gentlemen:

This letter agreement (this "Agreement") confirms the engagement of Keefe, Bruyette & Woods, Inc. ("KBW") by Peru Federal Savings Bank (the "Bank"), on behalf of both itself and the Company (as defined herein), to act as the conversion agent and the data processing records management agent (KBW in such capacities, the "Agent") to the Company in connection with the Bank's proposed conversion from the mutual to the stock form of organization, including the offer and sale of the common stock (the "Conversion") pursuant to the Company's proposed Plan of Conversion (the "Plan of Conversion"). The sale of the common stock will be to eligible persons in a subscription offering (the "Subscription Offering"), with any remaining unsold shares of Common Stock to then be offered to the general public in a community offering (the "Community Offering") and if necessary, through a syndicate of broker-dealers organized by KBW (a "Syndicated Community Offering") (the Subscription Offering, Community Offering, and any Syndicated Community Offering are collectively referred to herein as the "Offerings").

This Agreement sets forth the terms and conditions of KBW's engagement solely in its capacity as Agent. It is acknowledged that the terms of KBW's engagement by the Company as exclusive financial advisor in the Conversion and as sole bookrunning manager in the Offerings is set forth in a separate agreement entered into by and between KBW and the Bank (on behalf of both itself and the Company) on or about the date hereof (such separate agreement, the "Advisory Agreement").

1. <u>Description of Services.</u>

As Agent, and as the Company may reasonably request, KBW will provide the services further described below (the "Services"):

&nbsp;&nbsp;&nbsp;&nbsp;1. Consolidation of Accounts and Development
 of a Central File, including, but not limited to the following:

● Consolidate accounts having the same ownership and separate the consolidated file information into necessary groupings to satisfy mailing requirements;

● Create the master file of account holders as of key record dates; and

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 2 of 12

● Create software for the operation of the Company's Stock Information Center, including subscription management and proxy solicitation efforts.

&nbsp;&nbsp;&nbsp;&nbsp;2. Preparation of Proxy Forms; Proxy Solicitation
 and Special Meeting Services, including, but not limited to the following:

● Assist the Company's financial printer with labeling of proxy materials for voting;

● Provide support for any follow-up mailings to members, as needed, including proxy grams and additional solicitation materials;

● Proxy and ballot tabulation; and

● Support the Inspector of Election for the Company's special meeting of members, assuming the election is not contested.

&nbsp;&nbsp;&nbsp;&nbsp;3. Subscription Services, including, but
 not limited to the following:

● Assist the Company in establishing and managing a Stock Information Center;

● Provide the physical location of the Stock Information Center including materials required;

● Assist in educating Company personnel;

● Establish recordkeeping and reporting procedures;

● Manage the Stock Information Center during the Offerings;

● Assist the Company's financial printer with labeling of offering materials for subscribing for shares of Common Stock;

● Provide support for any follow-up mailings to members, as needed, including additional solicitation materials;

● Common Stock order form processing and production of daily reports and analysis;

● Provide supporting account information to the Company's legal counsel for "blue sky" research and applicable registration;

● Assist the Company's transfer agent with the generation and mailing of statements of ownership;

● Perform interest and refund calculations and provide a file to enable the Company or its transfer agent to generate interest and refund checks.

&nbsp;&nbsp;&nbsp;&nbsp;4. Records Processing Services: KBW will
 provide records processing services (the "Records Processing Services") contemplated
 hereby. The parties hereto expressly acknowledge and agree that KBW expects to subcontract
 certain Records Processing Services, including without limitation certain integral data processing
 functions, to any one or more of its affiliates or to any other party (including non-affiliate
 third parties).

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 3 of 12

2. <u>Duties and Obligations.</u>

KBW, as Agent, hereby agrees to perform the Services in a commercially reasonable manner and to comply with all timely, appropriate and lawful instructions received from duly authorized representatives of the Company. KBW makes no warranties regarding the rendering of the Services (including, without limitation, warranties of merchantability, security, accuracy, non-infringement, and fitness for a particular purpose), and no additional warranties may be implied from the terms of this Agreement. The Company will: (i) inform all of its authorized representatives, which may include attorneys, agents and advisors, that KBW shall act as the exclusive Agent and that they are authorized and directed to communicate with KBW and to promptly provide KBW with all information that is reasonably requested; (ii) cause KBW to have adequate notice of, and permit KBW to attend, meetings (whether in person or otherwise) where KBW's attendance is, in the discretion of KBW, relevant, advisable or necessary; (iii) cause KBW to receive, as they become available, copies of the documents relating to the Plan of Conversion, the Conversion and the Offerings, to the extent KBW believes that such documents are necessary or appropriate for it to perform the Services and (iv) cause KBW to have adequate advance notice of any proposed changes to the Plan of Conversion, the proposed Services or the timetable of the Offerings. Failure by the Company to keep KBW timely and adequately informed or to provide KBW with complete and accurate necessary information on a timely basis shall excuse KBW's delay in the performance of its Services and may be grounds for KBW to terminate the Services pursuant to this Agreement.

The actions to be taken by KBW hereunder are deemed by the parties to be ministerial only and not discretionary. KBW, in its capacity as Agent under this Agreement, shall not be called upon at any time to give any advice regarding implementing the Plan of Conversion. The Company shall have the sole responsibility to make any and all decisions with respect to implementing the Plan of Conversion, including but not limited to decisions regarding which customer bank accounts are to be included in accountholder records provided to KBW.

KBW expects to subcontract certain data processing functions integral to the Services with any one or more of its affiliates or with any other party. The fees and expenses of such subcontractor shall not be billed to the Company, unless otherwise agreed to by the parties hereto in writing. Such subcontractor shall agree to comply with the provisions of this Agreement set forth under the heading "Confidentiality and Consumer Privacy."

3. <u>Fees Payable to KBW.</u>

For the Services described above, the Company agrees to pay KBW a non-refundable cash fee of $30,000 (the "Services Fee")**.** Such fee is based upon the requirements of current banking regulations, the Company's Plan of Conversion as currently contemplated, and the expectation that member data will be processed as of three key record dates. Any material changes in applicable regulations or the Plan of Conversion, or delays requiring duplicate or replacement processing due to changes to record dates, may result in additional fees not exceeding $15,000 payable to KBW. The Services Fee shall be payable as follows: (i) $15,000 shall be payable immediately upon execution of this Agreement, which shall be non-refundable and deemed to be earned in full when paid and (ii) all remaining amounts shall be payable immediately upon the completion of the Offerings.

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 4 of 12

4. <u>Costs and Expenses; Reimbursement.</u>

The Company will bear all of expenses in connection with the Offerings and the matters contemplated by this Agreement. The Company shall also reimburse KBW for its reasonable out-of-pocket expenses incurred in connection with the Services, regardless of whether the Offerings are consummated, provided that such out-of-pocket expenses shall not exceed $7,500, which shall not be unreasonably withheld, conditioned or delayed. Typical expenses include, but are not limited to, additional programming costs, postage, overnight delivery, telephone and travel. Not later than two days before the closing of the Offerings, KBW will provide the Company with documentation of all reimbursable expenses of KBW, to be paid at closing. The provisions of this paragraph shall not apply to or in any way impair the indemnification, contribution or liability limitation provisions set forth in this Agreement.

5. <u>Reliance on Information Provided.</u>

The Company agrees to provide KBW with such information as KBW may reasonably require to carry out the Services under this Agreement (all such information so provided, the "Information). The Company recognizes and confirms that KBW (a) will use and rely on and assume the accuracy and completeness of such Information in performing the Services contemplated by this Agreement without having independently verified or analyzed the accuracy or completeness of the same, and (b) does not assume responsibility or liability for the accuracy or completeness of the Information (including, without limitation, accountholder records provided or processed) or to conduct any independent verification or any appraisal or physical inspection of properties or assets.

KBW, as Agent, may further rely upon the instructions and representations (whether oral or in writing) of the Company's duly authorized representatives, without inquiry or investigation. KBW shall not be responsible for any action taken in reliance upon any signature, endorsement, assignment, certificate, order, request, notice or instruction (whether written or oral), or other instrument or document reasonably believed by it to be valid, genuine and sufficient in carrying out its duties hereunder. KBW shall not be liable or responsible, and shall be fully authorized and protected for, acting or failing to act in accordance with any oral instructions or requests.

KBW may consult with legal counsel chosen in good faith as to KBW's obligations or performance under this Agreement, and KBW shall not incur any liability in acting in good faith in accordance with any advice from such counsel with respect to KBW's obligations or performance under this Agreement.

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 5 of 12

6. <u>Confidentiality and Consumer Privacy.</u>

KBW acknowledges that a portion of the Information provided to it in connection with its engagement hereunder may contain confidential and proprietary business information concerning the Company (such Information, the "Confidential Information"). KBW agrees that, except as contemplated in connection with the performance of its services under this agreement, as authorized by the Company or as required by law, regulation or legal process, it will treat as confidential all Confidential Information; provided, however, that KBW may disclose such Confidential Information to its agents and advisors who are assisting or advising KBW in performing its services hereunder and who have been instructed to be bound by the terms and conditions of this paragraph. As used herein, the term "Confidential Information" shall not include information which (a) is or becomes available to the public other than as a result of a disclosure by KBW or its representatives in violation of this Agreement, (b) was available to KBW on a non-confidential basis prior to its disclosure to KBW or its representatives by the Company, or (c) becomes available to KBW on a non-confidential basis from a person other than the Company who is not known to KBW to be bound not to disclose such information pursuant to a contractual obligation of confidentiality to the Company. It is understood by the parties hereto that the receiving party shall be deemed to have satisfied its obligation to hold the Confidential Information confidential if it exercises the same care as it takes to preserve the confidentiality of its own similar information.

KBW further acknowledges that a portion of the Information provided to it in connection with its engagement hereunder will include nonpublic personal data regarding Company customers and bank account records. KBW agrees that such information shall be deemed to be "Confidential Information" under this Agreement and shall not be used or disclosed except in accordance with the terms of this Agreement.

If at any time KBW is served with any judicial or administrative order, judgment, decree, motion, writ, or other form of judicial or administrative process which in any way affects any property of the Company, KBW is authorized to comply therewith in any reasonable manner as it or its legal counsel of its own choosing deems appropriate; provided that the Agent shall, if permissible by law or regulation, endeavor to give notice thereof to the Company. If KBW complies with any such judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process, KBW shall not be liable to any of the parties, or to any other person or entity, even though such order, judgment, decree, writ or process may be subsequently modified or vacated or otherwise determined to have been without legal force or effect.

7. <u>Limitations of Responsibilities.</u>

KBW, as Agent, (a) shall have no duties or obligations other than the contractual obligations specifically set forth herein; (b) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any order form or any stock certificates or statements of ownership or the shares of Common Stock represented thereby, and will not be required to and will make no representations as to the validity, value or genuineness of any offer in connection with the Offerings or otherwise; (c) shall not be obliged to take any legal action hereunder which might in its sole judgment involve any expense or liability, unless it shall have been furnished with indemnity satisfactory to it; and (d) may rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telex, telegram, or other document or security delivered to it and in good faith believed by it to be genuine and to have been signed by the proper party or parties.

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 6 of 12

The duties, responsibilities and obligations of KBW, as Agent, shall be limited to those expressly set forth herein, and no duties, responsibilities or obligations shall be inferred or implied. KBW, in its capacity as Agent, shall not be subject to, nor required to comply with, any other agreement between or among any or all of the parties hereto and/or any other person or entity, even though reference thereto may be made herein or therein, or to comply with any direction or instruction (other than those contained herein or delivered in accordance with this Agreement) from any person or entity other than the Company. Except as may otherwise specifically be set forth herein, KBW shall not be required to, and shall not, expend or risk any of its own funds or otherwise incur any financial liability in the performance of its duties hereunder.

KBW, as Agent in furnishing services to the Company under this Agreement, is acting only as an independent contractor and is not a fiduciary of, nor will its entering into this Agreement give rise to fiduciary duties to, the Company. KBW does not undertake by this Agreement or otherwise to perform any obligation of the Company, whether regulatory, contractual, or otherwise. KBW has the sole right and obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed by it under this Agreement unless otherwise provided in this Agreement. The Company understands and agrees that KBW may perform services substantially similar to those to be performed hereunder for others, and nothing herein is intended to restrict or prohibit KBW from performing such services for others.

No implied duties or obligations shall be read into this Agreement against KBW, and KBW, in its capacity as such, shall not be bound by any provision of any agreement between the Company and any other person or entity other than this Agreement, and KBW shall have no duty to inquire into, or to take into account its knowledge of, the terms and conditions of any agreement made or entered into in connection with this Agreement.

8. <u>Indemnification; Contribution; Limitations of Liability</u>.

The Company agrees to indemnify and hold harmless KBW and its affiliates, the respective partners, directors, officers, employees, and agents of KBW and its affiliates and each other person, if any, controlling KBW or any of its affiliates and each of their successors and assigns (KBW and each such person being an "Indemnified Party") to the fullest extent permitted by law, from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, and reasonably related to or arising out of the engagement of KBW pursuant to, and the performance by KBW of the services contemplated by, this Agreement , and will reimburse any Indemnified Party for all expenses (including legal fees and expenses) as they are incurred, including expenses incurred in connection with the investigation, preparing for or defending any such action or claim whether or not in connection with pending or threatened litigation, or any action or proceeding arising therefrom, whether or not KBW is a party. The Company will not be liable under the foregoing indemnification provision to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court of competent jurisdiction to have resulted primarily from KBW's bad faith or gross negligence.

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 7 of 12

If the indemnification provided for in the foregoing paragraph is judicially determined to be unavailable (other than in accordance with the terms hereof) to any person otherwise entitled to indemnity in respect of any losses, claims, damages or liabilities referred to herein, then, in lieu of indemnifying such person hereunder, the Company shall contribute to the amount paid or payable by such person as a result of such losses, claims, damages or liabilities (and expenses relating thereto) (i) in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and KBW, on the other hand, of the engagement provided for in this Agreement or (ii) if the allocation provided for in clause (i) above is not available, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (i) but also the relative fault of each of the Company and KBW, as well as any other relevant equitable considerations; <u>provided, however</u>, in no event shall KBW's aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by KBW under this Agreement. For the purposes of this Agreement, the relative benefits to the Company and to KBW of the engagement under this Agreement shall be deemed to be in the same proportion as (a) the total value paid or contemplated to be paid or received or contemplated to be received by the Company in the Conversion and the Offerings that are the subject of the engagement hereunder, whether or not consummated, bears to (b) the fees paid or to be paid to KBW under this Agreement.

The Company also agrees that neither KBW, nor any of its affiliates nor any officer, director, employee or agent of KBW or any of its affiliates, nor any person controlling KBW or any of its affiliates, shall have any liability to the Company for or in connection with such engagement except for any such liability for losses, claims, damages, liabilities or expenses incurred by the Company which are finally judicially determined to have resulted primarily from KBW's bad faith or gross negligence. The foregoing agreement shall be in addition to any rights that KBW, the Company or any Indemnified Party may have at common law or otherwise, including, but not limited to, any right to contribution. For the sole purpose of enforcing and otherwise giving effect to the provisions of this Agreement, the Company hereby consents to personal jurisdiction and service and venue in any court in which any claim which is subject to this agreement is brought against KBW or any other Indemnified Party.

KBW shall not be responsible nor liable for delays, errors or omissions arising from, relating to or made in connection with circumstances beyond its reasonable control, including but not limited to, acts or omissions of the Company or any of its advisors or agents, acts of governmental authorities, acts of civil commotion or riot, insurrection, acts of military authority, war or acts of war or terrorism, national emergencies, labor difficulties, fire, flood, weather-related problems, acts of God or nature, mechanical or electrical breakdown, computer problems, failure or unavailability of communications or power supply or any change in law or regulation materially affecting KBW or the Company.

In no event shall KBW be liable for: (i) acting in accordance with or relying upon any instruction, request, notice, demand, certificate, order or document from the Company or any authorized representative acting on its behalf or (ii) for any consequential, indirect, incidental, punitive, exemplary or special damages of any kind whatsoever (including but not limited to lost profits) even if KBW has been advised of the possibility of such damages. Any liability of KBW shall be limited to the amount of fees paid to KBW for the Services performed by KBW as Agent pursuant to this Agreement. A claim by Company for a return of fees paid to KBW by the Company for the Services performed as Agent pursuant to this Agreement shall be the sole and exclusive remedy for any damages. This limitation of liability is intended to apply to the full extent allowed by law, regardless of the grounds or nature of any claim asserted.

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 8 of 12

The Company agrees that it will not, without the prior written consent of KBW, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not KBW is an actual or potential party to such claim, action, suit, or proceeding) unless such settlement, compromise or consent includes an unconditional release of KBW from all liability arising out of such claim, action, suit or proceeding.

It is understood that KBW's engagement referred to above may be embodied in one or more separate written agreements and that, in connection with such engagement, KBW may also be requested to provide additional services or to act for the Company in one or more additional capacities. The indemnification provided hereunder shall apply to said engagement, any such additional services or activities and any modification, and shall remain in full force and effect following the completion or termination of KBW's engagement or this Agreement.

9. <u>Commencement and Termination.</u>

This Agreement shall commence immediately upon execution hereof by all parties and shall continue in force until the consummation or termination of the Conversion or the Offerings or the termination of this Agreement. This Agreement may only be terminated by the Company for cause due to action by KBW constituting a material violation of applicable law or a material breach of this Agreement, which breach remains uncured for ten (10) business days after written notice of such breach is delivered by the Company to KBW. This Agreement may only be terminated by KBW in the event of one or more of the following: (i) termination of the Advisor Agreement; (ii) circumstances described in this Agreement in the second paragraph under the heading "Miscellaneous"; (iii) action by the Company constituting a material violation of applicable law or a material breach of this Agreement (including as described in this Agreement in the first paragraph under the heading "Duties and Obligations" or failure to pay the fees and expenses of KBW as set forth herein), which breach remains uncured for ten (10) business days after written notice of breach is delivered by KBW to the Company or (iv) any proceeding in bankruptcy, reorganization, rehabilitation, guaranty fund action, receivership or insolvency is commenced by or against the Company, the Company shall become insolvent, or cease paying its obligations as they become due.

10. <u>Survival of Obligations.</u>

The covenants and agreements of the parties hereto, including those set forth under "Indemnification; Contribution; Limitations of Liability" above, will remain in full force and effect and will survive the consummation of the Conversion and the Offerings or the termination of this Agreement, and KBW, its affiliates, the officers, directors, employees and agents of KBW and any of its affiliates, and any person controlling KBW and any of its affiliates, shall be entitled to the benefit of the covenants and agreements thereafter.

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 9 of 12

11. <u>Miscellaneous.</u>

The parties hereto acknowledge that there are no third party beneficiaries to this Agreement, which is for the exclusive benefit of the parties hereto. No other person or entity or their respective heirs, successors and assigns shall be deemed to have any legal or equitable right, remedy or claim hereto.

In the event of any ambiguity or uncertainty hereunder or in any notice, instruction or other communication received by KBW hereunder, KBW will provide the Company a reasonable opportunity to resolve such uncertainty or ambiguity and in the event that such uncertainty or ambiguity is unresolved KBW may, in its sole discretion, take any action it deems appropriate or refrain from taking any action unless and until KBW receives written instructions from the Company clarifying the ambiguity or uncertainty, and KBW shall not be liable for acting or the failure to take any action during this period. In the event of any disagreement between the Company and any other person or entity resulting in adverse claims and demands being made herein or affected hereby, KBW shall be entitled to refuse to comply with any such claims or demands as long as such disagreement may continue, and in so refusing, shall make no delivery or other disposition under this Agreement, and in so doing shall be entitled to continue to refrain from acting until: (i) the right of adverse claimants shall have been finally settled by binding arbitration or finally adjudicated in a court of competent jurisdiction or (ii) all differences shall have been settled by agreement among the adverse claimants and the Company or other persons or entities and KBW shall have been notified in writing of such agreement signed by the Company and the adverse person(s) or entity(ies). In the event of such disagreement, KBW may, but need not, tender into the registry or custody of any court of competent jurisdiction all property in KBW's possession pursuant to the terms of this Agreement, together with such legal proceedings as KBW deems appropriate, and thereupon KBW shall be discharged from all further duties under this Agreement. The filing of any such legal proceeding shall not deprive KBW of compensation or expenses paid or payable hereunder for Services, and KBW shall not be liable with respect to any suspension of performance, delay or otherwise as a result of the tendering of such property. KBW shall have no obligation to take any legal action in connection with this Agreement or towards its enforcement, or to appear in, prosecute or defend any action or legal proceeding which would or might involve KBW in any cost, expense, loss or liability unless indemnification, satisfactory to KBW, in its sole discretion, shall be furnished by the Company. KBW shall be indemnified for all reasonable costs (including employee time at the employee's hourly rate determined by his annual salary) and reasonable attorneys' fees and expenses in connection with any such action.

This Agreement contains the entire agreement of the parties with respect to the subject matter hereof. This Agreement supersedes any other agreements, either oral or written, among the parties hereto with respect to the specific subject matter hereof, but not any engagement, underwriting, agency or other agreements among the parties pursuant to which KBW is acting as the Company's financial advisor, underwriter, placement agent, investment banker or in any similar capacity, including without limitation the Advisory Agreement. Except as specifically set forth herein, each party hereto acknowledges that no representation, inducement, promise or agreement, written, oral or otherwise, has been made by any party, or anyone acting on behalf of any party, which is not embodied or expressly stated herein, and that no other agreement, statement, or promise not contained in this Agreement shall be valid or binding in relation to the Services. The Company hereby acknowledges and agrees that: (i) KBW has made full and complete disclosure to the Company of the possibility or existence of any conflict of interest resulting from KBW serving as both data processing records management agent pursuant to this Agreement and as financial advisor, underwriter, placement agent, investment banker or in any similar capacity pursuant to the Advisory Agreement or any other separate agreement and (ii) having received full disclosure thereof, the Company hereby waives any such conflict of interest and consents to KBW serving in such dual capacity.

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 10 of 12

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and can be altered only by written consent signed by the parties. This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. **Any right to trial by jury with respect to any claim or action arising out of this Agreement or conduct in connection with the engagement is hereby waived by the parties hereto.**

This Agreement may be executed in several counterparts, which taken together, shall constitute one and the same document. All section headings used herein are for convenience and ease of reference only and do not constitute part of this Agreement and shall not be referred to for the purpose of defining, interpreting, construing or enforcing any of the provisions of this Agreement. All pronouns and variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the party or parties to this Agreement may require.

This Agreement may not be assigned by any party without the prior written consent of the other parties hereto and any purported assignment made in violation of the foregoing shall be void and have no legal effect; except that consent is not required for an assignment to a KBW affiliate or successor in interest. This Agreement may be modified only by a written amendment signed by all of the parties hereto and no waiver of any provision hereof shall be effective unless expressed in a writing signed by the party to be charged. No waiver of the breach of any provision or term of this Agreement shall be deemed or construed to be a waiver of any other or subsequent breach.

Should any term or provision, or portion of such provision, of this Agreement be invalid or unenforceable, the scope thereof or the period covered thereby or otherwise, such term, provision, or portion of such provision, shall be deemed to be reduced and limited to enable KBW or the Company, as applicable, to enforce it to the maximum extent permissible under the laws and public policies applied under the jurisdiction in which enforcement is sought. If any term or provision of this Agreement is held or deemed to be invalid or unenforceable, in whole or in part, by a court of competent jurisdiction, such term or provision shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement which shall be construed to preserve, to the maximum extent permissible, the intent and purposes of this Agreement. Any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such terms or provisions in any other jurisdiction.

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 11 of 12

All media releases, public announcements and public disclosures by either party or its agents relating to this Agreement or the subject matter of this Agreement, but not including any announcement intended solely for internal distribution at such party or any disclosure required by legal, accounting or regulatory requirements beyond the reasonable control of such party, shall be coordinated with and approved by the other party prior to the release thereof, which approval shall not be unreasonably withheld.

12. <u>Notices.</u>

Except as otherwise contemplated by this Agreement, all notices, demands, requests or other communications which may be or are required to be given, served or sent by any party to any other party pursuant to this Agreement, other than in the normal course of conducting the Services, can be by certified or registered mail, personal delivery or transmitted by any standard form of telecommunication with proof of delivery addressed as follows:

(a) If to the
 Agent:

Keefe, Bruyette & Woods, Inc.

70 W Madison, Suite 2401

Chicago, IL 60602

Attn: Patricia A. McJoynt

Telephone: (312) 423-8272

Fax: (312) 423-8232

If to the Company:

Peru Federal Savings Bank

1730 Fourth Street

Peru, IL 61354

Attn: Eric J. Heagy

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

Peru Federal Savings Bank

January 19, 2023

Page 12 of 12

Each party may designate by notice in writing a new address/addressee to which any notice, demand, request or communication may thereafter be provided. If the foregoing correctly sets forth our mutual understanding, please so indicate by signing and returning the original copy of this letter to the undersigned.

---

| | | | |
|:---|:---|:---|:---|
| Very truly yours, | Very truly yours, | Very truly yours, | Very truly yours, |
| KEEFE, BRUYETTE & WOODS, INC. | KEEFE, BRUYETTE & WOODS, INC. | KEEFE, BRUYETTE & WOODS, INC. | KEEFE, BRUYETTE & WOODS, INC. |
| By: | /s/ Patricia A. McJoynt | Date: | January 19, 2023 |
|  | Patricia A. McJoynt |  |  |
|  | Managing Director |  |  |
| PERU FEDERAL SAVINGS BANK | PERU FEDERAL SAVINGS BANK | PERU FEDERAL SAVINGS BANK | PERU FEDERAL SAVINGS BANK |
| By: | /s/ Eric J. Heagy | Date: | January 30, 2023 |
|  | Eric J. Heagy |  |  |
|  | President & Chief Executive Officer |  |  |

---

Keefe, Bruyette & Woods ● 70 West Madison, Suite 2401 ● Chicago, IL 60602

312.423.8200 ● 800.929.6113 ● Fax 312.423.8232 ● www.kbw.com

## Ex-2

**Exhibit 2**

**PLAN OF CONVERSION**

**OF**

**PERU FEDERAL SAVINGS BANK**

**TABLE OF CONTENTS**

1. INTRODUCTION 1

2. DEFINITIONS 1

3. PROCEDURES FOR CONVERSION 6

4. APPLICATIONS AND APPROVALS 9

5. SALE OF SUBSCRIPTION SHARES 9

6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES 9

7. RETENTION OF OFFERING PROCEEDS BY THE HOLDING COMPANY 10

8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY) 10

9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY) 11

10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY) 12

11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY) 12

12. COMMUNITY OFFERING 13

13. SYNDICATED COMMUNITY OFFERING OR FIRM COMMITMENT UNDERWRITTEN OFFERING 13

14. LIMITATIONS ON PURCHASES 14

15. PAYMENT FOR SUBSCRIPTION SHARES 15

16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS 16

17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT 17

18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES 18

19. CONTRIBUTION TO THE FOUNDATION 18

20. ESTABLISHMENT OF LIQUIDATION ACCOUNT 19

21. VOTING RIGHTS OF STOCKHOLDERS 20

22. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION OF COMMON STOCK 20

23. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION 21

24. TRANSFER OF DEPOSIT ACCOUNTS 21

25. REGISTRATION AND MARKETING 21

26. TAX RULINGS OR OPINIONS 21

27. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS 22

28. RESTRICTIONS ON ACQUISITION OF SAVINGS BANK AND HOLDING COMPANY 22

29. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK 23

30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE 23

31. EXPENSES OF CONVERSION 24

32. AMENDMENT OR TERMINATION OF PLAN 24

33. CONDITIONS TO CONVERSION 24

34. INTERPRETATION 24

(i) **PLAN OF CONVERSION**

**OF**

**PERU FEDERAL SAVINGS BANK**

**1.** **INTRODUCTION** 

This Plan of Conversion (the "Plan") provides for the conversion of Peru Federal Savings Bank, a federal mutual savings bank (the "Savings Bank"), into the capital stock form of organization. A new stock holding company (the "Holding Company") will be established as part of the Conversion and will issue Common Stock in connection with the Conversion. The purpose of the Conversion is to convert the Savings Bank to the capital stock form of organization and to raise capital in the Offering. The Holding Company will offer its Common Stock in the Offering upon the terms and conditions set forth in this Plan. The subscription rights granted to Participants in the Subscription Offering are set forth in Sections 8 through 11 hereof. All sales of Common Stock in the Community Offering, the Syndicated Community Offering or the Firm Commitment Underwritten Offering will be at the sole discretion of the Boards of Directors of the Savings Bank and the Holding Company. The Conversion will have no impact on depositors, borrowers or other customers of the Savings Bank (other than as to voting and liquidation rights as set forth in this Plan). After the Conversion, the Savings Bank's insured deposits will continue to be insured by the FDIC to the fullest extent provided by applicable law.

In furtherance of the Savings Bank's commitment to its community, the Plan provides for a contribution of Holding Company Common Stock and/or cash, subject to regulatory limitations, to the Foundation. The funding of the Foundation is intended to enhance the Savings Bank's existing community reinvestment activities by allowing the Savings Bank's local communities to share in the expected growth and profitability of the Holding Company and the Savings Bank over the long term.

This Plan has been approved by the Board of Directors of the Savings Bank. This Plan also must be approved by a majority of the total number of votes entitled to be cast by Voting Members of the Savings Bank at a Meeting of Members to be called for that purpose. The OCC must approve this Plan and the transactions contemplated by it before it is presented to Voting Members for their approval. In addition, the Holding Company will make any and all filings in a timely manner with the Federal Reserve and the SEC to obtain any requisite regulatory approvals to complete the Conversion.

**2.** **DEFINITIONS** 

For the purposes of this Plan, the following terms have the following respective meanings:

**Account Holder** – Any Person holding a Deposit Account in the Savings Bank.

**Acting in Concert** – The term Acting in Concert means (i) knowing participation in a joint activity or parallel action towards a common goal whether or not pursuant to an express agreement or (ii) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement, or other arrangement, whether written or otherwise. A Person or company that acts in concert with another Person or company ("other party") shall also be deemed to be acting in concert with any Person or company that is also acting in concert with that other party, except that any Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in concert with its trustee or a Person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated.

**Affiliate** – When applied to a specified Person, includes any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

**Appraised Value Range** – The range of the estimated consolidated pro forma market value of the Holding Company, which shall also be equal to the estimated pro forma market value of the total number of Subscription Shares to be issued in the Conversion, as determined by the Independent Appraiser before the Subscription Offering and as it may be amended from time to time thereafter. The maximum and minimum of the Appraised Value Range may vary as much as 15% above and 15% below, respectively, the midpoint of the Appraised Value Range. The maximum of the Appraised Value Range may be increased by up to 15% after the commencement of the Subscription Offering to reflect changes in market or financial conditions or demand for the Common Stock.

**Associate** – When used to indicate a relationship with any Person, means (i) any corporation or organization (other than the Holding Company, the Savings Bank or a majority-owned subsidiary of the Savings Bank) if the Person is a senior officer or partner or beneficially owns, directly or indirectly, 10% or more of any class of equity securities of the corporation or organization, (ii) any trust or other estate, if the Person has a substantial beneficial interest in the trust or estate or is a trustee or fiduciary of the trust or estate, except that for the purposes of this Plan relating to subscriptions in the Offering and the sale of Subscription Shares following the Conversion, a Person who has a substantial beneficial interest in any Non-Tax-Qualified Employee Stock Benefit Plan or any Tax-Qualified Employee Stock Benefit Plan, or who is a trustee or fiduciary of such plan, is not an associate of such plan, and except that for purposes of aggregating total shares that may be held by Officers and Directors, the term "Associate" does not include any Tax-Qualified Employee Stock Benefit Plan, and (iii) any Person who is related by blood or marriage to such Person and who (A) lives in the same home as such Person or (B) is a Director or Officer of the Savings Bank, the Holding Company or a subsidiary of the Savings Bank or the Holding Company.

**Bank Regulators** – The OCC and, where applicable, the Federal Reserve.

**Code** – The Internal Revenue Code of 1986, as amended.

**Common Stock** – The common stock, par value $0.01 per share, of the Holding Company.

**Community Offering** – The offering for sale to certain members of the general public directly by the Holding Company of Subscription Shares not subscribed for in the Subscription Offering. The Community Offering may occur concurrently with the Subscription Offering and any Syndicated Community Offering, or upon conclusion of the Subscription Offering.

**Control** – (including "controlling," "controlled by," and "under common control with") means the direct or indirect power to direct or exercise a controlling influence over the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise as described in 12 C.F.R. §5.50.

**Conversion** – The conversion of the Savings Bank to stock form pursuant to this Plan, and all steps incident or necessary thereto including the Offering.

**Conversion Application** – The Application for Conversion from Mutual to Stock Form (Form AC), which the Savings Bank will file with the OCC in connection with the Conversion.

**Deposit Account** – Any withdrawable account, including, without limitation, savings accounts, time accounts, demand accounts, NOW accounts, money market accounts, certificate accounts and passbook accounts.

**Director** – A member of the Board of Directors of the Savings Bank or the Holding Company, as appropriate in the context.

**Eligible Account Holder** – Any Person holding a Qualifying Deposit as of the close of business on the Eligibility Record Date, for purposes of determining subscription rights and establishing subaccount balances in the Liquidation Account.

**Eligibility Record Date** – The date for determining Eligible Account Holders of the Savings Bank, which is December 31, 2021.

**Employees** – All Persons who are employed by the Savings Bank or the Holding Company.

**Employee Plans** – Any one or more Tax-Qualified Employee Stock Benefit Plans of the Savings Bank or the Holding Company, including any ESOP and 401(k) Plan.

**ESOP** – The Savings Bank's Employee Stock Ownership Plan, and related trust.

**FDIC** – The Federal Deposit Insurance Corporation.

**Federal Reserve** – The Board of Governors of the Federal Reserve System, including the Federal Reserve Bank of Chicago.

**Firm Commitment Underwritten Offering** – The offering, at the sole discretion of the Holding Company, of Subscription Shares not subscribed for in the Subscription Offering and any Community Offering, to members of the general public through one or more underwriters. A Firm Commitment Underwritten Offering may occur following the Subscription Offering and the Community Offering as an alternative to a Syndicated Community Offering.

**Foundation** – Peru Federal Savings Charitable Foundation, Inc., a new charitable foundation intended to qualify as an exempt organization under Code Section 501(c)(3) that will receive Foundation Shares and/or cash in connection with the Conversion.

**Foundation Shares** – Shares of Common Stock to be issued to the Foundation in connection with the Conversion.

**Holding Company** – The corporation formed for the purpose of acquiring all of the outstanding shares of capital stock of the Savings Bank to be issued in connection with the Conversion, which shall be incorporated in such State as shall be designated by the Board of Directors. Shares of Common Stock of the Holding Company will be issued in the Conversion to Participants, and possibly others, in the Offering.

**Holding Company Application** – The application on such form as may be prescribed by the Federal Reserve, which will be filed by the Holding Company with the Federal Reserve in connection with the Conversion and the formation of the Holding Company.

**Independent Appraiser** – The independent appraiser retained by the Holding Company and the Savings Bank to prepare an appraisal of the pro forma market value of the Subscription Shares.

**Liquidation Account** – The account established by the Savings Bank representing the liquidation interests received by Eligible Account Holders and Supplemental Eligible Account Holders in connection with the Conversion in exchange for their interests in the Savings Bank immediately before the Conversion.

**Local Community** – Bureau, LaSalle and Putnam Counties in Illinois.

**Meeting of Members** – The special meeting or annual meeting of Voting Members, and any adjournments thereof, held to consider and vote upon this Plan.

**Member** – Any Person that qualifies as a member of the Savings Bank pursuant to its charter and bylaws.

**OCC** – The Office of the Comptroller of the Currency.

**Offering** – The offering, sale and issuance, pursuant to this Plan, of Common Stock in the Subscription Offering, Community Offering, Syndicated Community Offering or Firm Commitment Underwritten Offering, as the case may be.

**Offering Range** – The range of the number of shares of Common Stock offered for sale in the Offering. The Offering Range shall equal the quotient of the Appraised Value Range divided by the Subscription Price.

**Officer** – The chief executive officer, president, any vice president (but not an assistant vice president, second vice president, or other vice president having authority similar to an assistant or second vice president), the secretary, the treasurer, the comptroller, and any other individual performing similar functions with respect to any organization whether incorporated or unincorporated. The term Officer also includes the Chairman of the Board of Directors if the Chairman is authorized by the charter or bylaws of the organization to participate in its operating management or if the Chairman in fact participates in such management.

**Order Form** – Any form (together with any cover letter and acknowledgment) sent to any Participant or other Person containing, among other things, a description of the alternatives available to such Person under this Plan and by which any such Person may make elections regarding subscriptions for Subscription Shares.

**Other Member** – Any Member as of the close of business on the Voting Record Date who is not an Eligible Account Holder or a Supplemental Eligible Account Holder.

**Participant** – Any Eligible Account Holder, Employee Plan, Supplemental Eligible Account Holder or Other Member.

**Person** – An individual, a corporation, a partnership, an association, a joint-stock company, a limited liability company, a trust, an unincorporated organization, or a government or political subdivision of a government.

**Plan** – This Plan of Conversion, as it exists on the date hereof and as it may hereafter be amended in accordance with its terms.

**Prospectus** – The one or more documents used in offering for sale the Subscription Shares.

**Qualifying Deposit** – The aggregate balance of all Deposit Accounts in the Savings Bank of (i) an Eligible Account Holder as of the close of business on the Eligibility Record Date, provided the aggregate balance is not less than $50.00, or (ii) a Supplemental Eligible Account Holder as of the close of business on the Supplemental Eligibility Record Date, provided the aggregate balance is not less than $50.00.

**Resident** – Any Person who occupies a dwelling within the Local Community, has a present intent to remain within the Local Community for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence within the Local Community together with an indication that such presence within the Local Community is something other than merely transitory in nature. For a corporation or other business entity to be a Resident, the principal place of business or headquarters of such entity must be in the Local Community. To the extent a Person is a personal benefit plan, the circumstances of the beneficiary shall apply with respect to this definition. In the case of all other benefit plans, circumstances of the trustee shall be examined for purposes of this definition. The Savings Bank may utilize deposit or loan records or such other evidence provided to it to make a determination as to whether a Person is a resident of the Local Community. In all cases, however, such a determination shall be in the sole discretion of the Savings Bank. A Person must be a "Resident" for purposes of determining whether such Person "resides" in the Local Community as such term is used in this Plan.

**Savings Bank** – Peru Federal Savings Bank.

**SEC** – The U.S. Securities and Exchange Commission.

**Subscription Offering** – The offering of Subscription Shares for sale to Participants.

**Subscription Price** – The price per Subscription Share to be paid by Participants and others in the Offering. The Subscription Price will be determined by the Board of Directors of the Holding Company and fixed before the commencement of the Subscription Offering. The Subscription Price shall be between $5.00 per share and $50.00 per share.

**Subscription Shares** – Shares of Common Stock offered for sale in the Offering.

**Supplemental Eligible Account Holder** – Any Person, other than Directors and Officers of the Savings Bank and the Holding Company and their Associates (unless the OCC grants a waiver permitting a Director or Officer to be included), holding a Qualifying Deposit as of the close of business on the Supplemental Eligibility Record Date, who is not an Eligible Account Holder.

**Supplemental Eligibility Record Date** – The date for determining Supplemental Eligible Account Holders, which shall be the last day of the calendar quarter preceding OCC approval of the Conversion Application.

**Syndicated Community Offering** – The offering, at the sole discretion of the Holding Company, of Subscription Shares not subscribed for in the Subscription Offering and the Community Offering, to members of the general public through a syndicate of broker-dealers. The Syndicated Community Offering may occur concurrently with the Subscription Offering and any Community Offering, or upon conclusion of the Subscription Offering and any Community Offering.

**Tax-Qualified Employee Stock Benefit Plan** – Any defined benefit plan or defined contribution plan, such as an employee stock ownership plan, stock bonus plan, profit-sharing plan or other plan, which, with its related trust, meets the requirements to be "qualified" under Code Section 401. The Savings Bank may make scheduled discretionary contributions to a tax-qualified employee stock benefit plan, *provided* such contributions do not cause the Savings Bank to fail to meet its regulatory capital requirements. A "Non-Tax-Qualified Employee Stock Benefit Plan" is any defined benefit plan or defined contribution plan that is not so qualified.

**Voting Member** – Any Person who at the close of business on the Voting Record Date is entitled to vote as a Member of the Savings Bank pursuant to its charter and bylaws.

**Voting Record Date** – The date fixed by the Board of Directors of the Savings Bank for determining eligibility to vote at the Meeting of Members.

**3.** **PROCEDURES FOR CONVERSION** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. After approval of this Plan by the Savings Bank's Board of Directors, this Plan and the transactions contemplated hereby, together with all other requisite material, shall be submitted to the Bank Regulators for approval. Notice of the adoption of this Plan by the Savings Bank's Board of Directors shall be published in a newspaper having general circulation in each community in which an office of the Savings Bank is located, and copies of this Plan will be made available at each office of the Savings Bank for inspection by Members. The Savings Bank also shall publish notices of the filing of the Conversion Application with the OCC and of the filing of the Holding Company Application with the Federal Reserve.

Promptly following approval by the Bank Regulators, this Plan and the transactions contemplated by it will be submitted to a vote of the Voting Members at the Meeting of Members. The Savings Bank will mail to all Voting Members, at their address appearing on the records of the Savings Bank as of the close of business on the Voting Record Date, a proxy statement in either long or summary form describing this Plan. The Holding Company will also mail to all Participants a Prospectus and Order Form for the purchase of Subscription Shares, subject to other provisions of this Plan. In addition, all Participants will receive, or will be given the opportunity to request by telephone or by letter addressed to the Savings Bank's Secretary, a copy of this Plan. Upon approval of this Plan by a majority of the total number of votes entitled to be cast by Voting Members, the Holding Company and the Savings Bank will take all other necessary steps pursuant to applicable laws and regulations to consummate the Conversion. The Conversion must be completed within 24 months of the approval of this Plan by Voting Members, unless a longer time period is permitted by governing laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The period for the Subscription Offering will be not less than 20 days nor more than 45 days from the date Participants are first mailed a Prospectus and Order Form, unless extended. Any shares of Common Stock for which subscriptions have not been received in the Subscription Offering may be issued in a Community Offering, a Syndicated Community Offering or a Firm Commitment Underwritten Offering, or in any other manner permitted by the Bank Regulators and the SEC. All sales of shares of Common Stock must be completed within 45 days after the last day of the Subscription Offering, unless the offering period is extended by the Holding Company with the approval of the Bank Regulators. No single extension of more than 90 days will be granted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The Conversion will be effected as follows, or in any other manner that is consistent with the purposes of this Plan and applicable laws and regulations. Each of the steps set forth below shall be deemed to occur in such order as is necessary to consummate the Conversion pursuant to this Plan, the intent of the Board of Directors of the Holding Company and the Board of Directors of the Savings Bank, and applicable federal and state regulations and policy. Approval of this Plan by Voting Members also shall constitute approval of each of the transactions necessary to implement this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Savings Bank will convert its charter to a federal stock savings bank charter, which authorizes the
issuance of capital stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Holding Company will purchase all of the capital stock issued by the Savings Bank in connection with
its conversion from mutual to stock form, for at least 50% of the net proceeds of the Offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The Holding Company will issue the Common Stock sold in the Offering as provided in this Plan.

The Holding Company shall have registered the issuance of the Subscription Shares with the SEC and any appropriate state securities authorities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. The Board of Directors of the Savings Bank may determine for any reason at any time before the issuance of the Subscription Shares not to utilize a holding company form of organization in the Conversion. If the Board of Directors determines not to complete the Conversion utilizing a holding company form of organization, the common stock of the Savings Bank will be issued and sold in accordance with this Plan. In such case, the Holding Company's registration statement will be withdrawn from the SEC, the Holding Company's Holding Company Application will be withdrawn from the Federal Reserve, and the Savings Bank will take steps necessary to complete the Conversion, including filing any necessary documents with the OCC and any other applicable state or federal regulatory agencies and will issue and sell the Subscription Shares in accordance with this Plan. In such event, any subscriptions or orders received for Subscription Shares of the Holding Company shall be deemed to be subscriptions or orders for common stock of the Savings Bank, and the Savings Bank shall take such steps as permitted or required by the OCC and any other applicable state or federal regulatory agencies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. Upon completion of the Conversion, the legal existence of the Savings Bank shall not terminate but the Savings Bank (in stock form) shall be a continuation of the entity of the Savings Bank (in mutual form) and all property of the Savings Bank (in mutual form), including its right, title and interest in and to all property of whatever kind and nature, whether real, personal, or mixed, and things, and choses in action, and every right, privilege, interest and asset of every conceivable value or benefit then existing or pertaining to it, or which would inure to it, immediately by operation of law and without the necessity of any conveyance or transfer and without any further act or deed shall vest in the Savings Bank (in stock form). The Savings Bank (in stock form) shall have, hold, and enjoy the same in its own right as fully and to the same extent as the same was possessed, held and enjoyed by the Savings Bank (in mutual form). The Savings Bank (in stock form) at the time and the taking effect of the Conversion shall continue to have and succeed to all the rights, obligations and relations of the Savings Bank (in mutual form). All pending actions and other judicial or administrative proceedings to which the Savings Bank was a party shall not be discontinued by reason of the Conversion, but may be prosecuted to final judgment or order in the same manner as if the Conversion had not been made and the Savings Bank (in stock form) resulting from the Conversion may continue the actions in its name notwithstanding the Conversion. Upon completion of the Conversion, each Person having a Deposit Account at the Savings Bank before the Conversion will continue to have a Deposit Account, without further payment therefor, in the same amount and subject to the same terms and conditions (except for voting and liquidation rights) as in effect before the Conversion. All of the Savings Bank's insured Deposit Accounts will continue to be insured by the FDIC to the extent provided by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. The home office, and the branch offices, if any, of the Savings Bank shall be unaffected by the Conversion. The executive offices of the Holding Company shall be located at the main office of the Savings Bank.

**4.** **APPLICATIONS AND APPROVALS** 

The Boards of Directors of the Holding Company and the Savings Bank will take all necessary steps to convert the Savings Bank to stock form, form the Holding Company, and complete the Conversion. The Savings Bank shall file the Conversion Application with the OCC, and the Holding Company shall file the Holding Company Application with the Federal Reserve and a registration statement with the SEC. The Savings Bank and Holding Company intend to make any additional filings necessary to obtain all approvals required to complete the Conversion.

**5.** **SALE OF SUBSCRIPTION SHARES** 

The Subscription Shares will be offered for sale simultaneously in the Subscription Offering to the Participants in the respective priorities set forth in this Plan. The Subscription Offering may begin as early as the mailing of the Prospectus and the Proxy Statement for the Meeting of Members. The Common Stock will not be insured by the FDIC or any government agency. The Savings Bank will not extend credit to any Person to purchase shares of Common Stock.

Any shares of Common Stock for which subscriptions have not been received in the Subscription Offering may be issued in the Community Offering. The Subscription Offering may begin before the Meeting of Members and, in that event, the Community Offering also may begin before the Meeting of Members. The sale of Common Stock offered for sale before the Meeting of Members, however, is subject to the approval of this Plan by Voting Members.

If feasible, any shares of Common Stock remaining available for sale after the Subscription Offering, and the Community Offering, if conducted, will be sold in a Syndicated Community Offering or a Firm Commitment Underwritten Offering, or in any other manner approved by the Bank Regulators that will achieve the widest distribution of the Common Stock. The issuance of Common Stock in the Subscription Offering and any Community Offering will be consummated simultaneously on the date of the sale of Common Stock in any Syndicated Community Offering or Firm Commitment Underwritten Offering, and only if the required minimum number of shares of Common Stock has been issued.

**6.** **PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES** 

The total number of shares, or range of number, of Subscription Shares to be offered for sale in the Offering will be determined jointly by the Boards of Directors of the Savings Bank and the Holding Company immediately before the commencement of the Subscription Offering, and will be based on the Appraised Value Range and the Subscription Price. The Offering Range will equal the quotient of the Appraised Value Range divided by the Subscription Price. The estimated pro forma consolidated market value of the Holding Company will be subject to adjustment within the Appraised Value Range if necessitated by market or financial conditions, with the receipt of any required approvals of the Bank Regulators, and the maximum of the Appraised Value Range may be increased by up to 15% after the commencement of the Subscription Offering to reflect changes in market and financial conditions or demand for the shares. The number of Subscription Shares issued in the Offering will be equal to the quotient of the estimated pro forma consolidated market value of the Holding Company, as may be amended, divided by the Subscription Price.

If the product of the Subscription Price multiplied by the number of Subscription Shares to be sold in the Offering is below the minimum of the Appraised Value Range, or materially above the maximum of the Appraised Value Range, a resolicitation of subscribers may be required, *provided* that up to a 15% increase above the maximum of the Appraised Value Range shall be deemed not material and thus shall not require a resolicitation. Any such resolicitation shall be effected in such manner and within such time as the Savings Bank and the Holding Company shall establish, provided that all required regulatory approvals are obtained.

Notwithstanding the foregoing, Subscription Shares will not be issued unless, before the consummation of the Offering, the Independent Appraiser confirms to the Savings Bank, the Holding Company and the Bank Regulators, that, to the best knowledge of the Independent Appraiser, nothing of a material nature has occurred which, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the number of Subscription Shares to be sold in the Offering multiplied by the Subscription Price is incompatible with its estimate of the aggregate consolidated pro forma market value of the Holding Company. If such confirmation is not received, the Holding Company may cancel the Offering, extend the Offering and establish a new Subscription Price and/or Appraised Value Range, hold a new Offering, or take such other action as the Bank Regulators may permit.

The Common Stock to be issued in the Offering shall be fully paid and non-assessable.

**7.** **RETENTION OF OFFERING PROCEEDS BY THE HOLDING COMPANY** 

The Holding Company may retain up to 50% of the net proceeds of the Offering. The Offering proceeds will provide additional capital to the Holding Company and the Savings Bank for future growth of the Savings Bank's assets, products and services in a highly competitive and regulated financial services environment, and would facilitate expansion through acquisitions of financial service organizations, diversification into other related businesses and for other business and investment purposes, including the possible payment of dividends and possible future repurchases of the Common Stock as permitted by applicable federal and state regulations and policy. Following the Conversion, the Savings Bank may distribute additional capital to the Holding Company from time to time, subject to applicable regulations governing capital distributions.

**8.** **SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Each Eligible Account Holder shall have nontransferable subscription rights to subscribe for in the Subscription Offering up to the greater of 25,000 shares ($250,000) of the Subscription Shares, 0.10% of the total number of Subscription Shares issued in the Offering, or fifteen times the product (rounded down to the next whole number) obtained by multiplying the number of Subscription Shares offered in the Offering by a fraction of which the numerator is the amount of the Eligible Account Holder's Qualifying Deposit and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders, in each case on the Eligibility Record Date, subject to the provisions of Section 14.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. If Eligible Account Holders exercise subscription rights for a number of Subscription Shares in excess of the total number of such shares eligible for subscription, the Subscription Shares shall be allocated among the subscribing Eligible Account Holders so as to permit each subscribing Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation of Subscription Shares equal to the lesser of 100 shares or the number of shares for which such Eligible Account Holder has subscribed. Any remaining shares will be allocated among the subscribing Eligible Account Holders whose subscriptions remain unsatisfied in the proportion that the amount of the Qualifying Deposit of each Eligible Account Holder whose subscription remains unsatisfied bears to the total amount of the Qualifying Deposits of all Eligible Account Holders whose subscriptions remain unsatisfied. If the amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Eligible Account Holders whose subscriptions are still not fully satisfied on the same principle until all available shares have been allocated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Subscription rights as Eligible Account Holders received by Directors and Officers and their Associates that are based on increased deposits made by such persons during the 12 months preceding the Eligibility Record Date shall be subordinated to the subscription rights of all other Eligible Account Holders, except as permitted by the Bank Regulators.

**9.** **SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)** 

The Employee Plans of the Holding Company and the Savings Bank shall have subscription rights to purchase in the aggregate up to 10% of the shares of Common Stock issued and outstanding as of the consummation of the Conversion, including any Subscription Shares to be issued as a result of an increase in the maximum of the Offering Range after commencement of the Subscription Offering and before the completion of the Conversion. Consistent with applicable laws and regulations and practices and policies, the Employee Plans may use funds contributed by the Holding Company or the Savings Bank and/or borrowed from an independent financial institution to exercise such subscription rights, and the Holding Company and the Savings Bank may make scheduled discretionary contributions thereto, provided that such contributions do not cause the Holding Company or the Savings Bank to fail to meet any applicable regulatory capital requirements. The Employee Plans shall not be deemed to be Associates or Affiliates of or Persons Acting in Concert with any Director or Officer of the Holding Company or the Savings Bank. Alternatively, if permitted by the Bank Regulators, the Employee Plans may purchase all or a portion of such shares in the open market after the Conversion.

**10.** **SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Each Supplemental Eligible Account Holder shall have nontransferable subscription rights to subscribe for in the Subscription Offering up to the greater of 25,000 shares ($250,000) of the Subscription Shares, 0.10% of the total number of shares of Subscription Shares issued in the Offering, or fifteen times the product (rounded down to the next whole number) obtained by multiplying the number of Subscription Shares offered in the Offering by a fraction of which the numerator is the amount of the Supplemental Eligible Account Holder's Qualifying Deposit and the denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders, in each case on the Supplemental Eligibility Record Date, subject to the availability of sufficient shares after filling in full all subscription orders of the Eligible Account Holders and Employee Plans and to the purchase limitations specified in Section 14.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. If Supplemental Eligible Account Holders exercise subscription rights for a number of Subscription Shares in excess of the total number of such shares eligible for subscription, the Subscription Shares shall be allocated among the subscribing Supplemental Eligible Account Holders so as to permit each such subscribing Supplemental Eligible Account Holder, to the extent possible, to purchase a number of shares sufficient to make his or her total allocation of Subscription Shares equal to the lesser of 100 shares or the number of shares for which each such Supplemental Eligible Account Holder has subscribed. Any remaining shares will be allocated among the subscribing Supplemental Eligible Account Holders whose subscriptions remain unsatisfied in the proportion that the amount of the Qualifying Deposit of each such Supplemental Eligible Account Holder bears to the total amount of the Qualifying Deposits of all Supplemental Eligible Account Holders whose subscriptions remain unsatisfied. If the amount so allocated exceeds the amount subscribed for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Supplemental Eligible Account Holders whose subscriptions are still not fully satisfied on the same principle until all available shares have been allocated.

**11.** **SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Each Other Member shall have nontransferable subscription rights to subscribe for in the Subscription Offering up to the greater of 25,000 shares ($250,000) of Subscription Shares or 0.10% of the total number of Subscription Shares issued in the Offering, subject to the availability of sufficient shares after filling in full all subscription orders of Eligible Account Holders, Employee Plans and Supplemental Eligible Account Holders and to the purchase limitations specified in Section 14.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. If Other Members subscribe for a number of Subscription Shares which, when added to the Subscription Shares subscribed for by the Eligible Account Holders, Employee Plans and Supplemental Eligible Account Holders, is in excess of the total number of Subscription Shares to be issued, the available shares will be allocated to Other Members so as to permit each such subscribing Other Member, to the extent possible, to purchase a number of shares sufficient to make his or her total allocation of Subscription Shares equal to the lesser of 100 shares or the number of shares for which each such Other Member has subscribed. Any remaining shares will be allocated among the subscribing Other Members whose subscriptions remain unsatisfied in the proportion that the amount of the subscription of each such Other Member bears to the total amount of the subscriptions of all Other Members whose subscriptions remain unsatisfied.

**12.** **COMMUNITY OFFERING** 

If subscriptions are not received for all Subscription Shares offered for sale in the Subscription Offering, shares for which subscriptions have not been received may be offered for sale in the Community Offering through a direct community marketing program that may use a broker, dealer, consultant or investment banking firm experienced and expert in the sale of savings institutions securities. Such entities may be compensated on a fixed fee basis or on a commission basis, or a combination thereof. If orders for Subscription Shares in the Community Offering exceed the number of shares available for sale, shares may be allocated (to the extent shares remain available) first to cover orders of natural persons (including trusts of natural persons) residing in the Local Community, and thereafter to satisfy orders of other members of the general public, so that each Person in such category of the Community Offering may receive, to the extent possible, the lesser of 100 shares or the number of shares they ordered. In addition, orders received for shares in the Community Offering from natural persons (including trusts of natural persons) residing in the Local Community will be filled up to a maximum of two percent (2%) of the shares sold in the Offering, and thereafter any remaining shares will be allocated to Persons in such category of the Community Offering on an equal number of shares basis per order.

The Holding Company shall use its best efforts consistent with this Plan to distribute Subscription Shares sold in the Community Offering in such a manner as to promote the widest distribution practicable of such stock. The Holding Company reserves the right to reject any or all orders, in whole or in part, that are received in the Community Offering. Any Person may purchase up to 25,000 shares ($250,000) of Subscription Shares in the Community Offering, subject to the purchase limitations specified in Section 14.

**13.** **SYNDICATED COMMUNITY OFFERING OR FIRM COMMITMENT UNDERWRITTEN OFFERING** 

If feasible, the Board of Directors may determine to offer Subscription Shares not sold in the Subscription Offering or the Community Offering, if any, in a Syndicated Community Offering, subject to such terms, conditions and procedures as may be determined by the Holding Company, in a manner that will achieve the widest distribution of the Common Stock, subject to the right of the Holding Company to accept or reject in whole or in part any orders in the Syndicated Community Offering. In the Syndicated Community Offering, any Person may purchase up to 25,000 shares ($250,000) of Subscription Shares, subject to the purchase limitations specified in Section 14. Unless otherwise permitted by the Bank Regulators, orders received for shares in a Syndicated Community Offering will first be filled up to a maximum of two percent (2%) of the shares sold in the Offering, and thereafter any remaining shares will be allocated on an equal number of shares basis per order. Provided that the Subscription Offering has begun, the Holding Company may begin the Syndicated Community Offering at any time (including as soon as practicable after the termination of the Subscription Offering and any Community Offering), *provided* that the completion of the offer and sale of the Common Stock will be conditioned upon the approval of this Plan by Voting Members.

Alternatively, if feasible, the Board of Directors may determine to offer Subscription Shares not sold in the Subscription Offering and any Community Offering for sale in a Firm Commitment Underwritten Offering subject to such terms, conditions and procedures as may be determined by the Holding Company, subject to the right of the Holding Company to accept or reject in whole or in part any orders in the Firm Commitment Underwritten Offering. Provided the Subscription Offering has begun, the Holding Company may begin the Firm Commitment Underwritten Offering at any time.

If, for any reason, a Syndicated Community Offering or Firm Commitment Underwritten Offering of Subscription Shares not sold in the Subscription Offering and the Community Offering cannot be effected, or if any insignificant residue of shares of Common Stock is not sold in the Subscription Offering and the Community Offering or in a Syndicated Community Offering or Firm Commitment Underwritten Offering, the Holding Company, if possible, will make other arrangements for the disposition of unsubscribed shares aggregating at least the minimum of the Offering Range. Such other purchase arrangements will be subject to receipt of any required approval of the Bank Regulators.

**14.** **LIMITATIONS ON PURCHASES** 

The following limitations shall apply to all purchases and issuances of shares of Subscription Shares:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The maximum number of Subscription Shares that may be subscribed for or purchased in all categories in the Offering by any Person or Participant together with any Associate or group of Persons Acting in Concert ("In Concert Group") is 40,000 shares ($400,000), except that the Employee Plans may subscribe for up to 10% of the shares of Common Stock issued and outstanding as of the consummation of the Conversion (including shares issued in the event of an increase in the maximum of the Offering Range of 15%). If the number of Subscription Shares otherwise allocable pursuant to Sections 8 through 13, inclusive, would be in excess of the maximum number of shares permitted to be allocated to any In Concert Group as set forth in this section, the number of Subscription Shares allocated to each Person that makes up such In Concert Group shall first be reduced to the lowest limitation applicable to each such Person and then the number of Subscription Shares allocated to each such Person shall be reduced until the aggregate allocation to the In Concert Group complies with the limits of this Section 14. The method of reducing the allocation of each Person in any In Concert Group shall be determined by the Holding Company in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The maximum number of Subscription Shares that may be issued to or purchased in all categories of the Offering by Officers and Directors and their Associates in the aggregate, shall not exceed 32% of the Subscription Shares sold in the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. A minimum of 25 Subscription Shares must be purchased by each Person purchasing shares in the Offering to the extent those shares are available; *provided, however*, that in the event the minimum number of Subscription Shares purchased times the Subscription Price exceeds $500, then such minimum purchase requirement shall be reduced to such number of shares which when multiplied by the price per share shall not exceed $500, as determined by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Depending upon market or financial conditions, the Board of Directors of the Holding Company, with the receipt of any required approvals of the Bank Regulators and without further approval of Voting Members, may decrease or increase any of the purchase limitations in this Plan, *provided* that the maximum purchase limitations may not be increased to a percentage in excess of 5.0% of Subscription Shares sold in the Offering, except as provided below. If the Holding Company increases the maximum purchase limitation(s), the Holding Company is only required to resolicit Persons who subscribed for the maximum purchase amount in the Subscription Offering and who indicated a desire to be resolicited on the Order Form, and may, in the sole discretion of the Holding Company, resolicit certain other large subscribers. In the event of such a resolicitation, the Holding Company shall have the right, in its sole discretion, to require such Persons to supply immediately available funds for the purchase of additional shares of Common Stock. Such Persons will be prohibited from paying with a personal check, but the Holding Company may allow payment by wire transfer. If a maximum purchase limitation is increased to 5.0% of the shares sold in the Offering, such limitation may be further increased to 9.99% of the shares sold in the Offering; *provided*, that orders exceeding 5.0% of the shares sold in the Offering shall not exceed in the aggregate 10.0% of the total shares sold in the Offering. Whether to fill any requests to purchase additional Subscription Shares in the event that the purchase limitation is so increased will be determined by the Board of Directors of the Holding Company in its sole discretion.

In the event of an increase in the total number of shares offered in the Offering due to an increase in the maximum of the Appraised Value Range of up to 15%, the additional shares may, at the discretion of the Holding Company, be used to fill the Employee Plans orders and then will be allocated in accordance with the purchase priorities set forth in this Plan.

For purposes of this Section 14, (i) Directors, Officers and employees of the Savings Bank and the Holding Company or any of their subsidiaries shall not be deemed to be Associates or a group affiliated with each other or otherwise Acting in Concert solely as a result of their capacities as such, (ii) shares purchased by Tax-Qualified Employee Stock Benefit Plans shall not be attributable to the individual trustees or beneficiaries of any such plan for purposes of determining compliance with the limitations set forth in paragraphs A. and B. of this Section 14, and (iii) shares purchased by a Tax-Qualified Employee Stock Benefit Plan pursuant to instructions of an individual in an account in such plan in which the individual has the right to direct the investment, including any plan of the Savings Bank qualified under Code Section 401(k), shall be aggregated and included in that individual's purchases and not attributed to the Tax-Qualified Employee Stock Benefit Plan.

Each Person purchasing Subscription Shares in the Offering shall be deemed to confirm that such purchase does not conflict with the above purchase limitations contained in this Plan.

**15.** **PAYMENT FOR SUBSCRIPTION SHARES** 

All payments for Subscription Shares subscribed for in the Subscription Offering and any Community Offering must be delivered in full to the Savings Bank, the Holding Company or an agent of the Savings Bank or the Holding Company, as described in the Order Form, together with a properly completed and executed Order Form, on or before the expiration date of the Offering; *provided, however*, that if the Employee Plans subscribe for shares in the Subscription Offering, then the Employee Plans shall not be required to pay for the shares at the time they subscribe for them but rather may pay for such shares at the Subscription Price upon consummation of the Offering. Subscription funds will be held in a segregated account at the Savings Bank.

Except as set forth in Section 14.D., payment for Common Stock subscribed for in the Subscription Offering and any Community Offering shall be made by cash, personal check, or money order or bank draft from the subscriber. Alternatively, subscribers in the Subscription Offering and any Community Offering may pay for the shares for which they have subscribed by authorizing the Savings Bank on the Order Form to make a withdrawal from designated types of Deposit Accounts at the Savings Bank in an amount equal to the aggregate Subscription Price of such shares. Such authorized withdrawal shall be without penalty as to premature withdrawal. If the authorized withdrawal is from a certificate account, and the remaining balance does not meet the applicable minimum balance requirement, the certificate shall be canceled at the time of withdrawal, without penalty, and the remaining balance will earn interest at the passbook rate. Funds for which a withdrawal is authorized will remain in the subscriber's Deposit Account and will continue to earn interest therein, but may not be used by the subscriber during the Subscription Offering and any Community Offering. Thereafter, the withdrawal will be given effect only to the extent necessary to satisfy the subscription (to the extent it can be filled) at the Subscription Price per share. Interest will continue to be earned on any amounts authorized for withdrawal until such withdrawal is given effect. Interest on funds received by personal check, bank draft or money order or by cash will be paid by the Savings Bank at not less than the passbook rate. Such interest will be paid from the date payment is processed by the Savings Bank until consummation or termination of the Offering. If for any reason the Offering is not consummated, all payments made by subscribers in the Subscription Offering and any Community Offering will be refunded to them with interest. In case of amounts authorized for withdrawal from Deposit Accounts, refunds will be made by canceling the authorization for withdrawal. The Savings Bank is prohibited by regulation from making any loans or granting any lines of credit for the purchase of stock in the Offering, and therefore, will not do so.

**16.** **MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS** 

As soon as practicable after the registration statement prepared by the Holding Company and the Savings Bank has been declared effective by the SEC, and the Bank Regulators have approved the Conversion, cleared the proxy statement to be provided to Voting Members, and cleared the Prospectus and other offering materials for distribution, Order Forms will be distributed to the Eligible Account Holders, Employee Plans, Supplemental Eligible Account Holders and Other Members at their addresses appearing on the records of the Savings Bank as of the Voting Record Date for the purpose of subscribing for shares of Common Stock in the Subscription Offering and will be made available for use by those other Persons to whom a Prospectus is delivered.

Each Order Form will be preceded or accompanied by a Prospectus describing the Holding Company, the Savings Bank, the Common Stock and the Offering. Each Order Form will contain, among other things, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. A specified date by which all Order Forms must be received by the Savings Bank or the Holding Company or its agent, which date shall be at least 20 days but not more than 45 days following the date on which the Order Forms are mailed to Participants by the Holding Company, and which date will constitute the termination of the Subscription Offering unless extended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Subscription Price per share for shares of Common Stock to be sold in the Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. A description of the minimum and maximum number of Subscription Shares that may be subscribed for pursuant to the exercise of subscription rights or otherwise purchased in the Subscription Offering and any Community Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Instructions as to how the recipient of the Order Form is to indicate thereon the number of Subscription Shares for which such recipient elects to subscribe and the available alternative methods of payment therefor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. An acknowledgment that the recipient of the Order Form has received a final copy of the Prospectus before the execution of the Order Form;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. A statement to the effect that all subscription rights are nontransferable, will be void at the end of the Subscription Offering, and can only be exercised by delivering to the Savings Bank or the Holding Company or its agent within the subscription period such properly completed and executed Order Form, together with payment in the full amount of the aggregate purchase price as specified in the Order Form for the shares of Common Stock for which the recipient elects to subscribe in the Subscription Offering (or by authorizing on the Order Form that the Savings Bank withdraw said amount from the subscriber's Deposit Account at the Savings Bank);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. A statement to the effect that the executed Order Form, once received by the Holding Company, may not be modified or amended by the subscriber without the consent of the Holding Company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. Certain legends stating that subscription rights may not be transferred and that shares of the Common Stock are not deposits and are not insured or guaranteed by the federal government, and a certification stating that the subscriber is purchasing the shares for his or her own account.

Notwithstanding the above, the Holding Company reserves the right in its sole discretion to accept or reject orders received on photocopied or facsimiled order forms.

**17.** **UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT** 

In the event Order Forms (a) are not delivered or are not timely delivered by the United States Postal Service, (b) are not received back by the Holding Company or its agent or are received by the Holding Company or its agent after the expiration date specified thereon, (c) are defectively completed or executed, (d) are not accompanied by the full required payment, unless waived by the Holding Company, for the shares of Common Stock subscribed for (including cases in which deposit accounts from which withdrawals are authorized are insufficient to cover the amount of the required payment), or (e) are not mailed pursuant to a "no mail" order placed in effect by the account holder, the subscription rights of the Participant to whom such rights have been granted will lapse as though such Participant failed to return the completed Order Form within the time period specified thereon; *provided, however*, that the Holding Company may, but will not be required to, waive any immaterial irregularity on any Order Form or require the submission of a corrected Order Form or the remittance of full payment for subscribed shares by such date as the Holding Company may specify. The interpretation of the Holding Company of terms and conditions of this Plan and of the Order Forms will be final, subject to the authority of the Bank Regulators.

**18.** **RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES** 

The Holding Company will make reasonable efforts to comply with the securities laws of all States in the United States in which Persons entitled to subscribe for shares of Common Stock pursuant to this Plan reside. However, no such Person will be issued subscription rights or be permitted to purchase shares of Common Stock in the Subscription Offering if such Person resides in a foreign country; or in a State of the United States with respect to which any of the following apply: (i) a small number of Persons otherwise eligible to subscribe for shares under this Plan reside in such state; (ii) the issuance of subscription rights or the offer or sale of shares of Common Stock to such Persons would require the Holding Company under the securities laws of such state, to register as a broker, dealer, salesman or agent or to register or otherwise qualify its securities for sale in such state; and (iii) such registration or qualification would be impracticable for reasons of cost or otherwise.

**19.** **CONTRIBUTION TO THE FOUNDATION** 

As part of the Conversion, the Holding Company and the Savings Bank intend to donate the Foundation Shares and/or cash to the Foundation, in such amounts, subject to regulatory limits, as shall be approved by the Savings Bank's Board of Directors. The contribution to the Foundation is intended to enhance the Savings Bank's existing community reinvestment activities, and to share with the communities in which the Savings Bank conducts business a part of the Savings Bank's financial success as a community minded, financial services institution. The contribution of the Foundation Shares to the Foundation may further this goal as it may enable the community to share in the long-term growth and profitability of the Holding Company and the Savings Bank.

The Foundation will be dedicated to the promotion of charitable purposes including community development, grants or donations to support housing assistance, not-for-profit community groups and other types of organizations or civic-minded projects. The Foundation will annually distribute total grants to assist charitable organizations or to fund projects within its local community of not less than 5% of the average fair market value of Foundation assets each year, less certain expenses. In order to serve the purposes for which it was formed and to maintain its qualification under Code Section 501(c)(3), the Foundation may sell, on an annual basis, a portion of the Foundation Shares.

For five years following the consummation of the Conversion, except for temporary periods resulting from death, resignation, removal or disqualification, (i) at least one director of the Foundation must be an independent director unaffiliated with the Holding Company and the Savings Bank, must be from the Savings Bank's local community, and must have experience with local community charitable organizations and grant making, and (ii) at least one director of the Foundation must also be a director of the Savings Bank. The Foundation's Board of Directors will be responsible for establishing the Foundation's policies, including a conflicts of interest policy, consistent with the stated purposes of the Foundation.

The contribution of Foundation Shares and/or cash to the Foundation as part of the Conversion must be approved by a majority of the total number of votes eligible to be cast by the Voting Members. If the contribution to the Foundation is not approved by the requisite vote of the Voting Members, then the shares of Common Stock consisting of the Foundation Shares that would have been contributed to the Foundation will not be issued and any cash that would have been contributed to the Foundation will be retained the Holding Company and/or the Savings Bank. The decision to proceed with the formation of the Foundation and the grant of Foundation Shares and/or cash to the Foundation will be at the sole discretion of the Savings Bank's Board of Directors.

**20.** **ESTABLISHMENT OF LIQUIDATION ACCOUNT** 

The Savings Bank shall establish, at the time of the Conversion, a Liquidation Account in an amount equal to the Savings Bank's total equity as reflected in the latest statement of financial condition contained in the final Prospectus used in the Offering. Following the Conversion, the Liquidation Account will be maintained by the Savings Bank for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their Deposit Accounts at the Savings Bank. Each Eligible Account Holder and Supplemental Eligible Account Holder shall, with respect to his Deposit Account, hold a related inchoate interest in a portion of the Liquidation Account balance, in relation to his Deposit Account balance at the Eligibility Record Date or Supplemental Eligibility Record Date, respectively, or to such balance as it may be subsequently reduced, as hereinafter provided.

In the unlikely event of a complete liquidation of the Savings Bank (and only in such event), following all liquidation payments to creditors (including those to Account Holders to the extent of their Deposit Accounts) each Eligible Account Holder and Supplemental Eligible Account Holder shall be entitled to receive a liquidating distribution from the Liquidation Account, in the amount of the then adjusted subaccount balance for its Deposit Account then held, before any liquidation distribution may be made to any holders of the Savings Bank's capital stock. No merger, consolidation, purchase of bulk assets with assumption of Deposit Accounts and other liabilities, or similar transactions with an FDIC-insured institution, in which the Savings Bank is not the surviving institution, shall be deemed to be a complete liquidation for this purpose. In such transactions, the Liquidation Account shall be assumed by the surviving institution.

The initial subaccount balance for a Deposit Account held by an Eligible Account Holder and Supplemental Eligible Account Holder shall be determined in accordance with 12 C.F.R. §192.460. Such initial subaccount balance shall not be increased, but shall be subject to downward adjustment as described in 12 C.F.R. §192.470. In the event of such downward adjustment, the subaccount balance shall not be subsequently increased notwithstanding any subsequent increase in the deposit balance of the related Deposit Account.

The establishment and maintenance of the Liquidation Account shall not operate to restrict the use or application of any of the equity accounts of the Savings Bank, except that the Savings Bank shall not declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its equity to be reduced below the amount required for the Liquidation Account.

**21.** **VOTING RIGHTS OF STOCKHOLDERS** 

Following consummation of the Conversion, the holders of the voting capital stock of the Holding Company shall have the exclusive voting rights with respect to the Holding Company.

**22.** **RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION OF COMMON STOCK** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. All shares of Common Stock purchased by Directors or Officers of the Holding Company or the Savings Bank in the Offering shall be subject to the restriction that, except as provided in this Section 22 or as may be approved by the Bank Regulators, no interest in such shares may be sold or otherwise disposed of for value for a period of one year following the date of purchase in the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The restriction on disposition of Subscription Shares set forth above in this Section 22 shall not apply to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Any exchange of such shares in connection with a merger or acquisition involving the Savings Bank or the
Holding Company, as the case may be, which has been approved by the appropriate Federal regulatory agency; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Any disposition of such shares following the death of the person to whom such shares were initially sold
under the terms of this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. With respect to all Subscription Shares subject to restrictions on resale or subsequent disposition, each of the following provisions shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Each certificate representing shares restricted by this Section 22 shall bear a legend giving notice
of the restriction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Instructions shall be issued to the stock transfer agent for the Holding Company not to recognize or effect
any transfer of any certificate or record of ownership of any such shares in violation of the restriction on transfer; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Any shares of capital stock of the Holding Company issued with respect to a stock dividend, stock split,
or otherwise with respect to ownership of outstanding Subscription Shares subject to the restriction on transfer hereunder shall be subject
to the same restriction as is applicable to such Subscription Shares.

**23.** **REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION** 

For a period of three years from the date of consummation of the Conversion, no Officer, Director or their Associates shall purchase, without the prior written approval of the Bank Regulators, any outstanding shares of Common Stock except from a broker-dealer registered with the SEC. This provision shall not apply to negotiated transactions involving more than 1% of the outstanding shares of Common Stock, the exercise of any options pursuant to a stock option plan or purchases of Common Stock made by or held by any Tax-Qualified Employee Stock Benefit Plan or Non-Tax-Qualified Employee Stock Benefit Plan of the Savings Bank or the Holding Company (including the Employee Plans) which may be attributable to any Officer or Director. As used herein, the term "negotiated transaction" means a transaction in which the securities are offered and the terms and arrangements relating to any sale are arrived at through direct communications between the seller or any person acting on its behalf and the purchaser or his investment representative. The term "investment representative" shall mean a professional investment advisor acting as agent for the purchaser and independent of the seller and not acting on behalf of the seller in connection with the transaction.

**24.** **TRANSFER OF DEPOSIT ACCOUNTS** 

Each Person holding a Deposit Account at the Savings Bank at the time of Conversion shall retain an identical Deposit Account at the Savings Bank following Conversion in the same amount and subject to the same terms and conditions (except as to voting and liquidation rights).

**25.** **REGISTRATION AND MARKETING** 

Within the time period required by applicable laws and regulations, the Holding Company will register the securities issued in connection with the Conversion pursuant to the Securities Exchange Act of 1934, as amended, and will not deregister such securities for a period of at least three years thereafter, except that the requirement that registration be maintained for three years may be fulfilled by any successor to the Holding Company. In addition, the Holding Company will use its best efforts to encourage and assist a market maker to establish and maintain a market for the Common Stock and to list those securities on a national or regional securities exchange.

**26.** **TAX RULINGS OR OPINIONS** 

Consummation of the Conversion is expressly conditioned upon prior receipt by the Savings Bank of either a ruling or an opinion of counsel with respect to federal tax laws, and either a ruling, an opinion of counsel, or a letter of advice from their tax advisor with respect to applicable state tax laws, to the effect that consummation of the transactions contemplated by the Conversion and this Plan will not result in a taxable reorganization under the provisions of the applicable codes or otherwise result in any adverse tax consequences to the Holding Company or the Savings Bank, or to the account holders receiving subscription rights before or after the Conversion, except in each case to the extent, if any, that subscription rights are deemed to have value on the date such rights are issued.

**27.** **STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Holding Company and the Savings Bank are authorized to adopt Tax-Qualified Employee Stock Benefit Plans in connection with the Conversion, including without limitation, an ESOP. Existing as well as any newly created Tax-Qualified Employee Stock Benefit Plans may purchase shares of Common Stock in the Offering, to the extent permitted by the terms of such benefit plans and this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Holding Company and the Savings Bank are authorized to enter into employment and other compensation agreements with their executive officers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The Holding Company and the Savings Bank are authorized to adopt stock option plans, restricted stock plans and other Non-Tax-Qualified Employee Stock Benefit Plans no sooner than six months after the completion of the Conversion and Offering, provided that such stock plans conform to any applicable requirements of Federal regulations, including 12 C.F.R. §192.500. 12 C.F.R. §192.500 includes provisions regarding plan size, size of grants, vesting requirements for grants, and stockholder approval requirements, which shall be disclosed in the Prospectus. The Holding Company intends to implement such stock plans after the completion of the Conversion and Offering, subject to any necessary stockholder approvals.

**28.** **RESTRICTIONS ON ACQUISITION OF SAVINGS BANK AND HOLDING COMPANY** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. For a period of three years from the date of consummation of the Conversion, no person, other than the Holding Company, may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of an equity security of the Savings Bank without the prior written consent of the Bank Regulators. Nothing in this Plan shall prohibit the Holding Company from repurchasing its shares in compliance with applicable regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. In connection with the Conversion, the Savings Bank will apply to the OCC to amend its charter and bylaws consistent with 12 C.F.R. §5.22. The Savings Bank's amended charter and bylaws may contain OCC approved anti-takeover provisions, such as a charter provision stipulating that no person, except the Holding Company, for a period of five years following the closing date of the Conversion, may directly or indirectly acquire or offer to acquire the beneficial ownership of more than 10% of any class of equity security of the Savings Bank, without the prior written approval of the OCC. The Savings Bank's amended charter may also provide that for a period of five years following the closing date of the Conversion, shares beneficially owned in violation of the above-described charter provision shall not be entitled to vote and shall not be voted by any person or counted as voting stock in connection with any matter submitted to stockholders for a vote. In addition, the Savings Bank's amended charter may also provide that special meetings of the stockholders relating to changes in control or amendment of the charter may only be called by the Board of Directors, and shareholders shall not be permitted to cumulate their votes for the election of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The articles of incorporation of the Holding Company may contain a provision stipulating that in no event shall the record owners of any outstanding shares of Common Stock that are beneficially owned by a person who beneficially owns in excess of 10% of such outstanding shares be entitled or permitted to any vote with respect to any shares held in excess of 10%. In addition, the articles of incorporation and bylaws of the Holding Company may contain provisions that prohibit cumulative voting for the election of directors, provide for staggered terms for directors, limit the calling of special meetings, require supermajority shareholder votes to amend certain provisions of the articles of incorporation, allow the Board of Directors to issue preferred stock and increase the amount of authorized capital stock without shareholder approval, provide certain qualifications and restrictions for election as director, certain advance notice requirements for shareholder proposals and nominations and a fair price provision for certain business combinations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. For the purposes of this Section 28:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The term "person" includes an individual, a firm, a corporation or other entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The term "offer" includes every offer to buy or acquire, solicitation of an offer to sell,
tender offer for, or request or invitation for tenders of, a security or interest in a security for value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The term "acquire" includes every type of acquisition, whether effected by purchase, exchange,
operation of law or otherwise; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The term "security" includes non-transferable subscription rights issued pursuant to a plan
of conversion as well as a "security" as defined in Section 2(a)(1) of the Securities Act of 1933, as amended.

**29.** **PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Holding Company shall comply with any applicable regulation in connection with the repurchase of any shares of its capital stock following consummation of the Conversion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Savings Bank shall not declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its regulatory capital to be reduced below (i) the amount required for the Liquidation Account, or (ii) applicable federal regulatory capital requirements.

**30.** **CONSUMMATION OF CONVERSION AND EFFECTIVE DATE** 

The effective date of the Conversion shall be the date of closing on the sale of all shares of the Common Stock after all requisite regulatory and Member approvals have been obtained, all applicable waiting periods have expired, and sufficient subscriptions and orders for Subscription Shares have been received. The closing on the sale of all shares of Common Stock sold in the Offering shall occur simultaneously on the effective date of the closing.

**31.** **EXPENSES OF CONVERSION** 

The Savings Bank and the Holding Company may retain and pay for the services of legal, financial and other advisors to assist in connection with any or all aspects of the Conversion, including the Offering, and such parties shall use their best efforts to assure that such expenses are reasonable.

**32.** **AMENDMENT OR TERMINATION OF PLAN** 

If deemed necessary or desirable, this Plan may be substantively amended as a result of comments from the Bank Regulators or the SEC or otherwise at any time before the solicitation of proxies from Voting Members to vote on this Plan by the Board of Directors of the Savings Bank, and at any time thereafter by the Board of Directors of the Savings Bank with the concurrence of the Bank Regulators. Any amendment to this Plan made after approval by Voting Members with the approval of the Bank Regulators shall not require further approval by Voting Members unless otherwise required by the Bank Regulators. The Board of Directors of the Savings Bank may terminate this Plan at any time before the Meeting of Members to vote on this Plan, and at any time thereafter with the concurrence of the Bank Regulators.

By adopting this Plan, Voting Members of the Savings Bank authorize the Board of Directors of the Savings Bank to amend or terminate this Plan under the circumstances set forth in this Section 32.

**33.** **CONDITIONS TO CONVERSION** 

Consummation of the Conversion pursuant to this Plan is expressly conditioned upon the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Prior receipt by the Savings Bank of rulings of the U.S. Internal Revenue Service and the state taxing authorities, or opinions of counsel or tax advisers as described in Section 26;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The issuance of at least the minimum number of Subscription Shares offered for sale in the Offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The completion of the Conversion within the time period specified in Section 3.

**34.** **INTERPRETATION** 

All interpretations of this Plan, and the application of its provisions to particular circumstances, by a majority of the Board of Directors of the Savings Bank shall be final, subject to the authority of the Bank Regulators.

Adopted: March 6, 2023

## Exhibit 3.1

**Exhibit 3.1**

**ARTICLES OF INCORPORATION**

**PFS BANCORP, INC.**

The undersigned, Eric J. Heagy, whose address is 1730 Fourth Street, Peru, Illinois 61354, being at least eighteen years of age, acting as incorporator, does hereby form a corporation under the general laws of the State of Maryland, having the following Articles of Incorporation (the "Articles"):

**ARTICLE 1. Name.** The name of the corporation is PFS Bancorp, Inc. (herein, the "Corporation").

**ARTICLE 2. Principal Office.** The address of the principal office of the Corporation in the State of Maryland is c/o CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 820, Baltimore, Maryland 21202.

**ARTICLE 3. Purpose.** The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force.

**ARTICLE 4. Resident Agent.** The name and address of the registered agent of the Corporation in the State of Maryland is CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 820, Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.

**ARTICLE 5. Capital Stock**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Authorized Stock.** The total number of shares of capital stock of all classes that the Corporation has authority to issue is fifteen million (15,000,000) shares, consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Fourteen million (14,000,000) shares of common stock, par value one cent ($0.01) per share (the "Common Stock"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. One million (1,000,000) shares of preferred stock, par value one cent ($0.01) per share (the "Preferred Stock").

The aggregate par value of all the authorized shares of capital stock is one hundred fifty thousand dollars ($150,000.00). Except to the extent required by governing law, rule or regulation, the shares of capital stock may be issued from time to time by the Board of Directors without further approval of the stockholders of the Corporation. The Corporation shall have the authority to purchase its capital stock out of funds lawfully available therefor, which funds shall include, without limitation, the Corporation's unreserved and unrestricted capital surplus. The Board of Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue. For the purposes of these Articles, the term "Whole Board" shall mean the total number of directors that the Corporation would have if there were no vacancies on the Board of Directors at the time any such resolution is presented to the Board of Directors for adoption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Common Stock.** Except as provided under the terms of any series of Preferred Stock and as limited by Section D of this Article 5, the exclusive voting power shall be vested in the Common Stock. Except as otherwise provided in these Articles, each holder of the Common Stock shall be entitled to one vote for each share of Common Stock standing in the holder's name on the books of the Corporation. Subject to any rights and preferences of any series of Preferred Stock, holders of Common Stock shall be entitled to such dividends as may be declared by the Board of Directors out of funds lawfully available therefor. Upon the liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them, respectively, after: (i) payment or provision for payment of the Corporation's debts and liabilities; and (ii) distributions or provisions for distributions to holders of any class or series of stock having a preference over the Common Stock in the liquidation, dissolution or winding up of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Preferred Stock.** The Board of Directors is hereby expressly authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in series, to establish from time to time the number of shares to be included in each such series, and to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of the shares of each such series. The number of authorized shares of the Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required by law or pursuant to the terms of such Preferred Stock. The power of the stockholders to increase or decrease the authorized shares of the Preferred Stock shall not limit any of the powers of the Board of Directors provided under these Articles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Restrictions on Voting Rights of the Corporation's Equity Securities.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Notwithstanding any other provision of these Articles, in no event shall the record owner (or if more than one record owner, all such record owners taken as a group) of any outstanding Common Stock that is beneficially owned, directly or indirectly, by a Person who, as of any record date for the determination of stockholders entitled to vote on any matter, beneficially owns in excess of 10% of the then-outstanding shares of Common Stock (the "Limit"), be entitled, or permitted to any vote in respect of the shares held in excess of the Limit. The number of votes that may be cast by any particular record owner by virtue of the provisions hereof in respect of Common Stock beneficially owned by such Person owning shares in excess of the Limit (a "Holder in Excess") shall be a number equal to the total number of votes that a single record owner of all Common Stock owned by such Holder in Excess would be entitled to cast after giving effect to the provisions hereof, multiplied by a fraction, the numerator of which is the number of shares of such class or series that are both (i) beneficially owned by such Holder in Excess and (ii) owned of record by such particular record owner, and the denominator of which is the total number of shares of Common Stock beneficially owned by such Holder in Excess. The provisions of this Section D of this Article 5 shall not be applicable if, before the Holder in Excess acquired beneficial ownership of such shares in excess of the Limit, such acquisition was approved by a majority of the "Unaffiliated Directors." For this purpose, the term "Unaffiliated Director" means any member of the Board of Directors who is unaffiliated with the Holder in Excess and was a member of the Board of Directors before the time that the Holder in Excess became such, and any director who is thereafter chosen to fill any vacancy on the Board of Directors and who is elected and who, in either event, is unaffiliated with the Holder in Excess and in connection with his or her initial assumption of office is recommended for appointment or election by a majority of the Unaffiliated Directors then serving on the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The following definitions shall apply to this Section D of this Article 5.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) An "affiliate" of a specified Person shall mean a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person specified.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "Beneficial ownership" shall be determined pursuant to Rule 13d-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934 (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded
and there shall be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3 as in effect on December 31,
2021; provided, however, that a Person shall, in any event, also be deemed the "beneficial owner" of any Common Stock:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) that such Person or any of its affiliates beneficially owns, directly or indirectly; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) that such Person or any of its affiliates has (i) the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or understanding (but shall not be deemed to be the beneficial owner
of any voting shares solely by reason of an agreement, contract, or other arrangement with the Corporation to effect any transaction of
the type described in clause (i) or (ii) of the first sentence of Article 9 hereof) or upon the exercise of conversion
rights, exchange rights, warrants, or options or otherwise, or (ii) sole or shared voting or investment power with respect thereto
pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of
any voting shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation
of proxies for such meeting, with respect to shares of which neither such Person nor any such affiliate is otherwise deemed the beneficial
owner); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) that are beneficially owned, directly or indirectly, by any other Person with which such first mentioned Person or any of its affiliates
acts as a partnership, limited partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation; and provided further, however, that (i) no
director or officer of the Corporation (or any affiliate of any such director or officer) shall, solely by reason of any or all of such
directors or officers acting in their capacities as such, be deemed, for any purposes hereof, to beneficially own any Common Stock beneficially
owned by any other such director or officer (or any affiliate thereof), and (ii) neither any employee stock ownership or similar
plan of the Corporation or any subsidiary of the Corporation nor any trustee with respect thereto (or any affiliate of such trustee) shall,
solely by reason of such capacity of such trustee, be deemed, for any purposes hereof, to beneficially own any Common Stock held under
any such plan. For purposes of computing the percentage of beneficial ownership of Common Stock of a Person, the outstanding Common Stock
shall include shares deemed owned by such Person through application of this subsection but shall not include any other shares of Common
Stock that may be issuable by the Corporation pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or
otherwise. For all other purposes, the outstanding Common Stock shall include only Common Stock then outstanding and shall not include
any Common Stock that may be issuable by the Corporation pursuant to any agreement, or upon the exercise of conversion rights, warrants
or options, or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A "Person" shall mean any individual, firm, corporation, or other entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Board of Directors shall have the power to construe and apply the provisions of this Section D and to make all determinations
necessary or desirable to implement such provisions including, but not limited to, matters with respect to (i) the number of shares
of Common Stock beneficially owned by any Person, (ii) whether a Person is an affiliate of another, (iii) whether a Person has
an agreement, arrangement, or understanding with another as to the matters referred to in the definition of beneficial ownership, (iv) the
application of any other definition or operative provision of this Section D to the given facts, or (v) any other matter relating
to the applicability or effect of this Section D.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The Board of Directors shall have the right to demand that any Person reasonably believed by the Board of Directors to be a Holder in Excess (or holder of record of Common Stock beneficially owned by any Holder in Excess) supply the Corporation with complete information as to (i) the record owner(s) of all shares beneficially owned by such Holder in Excess, and (ii) any other factual matter relating to the applicability or effect of this section as may reasonably be requested of such Holder in Excess. The Board of Directors shall further have the right to receive from any Holder in Excess reimbursement for all expenses incurred by the Board in connection with its investigation of any matters relating to the applicability or effect of this section on such Holder in Excess, to the extent such investigation is deemed appropriate by the Board of Directors as a result of the Holder in Excess refusing to supply the Corporation with the information described in the previous sentence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Any constructions, applications, or determinations made by the Board of Directors pursuant to this Section D in good faith and on the basis of such information and assistance as was then reasonably available for such purpose, shall be conclusive and binding upon the Corporation and its stockholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. If any provision (or portion thereof) of this Section D shall be found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this Section D shall remain in full force and effect, and shall be construed as if such invalid, prohibited or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the Corporation and its stockholders that each such remaining provision (or portion thereof) of this Section D remain, to the fullest extent permitted by law, applicable and enforceable as to all stockholders, including Holders in Excess, notwithstanding any such finding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Majority Vote for Certain Actions.** With respect to those actions as to which any provision of the Maryland General Corporation Law (the "MGCL") requires stockholder authorization by a greater proportion than a majority of the total number of shares of all classes of capital stock or of the total number of shares of any class of capital stock, any such action shall be valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes outstanding and entitled to vote thereon, except as otherwise provided in these Articles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F.** **Quorum.** Except as otherwise provided by law or expressly provided in these Articles, the presence, in person or by proxy, of the holders of record of shares of capital stock of the Corporation entitling the holders thereof to cast a majority of the votes (after giving effect, if required, to the provisions of Article 5, Section D) entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote shall constitute a quorum at all meetings of the stockholders, and every reference in these Articles to a majority or other proportion of capital stock (or the holders thereof) for purposes of determining any quorum requirement or any requirement for stockholder consent or approval shall be deemed to refer to such majority or other proportion of the votes (or the holders thereof) then entitled to be cast in respect of such capital stock.

**ARTICLE 6. Preemptive Rights and Appraisal Rights.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Preemptive Rights.** Except for preemptive rights approved by the Board of Directors pursuant to a resolution approved by a majority of the directors then in office, no holder of the capital stock of the Corporation or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued capital stock of any class or series, or any unissued bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for capital stock of any class or series or carrying any right to purchase stock of any class or series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Appraisal Rights.** Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors, pursuant to a resolution approved by a majority of the directors then in office, shall determine that such rights apply with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.

**ARTICLE 7. Directors.** The following provisions are made a part of these Articles for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Management of the Corporation.** The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. All powers of the Corporation may be exercised by or under the authority of the Board of Directors, except as conferred on or as reserved to the stockholders by law or by these Articles or the Bylaws of the Corporation; provided, however, that any limitations on the Board of Directors' management or direction of the affairs of the Corporation shall reserve the directors' full power to discharge their fiduciary duties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Number, Class and Terms of Directors; No Cumulative Voting.** The number of directors constituting the Board of Directors of the Corporation shall initially be six (6), which number may be increased or decreased in the manner provided in the Bylaws of the Corporation; provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter in force. The directors, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided into three classes, with the term of office of the first class ("Class I") to expire at the conclusion of the first annual meeting of stockholders, the term of office of the second class ("Class II") to expire at the conclusion of the annual meeting of stockholders one year thereafter and the term of office of the third class ("Class III") to expire at the conclusion of the annual meeting of stockholders two years thereafter, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election or for such shorter period of time as the Board of Directors may determine, with each director to hold office until his or her term expires and until his or her successor shall have been duly elected and qualified.

The names of the individuals who will serve as the initial directors of the Corporation until their successors are elected and qualify are as follows:

---

| |
|:---|
| &nbsp;&nbsp;**Term to Expire in 2024**: |
| &nbsp;&nbsp;Cynthia L. Kurkowski |
| &nbsp;&nbsp;Dale R. Tieman |
| &nbsp;&nbsp;**Term to Expire in 2025**: |
| &nbsp;&nbsp;Jonathan F. Brandt |
| &nbsp;&nbsp;Michael J. Rooney |
| &nbsp;&nbsp;**Term to Expire in 2026** |
| &nbsp;&nbsp;James J. Brady, IV |
| &nbsp;&nbsp;Eric J. Heagy |

---

Stockholders shall not be permitted to cumulate their votes in the election of directors. A plurality of all the votes cast at a meeting at which a quorum is present is sufficient to elect a director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Vacancies.** Any vacancies in the Board of Directors may be filled in the manner provided in the Bylaws of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Removal.** Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5 hereof) voting together as a single class.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Stockholder Proposals and Nominations of Directors.** Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation. Stockholder proposals to be presented in connection with a special meeting of stockholders shall be presented by the Corporation only to the extent required by Section 2-502 of the MGCL and the Bylaws of the Corporation.

**ARTICLE 8. Bylaws.** The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the Whole Board. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. In addition to any vote of the holders of any class or series of stock of the Corporation required by law or by these Articles, the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5 hereof), voting together as a single class, shall be required for the adoption, amendment or repeal of any provisions of the Bylaws of the Corporation by the stockholders.

**ARTICLE 9. Evaluation of Certain Offers.** The Board of Directors, when evaluating (i) any offer of another Person (as defined below) to (A) make a tender or exchange offer for any equity security of the Corporation, (B) merge or consolidate the Corporation with another corporation or entity, or (C) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation or (ii) any other actual or proposed transaction that would or may involve a change in control of the Corporation (whether by purchases of shares of stock or any other securities of the Corporation in the open market or otherwise, tender offer, merger, consolidation, share exchange, dissolution, liquidation, sale of all or substantially all of the assets of the Corporation, proxy solicitation or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of the Corporation and its stockholders and in making any recommendation to the Corporation's stockholders, give due consideration to all relevant factors, including, but not limited to: (A) the economic effect, both immediate and long-term, upon the Corporation's stockholders, including stockholders, if any, who do not participate in the transaction; (B) the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, the Corporation and its subsidiaries and on the communities in which the Corporation and its subsidiaries operate or are located; (C) whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of the Corporation; (D) whether a more favorable price could be obtained for the Corporation's stock or other securities in the future; (E) the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect the employees of the Corporation and its subsidiaries; (F) the future value of the stock or any other securities of the Corporation or the other entity to be involved in the proposed transaction; (G) any antitrust or other legal and regulatory issues that are raised by the proposal; (H) the business and historical, current or expected future financial condition or operating results of the other entity to be involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the proposed transaction; and (I) the ability of the Corporation to fulfill its objectives as a financial institution holding company and on the ability of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable statutes and regulations. If the Board of Directors determines that any proposed transaction of the type described in clause (i) or (ii) of the immediately preceding sentence should be rejected, it may take any lawful action to defeat such transaction, including, but not limited to, any or all of the following: advising stockholders not to accept the proposal; instituting litigation against the party making the proposal; filing complaints with governmental and regulatory authorities; acquiring the stock or any of the securities of the Corporation; selling or otherwise issuing authorized but unissued stock or other securities or granting options or rights with respect thereto; and obtaining a more favorable offer from another individual or entity. This Article 9 sets forth certain factors that may be considered by the Board of Directors, but does not create any implication concerning the factors that must be considered, or any other factors that may or may not be considered, by the Board of Directors regarding any proposed transaction of the type described in clause (i) or (ii) of the first sentence of this Article 9.

For purposes of this Article 9, a "Person" shall include an individual, a group acting in concert, a corporation, a partnership, an association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group or entity formed for the purpose of acquiring, holding or disposing of securities.

**ARTICLE 10. Indemnification, etc. of Directors and Officers.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Indemnification.** The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Procedure.** If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both (i) an undertaking as required by law to repay such advances if it shall ultimately be determined that the standard of conduct has not been met and (ii) a written affirmation by the indemnitee of his good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination before the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise shall be on the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Non-Exclusivity.** The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation's Bylaws, any agreement, any vote of stockholders or the Board of Directors, or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Insurance.** The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the MGCL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Miscellaneous.** The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A and B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director or officer and shall inure to the benefit of the indemnitee's heirs, executors and administrators.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F.** **Limitations Imposed by Federal Law.** Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made by the Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law, including, without limitation, Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.

Any repeal or modification of this Article 10 shall not in any way diminish any rights to indemnification or advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this Article 10 is in force.

**ARTICLE 11. Limitation of Liability.** An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders for money damages, except (A) to the extent that it is proved that the Person actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (B) to the extent that a judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the proceeding that the Person's action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.

Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or modification.

**ARTICLE 12**: **Selection of Forum.** Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the MGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the State of Maryland, in all cases subject to the court's having personal jurisdiction over the indispensible parties named as defendants. The provisions of this Article 12 shall not apply to claims arising under the federal securities laws. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article 12.

**ARTICLE 13. Amendment of the Articles of Incorporation.** The Corporation reserves the right to amend or repeal any provision contained in these Articles in the manner prescribed by the MGCL, including any amendment altering the terms or contract rights, as expressly set forth in these Articles, of any of the Corporation's outstanding stock by classification, reclassification or otherwise, and no stockholder approval shall be required if the approval of stockholders is not required for the proposed amendment or repeal by the MGCL, and all rights conferred upon stockholders are granted subject to this reservation.

The Board of Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

No proposed amendment or repeal of any provision of these Articles shall be submitted to a stockholder vote unless the Board of Directors shall have (1) approved the proposed amendment or repeal, (2) determined that it is advisable, and (3) directed that it be submitted for consideration at either an annual or special meeting of the stockholders pursuant to a resolution approved by the Board of Directors. Any proposed amendment or repeal of any provision of these Articles may be abandoned by the Board of Directors at any time before its effective time upon the adoption of a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number).

The amendment or repeal of any provision of these Articles shall be approved by at least two-thirds (2/3) of all votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article 5 of these Articles), except that the proposed amendment or repeal of any provision of these Articles need only be approved by the vote of a majority of all the votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article 5 of these Articles) if the amendment or repeal of such provision is approved by the Board of Directors pursuant to a resolution approved by at least two-thirds (2/3) of the Whole Board (rounded up to the nearest whole number).

Notwithstanding any other provision of these Articles or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by these Articles, the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5), voting together as a single class, shall be required to amend or repeal this Article 13, Section C, D, E or F of Article 5, Article 7 (other than the removal of the list of initial directors), Article 8, Article 9, Article 10, Article 11 or Article 12.

**ARTICLE 14. Name and Address of Incorporator.** The name and mailing address of the sole incorporator are as follows:

Eric J. Heagy

1730 Fourth Street

Peru, Illinois 61354

*[Signature Page Immediately Follows]*

I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a corporation under the laws of the State of Maryland, do make, file and record these Articles of Incorporation, do certify that the facts herein stated are true, and, accordingly, have hereto set my hand this 22<sup>nd</sup> day of February, 2023.

---

| |
|:---|
| /s/ Eric J. Heagy |
| Eric J. Heagy |
| Incorporator |

---

## Exhibit 3.2

**Exhibit 3.2**

**PFS BANCORP, INC.**

**BYLAWS**

**ARTICLE I**

**STOCKHOLDERS**

**Section 1. Annual Meeting.**

The Corporation shall hold an annual meeting of its stockholders to elect directors and to transact any other business within its powers, at such place, on such date and at such time as the Board of Directors shall fix. Failure to hold an annual meeting does not invalidate the Corporation's existence or affect any otherwise valid corporate act.

**Section 2. Special Meetings.**

Special meetings of stockholders of the Corporation may be called by the President, the Chief Executive Officer or the Chairperson of the Board or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies on the Board of Directors (hereinafter the "Whole Board"). Special meetings of the stockholders shall be called by the Secretary at the request of stockholders only on the written request of stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting. Such written request shall state the purpose or purposes of the meeting and the matters proposed to be acted upon at the meeting, and shall be delivered at the principal office of the Corporation addressed to the President or the Secretary. The Secretary shall inform the stockholders who make the request of the reasonably estimated cost of preparing and mailing a notice of the meeting and, upon payment of these costs to the Corporation, notify each stockholder entitled to notice of the meeting. The Board of Directors shall have the sole power to fix (i) the record date for determining stockholders entitled to request a special meeting of stockholders and the record date for determining stockholders entitled to notice of and to vote at the special meeting and (ii) the date, time and place of the special meeting and the means of remote communication, if any, by which stockholders and proxy holders may be considered present in person and may vote at the special meeting.

**Section 3. Notice of Meetings; Adjournment or Postponement.**

Not less than ten (10) nor more than ninety (90) days before each stockholders' meeting, the Secretary shall give notice of the meeting in writing or by electronic transmission to each stockholder entitled to vote at the meeting and to each other stockholder entitled to notice of the meeting. The notice shall state the time and place of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and may vote at the meeting, and, if the meeting is a special meeting, or notice of the purpose is required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally delivered to the stockholder, left at the stockholder's residence or usual place of business, mailed to the stockholder at the stockholder's address as it appears on the records of the Corporation, or transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. If the Corporation has received a request from a stockholder that notice not be sent by electronic transmission, the Corporation may not provide notice to the stockholder by electronic transmission. Notwithstanding the foregoing provisions, each person who is entitled to notice waives notice if such person, before or after the meeting, delivers a written waiver or waiver by electronic transmission which is filed with the records of the stockholders' meetings, or if such person is present at the meeting in person or by proxy.

A meeting of stockholders convened on the date for which it was called may be adjourned from time to time without further notice to a date not more than one hundred twenty (120) days after the original record date. A meeting may be adjourned by a resolution adopted by a majority of the Whole Board or by the vote of a majority of the stockholders present at the meeting, whether or not a quorum is present at such meeting. At any adjourned meeting, any business may be transacted that might have been transacted at the original meeting.

A meeting of stockholders may be postponed to a date not more than one hundred twenty (120) days after the original record date. A meeting may be postponed by a resolution adopted by a majority of the Whole Board. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten (10) days before such date and otherwise in the manner set forth in this Section 3. At any postponed meeting, any business may be transacted that might have been transacted at the meeting as originally scheduled.

If a meeting shall be adjourned or postponed to a date not more than one hundred twenty (120) days after the original record date, a new record date need not be established, and the original record date may be used for the purpose of determining which stockholders are entitled to notice of, and to vote at, the adjourned or postponed meeting. Any writing authorizing another person to act as proxy at a meeting of stockholders shall remain valid for use at any adjournment or postponement of such meeting unless such proxy is revoked or a later dated proxy is provided by such stockholder.

As used in these Bylaws, the term "electronic transmission" shall have the meaning given to such term by Section 1-101 of the Maryland General Corporation Law (the "MGCL") or any successor provision.

**Section 4. Quorum.**

Unless the Articles of Incorporation provide otherwise, where a separate vote by a class or classes is required, a majority of the shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter.

If a quorum shall fail to attend any meeting, the chairperson of the meeting or the holders of a majority of the shares of stock who are present at the meeting, in person or by proxy, may, in accordance with Section 3 of this Article I, adjourn the meeting to another place, date or time.

**Section 5. Organization and Conduct of Business.**

The Chairperson of the Board of Directors or the Vice Chairperson of the Board, if any, or in their absence, the Chief Executive Officer, or in his or her absence, such other person as may be designated by a majority of the Whole Board, shall call to order any meeting of the stockholders and act as chairperson of the meeting. In the absence of the Secretary, the secretary of the meeting shall be such person as the chairperson of the meeting appoints. The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her to be in order.

**Section 6. Advance Notice Provisions for Business to be Transacted at Annual Meetings and Elections of Directors.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) At any annual meeting of the stockholders, unless otherwise required by law, only such business shall be conducted as shall have been brought before the meeting: (i) as specified in the Corporation's notice of the meeting; (ii) by or at the direction of the Board of Directors; or (iii) by any stockholder of the Corporation who (a) is a stockholder of record on the date such stockholder gives the notice provided for in this Section 6(a) and on the record date for the determination of stockholders entitled to vote at such annual meeting, and (b) complies with the notice procedures set forth in this Section 6(a). For business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of the immediately preceding sentence, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must otherwise be a proper matter for action by stockholders.

To be timely, a stockholder's notice must be delivered or mailed to and received by the Secretary at the principal executive office of the Corporation not less than ninety (90) days nor more than one hundred (100) days before the anniversary of the prior year's annual meeting of stockholders; *provided*, *however,* that if the date of the annual meeting is advanced more than thirty (30) days before the anniversary of the prior year's annual meeting of stockholders, such written notice shall be timely only if delivered or mailed to and received by the Secretary of the Corporation at the principal executive office of the Corporation no earlier than the day on which public disclosure of the date of such annual meeting is first made and not later than the 10<sup>th</sup> day following the earlier of the day notice of the meeting was mailed to stockholders or such public disclosure was made.

The advance notice periods provided in this Section 6(a), once established by the initial notice or public disclosure of a date for the annual meeting of stockholders, shall remain in effect regardless of whether a subsequent notice or public disclosure shall provide that the meeting shall have been adjourned or that the date of the meeting shall have been postponed or otherwise changed from the date provided in the initial notice or public disclosure.

A stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii) the name and address of such stockholder as they appear on the Corporation's books and of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and such beneficial owner; (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business; and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

Notwithstanding anything in these Bylaws to the contrary, no business shall be brought before or conducted at an annual meeting except in accordance with the provisions of this Section 6(a). The chairperson of the meeting shall, if the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 6(a) and, if he or she should so determine, he or she shall so declare to the meeting and any such business so determined to be not properly brought before the meeting shall not be transacted.

At any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting pursuant to the Corporation's notice of the meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Only persons who are nominated according with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders at which directors are to be elected only: (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who (1) is a stockholder of record on the date such stockholder gives the notice provided for in this Section 6(b) and on the record date for the determination of stockholders entitled to vote at such meeting and (2) complies with the notice procedures set forth in this Section 6(b) and the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made by timely notice in writing to the Secretary of the Corporation.

To be timely, a stockholder's notice must be delivered or mailed to and received by the Secretary at the principal executive office of the Corporation not less than ninety (90) days nor more than one hundred (100) days before the anniversary of the prior year's annual meeting of stockholders; *provided*, *however,* that if the date of the annual meeting is advanced more than thirty (30) days before the anniversary of the prior year's annual meeting of stockholders, such written notice shall be timely only if delivered or mailed to and received by the Secretary of the Corporation at the principal executive office of the Corporation no earlier than the day on which public disclosure of the date of such annual meeting is first made and not later than the tenth (10<sup>th</sup>) day following the earlier of the day notice of the meeting was mailed to stockholders or such public disclosure was made.

The advance notice periods provided in this Section 6(b), once established by the initial notice or public disclosure of a date for the annual meeting of stockholders, shall remain in effect regardless of whether a subsequent notice or public disclosure shall provide that the meeting shall have been adjourned or that the date of the meeting shall have been postponed or otherwise changed from the date provided in the initial notice or public disclosure.

A stockholder's notice must be in writing and set forth (i) as to each person whom the stockholder proposes to nominate for election as a director, (a) all information relating to such person that would indicate such person's qualification to serve on the Board of Directors of the Corporation; (b) an affidavit that such person would not be disqualified under the provisions of Article II, Section 12 of these Bylaws; (c) such information relating to such person that is required to be disclosed in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, or any successor rule or regulation; and (d) a written consent of each proposed nominee to be named as a nominee, including in proxy materials relating to the meeting to nominate the nominee(s), and to serve as a director if elected; and (ii) as to the stockholder giving the notice: (a) the name and address of such stockholder as they appear on the Corporation's books and of the beneficial owner, if any, on whose behalf the nomination is made; (b) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and such beneficial owner; (c) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder; (d) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; (e) whether such stockholder intends to solicit proxies in support of director nominees other than the Corporation's nominees in accordance with the Exchange Act and the rules and regulations promulgated thereunder; and (f) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act or any successor rule or regulation. Upon request by the Corporation, if a stockholder provides notice of its intent to solicit proxies in support of director nominees other than the Corporation's nominees in accordance with the Exchange Act and the rules and regulations promulgated thereunder, the stockholder shall deliver to the Corporation, no later than five (5) business days prior to the applicable meeting of stockholders, reasonable evidence that it has met the requirements of the Exchange Act and the rules and regulations promulgated thereunder. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this Section 6(b). The chairperson of the meeting shall, if the facts so warrant, determine that a nomination was not made in accordance with such provisions and, if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded. Furthermore, unless otherwise required by law, if any stockholder (i) provides notice pursuant to Rule 14a-19(b) under the Exchange Act and (ii) subsequently fails to comply with any requirements of Rule 14a-19 under the Exchange Act or any other rules or regulations thereunder, then the Corporation shall disregard any proxies or votes solicited for such nominees and such nomination shall be disregarded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) For purposes of subsections (a) and (b) of this Section 6, the term "public disclosure" shall mean disclosure (i) in a press release issued through a nationally-recognized news service, (ii) in a document publicly filed or furnished by the Corporation with the United States Securities and Exchange Commission or (iii) on a website maintained by the Corporation. The timely notice requirements provided in subsections (a) and (b) of this Section 6 shall apply to all stockholder nominations for election as a director and all stockholder proposals for business to be conducted at an annual meeting regardless of whether such proposal is submitted for inclusion in the Corporation's proxy materials pursuant to Rule 14a-8 of Regulation 14A under the Exchange Act or whether such nomination is submitted for inclusion in the Corporation's proxy materials pursuant to Rule 14a-19 of Regulation 14A under the Exchange Act.

**Section 7. Proxies and Voting.**

Unless the Articles of Incorporation provide for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding share of capital stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of stockholders; however, a share is not entitled to be voted if any installment payable on it is overdue and unpaid. In all elections for directors, directors shall be determined by a plurality of the votes cast, and except as otherwise required by law or as provided in the Articles of Incorporation, all other matters voted on by stockholders shall be determined by a majority of the votes cast on the matter.

A stockholder may vote the capital stock the stockholder owns of record either in person or by proxy. A stockholder may sign a writing authorizing another person to act as proxy. Signing may be accomplished by the stockholder or the stockholder's authorized agent signing the writing or causing the stockholder's signature to be affixed to the writing by any reasonable means, including facsimile signature. A stockholder may authorize another person to act as proxy by transmitting, or authorizing the transmission of, an authorization for the person to act as the proxy to the person authorized to act as proxy or to any other person authorized to receive the proxy authorization on behalf of the person authorized to act as the proxy, including a proxy solicitation firm or proxy support service organization. The authorization may be transmitted by a telegram, cablegram, datagram, electronic mail or any other electronic or telephonic means. Unless a proxy provides otherwise, a proxy is not valid more than 11 months after its date. A proxy is revocable by a stockholder at any time without condition or qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for as long as it is coupled with an interest. The interest with which a proxy may be coupled includes an interest in the capital stock to be voted under the proxy or another general interest in the Corporation or its assets or liabilities.

**Section 8. Conduct of Voting**

The Board of Directors shall, in advance of any meeting of stockholders, appoint one or more persons as inspectors of election, to act at the meeting or any adjournment thereof and make a written report thereof, in accordance with applicable law. If one or more inspectors are not so elected, the chairperson of the meeting shall make such appointment at the meeting of stockholders. At all meetings of stockholders, the proxies and ballots shall be received, and all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided or determined by the inspector of election. All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or his or her proxy or the chairperson of the meeting, a written vote shall be taken. Every written vote shall be taken by ballot, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. No candidate for election as a director at a meeting shall serve as an inspector at such meeting.

**Section 9. Control Share Acquisition Act.**

Notwithstanding any other provision of the Articles of Incorporation or these Bylaws, Title 3, Subtitle 7 of the MGCL (or any successor statute) shall not apply to any acquisition by any person of shares of capital stock of the Corporation. This Section 9 may be repealed by a majority of the Whole Board, in whole or in part, at any time, whether before or after an acquisition of Control Shares (as defined in Section 3-701(d) of the MGCL, or any successor provision) and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent Control Share Acquisition (as defined in Section 3-701(d) of the MGCL, or any successor provision).

**ARTICLE II<br> BOARD OF DIRECTORS**

**Section 1. General Powers, Number and Term of Office.**

The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation shall, by virtue of the Corporation's election made hereby to be governed by Section 3-804(b) of the MGCL, be fixed from time to time exclusively by vote of the Board of Directors; provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter in force. The Board of Directors shall annually elect a Chairperson of the Board from among its members and shall designate the Chairperson of the Board or his or her designee to preside at its meetings. The Board of Directors may also annually elect a Vice Chairperson. In the absence of the Chairperson of the Board, the Vice Chairperson of the Board shall preside at the meetings of the Board of Directors, and in his or her absence such other person as may be designated by a majority of the Whole Board shall preside at the meetings of the Board of Directors.

The directors, other than those who may be elected by the holders of any series of preferred stock of the Corporation, shall be divided into three classes, as nearly equal in number as reasonably possible, with the term of office of the first class to expire at the first annual meeting of stockholders, the term of office of the second class to expire at the annual meeting of stockholders one year thereafter and the term of office of the third class to expire at the annual meeting of stockholders two years thereafter, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, commencing with the first annual meeting, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election or for such shorter period of time as the Board of Directors may determine, with each director to hold office until his or her successor shall have been duly elected and qualified.

**Section 2. Vacancies and Newly Created Directorships.**

By virtue of the Corporation's election made hereby to be subject to Section 3-804(c) of the MGCL, any vacancies in the Board of Directors resulting from an increase in the size of the Board of Directors or the death, resignation or removal of a director may be filled only by the affirmative vote of two-thirds (2/3) of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualifies. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

**Section 3. Regular Meetings.**

Regular meetings of the Board of Directors shall be held at such place or places or by means of remote communication, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required. Any regular meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

**Section 4. Special Meetings.**

Special meetings of the Board of Directors may be called by one-third (1/3) of the directors then in office (rounded up to the nearest whole number), by the Chairperson of the Board, by the Vice Chairperson of the Board or by the Chief Executive Officer, and shall be held at such place or by means of remote communication, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director who has not waived notice by mailing and post-marking written notice not less than five (5) days before the meeting, or by facsimile or other electronic transmission of the same not less than twenty four (24) hours before the meeting. Any director may waive notice of any special meeting, either before or after such meeting, by delivering a written waiver or a waiver by electronic transmission that is filed with the records of the meeting. Attendance of a director at a special meeting shall constitute a waiver of notice of such meeting, except where the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted nor the purpose of any special meeting of the Board of Directors need be specified in the notice of such meeting. Any special meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

**Section 5. Quorum.**

At any meeting of the Board of Directors, a majority of the Whole Board shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.

**Section 6. Participation in Meetings By Conference Telephone or by Other Electronic Communications Equipment.**

Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of a conference telephone or by means of other electronic communications equipment if all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at such meeting.

**Section 7. Conduct of Business.**

At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided in these Bylaws or the Articles of Incorporation or required by law. Action may be taken by the Board of Directors without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the Board of Directors and filed in paper or electronic form with the minutes of proceedings of the Board of Directors.

**Section 8. Powers.**

All powers of the Corporation may be exercised by or under the authority of the Board of Directors except as provided by the Articles of Incorporation. Consistent with the foregoing, the Board of Directors shall have, among other powers, the unqualified power:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) To declare dividends from time to time in accordance with law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable
or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer
upon any other person for the time being;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans for directors, officers, employees
and agents of the Corporation and its subsidiaries as it may determine;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) To adopt from time to time regulations, not inconsistent with these Bylaws, for the management of the Corporation's business
and affairs.

**Section 9. Compensation of Directors.**

Directors, as such, may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board of Directors.

**Section 10. Resignation.**

Any director may resign at any time by giving written notice of such resignation to the Chairperson, the President or the Secretary at the principal office of the Corporation. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof.

**Section 11. Presumption of Assent.**

A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to such action unless such director announces his or her dissent at the meeting and (a) such director's dissent is entered in the minutes of the meeting, (b) such director files his or her written dissent to such action with the secretary of the meeting before the adjournment thereof, or (c) such director forwards his or her written dissent within twenty four (24) hours after the meeting is adjourned, by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, to the secretary of the meeting or the Secretary of the Corporation. Such right to dissent shall not apply to a director who voted in favor of such action or failed to make his or her dissent known at the meeting.

**Section 12. Director Qualifications.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) No person shall be eligible for election or appointment to the Board of Directors: (i) if a financial or securities regulatory agency has, within the past ten years, issued a cease and desist, consent or other formal order, other than a civil money penalty, against such person, which order is subject to public disclosure by such agency; (ii) if such person has been convicted of a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; (iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation in such a crime; or (iv) other than the persons appointed as initial directors in connection with the formation of the Corporation and other than persons who are also executive officers of the Corporation or of the Corporation's banking subsidiary, Peru Federal Savings Bank, if such person did not, at the time of his or her first election or appointment to the Board of Directors, maintain his or her principal residence (as determined by reference to such person's most recent tax returns, copies of which shall be provided to the Corporation for the sole purpose of determining compliance with this clause (iv)) within a thirty (30)-mile radius of the main office of Peru Federal Savings Bank for a period of at least one (1) year before the date of his or her purported nomination, election or appointment to the Board of Directors. No person may serve on the Board of Directors if such person is: (w) at the same time, a director, officer, employee or 10% or more stockholder of a bank, savings institution, credit union, mortgage banking company, consumer loan company or similar organization, other than a subsidiary of the Corporation, that engages in financial services related business activities or solicits customers, whether through a physical presence or electronically, in the same market area as the Corporation or any of its subsidiaries; (x) does not agree in writing to comply with all of the Corporation's policies applicable to directors including but not limited to its confidentiality policy and confirm in writing his or her qualifications hereunder; (y) is a party to any agreement, understanding or arrangement with a party other than the Corporation or a subsidiary that (1) provides him or her with material benefits which are tied to or contingent on the Corporation entering into a merger, sale of control or similar transaction in which it is not the surviving institution, (2) materially limits his or her voting discretion as a member of the Board of Directors of the Corporation, or (3) materially impairs his or her ability to discharge his or her fiduciary duties with respect to the fundamental strategic direction of the Corporation; or (z) has lost more than one election for service as a director of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No person seventy five (75) years of age shall be eligible for election, reelection, appointment, or reappointment as a director of the Corporation and shall not serve the Corporation beyond the expiration of any term after reaching age seventy five (75), unless said director has submitted a letter of resignation to the Chairman of the Board to be effective upon acceptance by a majority of the Board of Directors at any regular meeting following the submission of said letter, or, in lieu of prior action by the Board of Directors, a request by the submitting party for immediate acceptance of said letter of resignation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Board of Directors shall have the power to construe and apply the provisions of this Section 12 and to make all determinations necessary or desirable to implement such provisions.

**Section 13. Attendance at Board Meetings.**

The Board of Directors shall have the right to remove any director from the board upon a director's unexcused absence from (i) three consecutive regularly scheduled meetings of the Board of Directors, or (ii) three regularly scheduled meetings of the Board of Directors in any fiscal year of the Corporation.

**ARTICLE III<br> COMMITTEES**

**Section 1. Committees of the Board of Directors.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *General Provisions.* The Board of Directors may appoint from among its members an audit committee, a compensation committee, a nominating and corporate governance committee, and such other committees as the Board of Directors deems necessary or desirable. The Board of Directors may delegate to any committee so appointed any of the powers and authorities of the Board of Directors to the fullest extent permitted by the MGCL and any other applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Composition.* Each committee shall be composed of one or more directors or any other number of members specified in these Bylaws or required by applicable regulations or stock exchange rules. The Chairperson of the Board may recommend committees, committee memberships, and committee chairs to the Board of Directors. The Board of Directors shall have the power at any time to appoint the chairperson and the members of any committee, change the membership of any committee, to fill all vacancies on committees, to designate alternate members to replace or act in the place of any absent or disqualified member of a committee, or to dissolve any committee. A member of a committee may resign from that committee at any time by giving written notice of such resignation to the Chairperson of the Board. Unless otherwise specified therein, such resignation from the committee shall take effect upon receipt thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Issuance of Capital Stock.* If the Board of Directors has given general authorization for the issuance of capital stock providing for or establishing a method or procedure for determining the maximum number of shares to be issued, a committee of the Board of Directors, in accordance with that general authorization or any stock option or other plan or program adopted by the Board of Directors, may authorize or fix the terms of stock subject to classification or reclassification and the terms on which any capital stock may be issued, including all terms and conditions required or permitted to be established or authorized by the Board of Directors. Any committee so designated may exercise the power and authority of the Board of Directors if the resolution that designated the committee or a supplemental resolution of the Board of Directors shall so provide.

**Section 2. Conduct of Business.**

Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third (1/3) of the members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the committee and filed in paper or electronic form with the minutes of the proceedings of such committee. The members of any committee may conduct any meeting thereof by conference telephone or other communications equipment in accordance with the provisions of Section 6 of Article II.

**ARTICLE IV<br> OFFICERS**

**Section 1. Generally.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Board of Directors as soon as may be practicable after the annual meeting of stockholders shall choose a Chairperson of the Board, a President, a Secretary and a Chief Financial Officer/Treasurer and from time to time may choose such other officers as it may deem proper. Any number of offices may be held by the same person, except that no person may concurrently serve as both President and Vice President of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The term of office of all officers shall be until the next annual election of officers and until their respective successors are chosen, but any officer may be removed from office at any time by the affirmative vote of a majority of the Whole Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof.

**Section 2. Chairperson of the Board of Directors.**

The Chairperson of the Board of Directors of the Corporation shall perform all duties and have all powers which are commonly incident to the office of Chairperson of the Board or which are delegated to him or her by the Board of Directors. He or she shall have power to sign all stock certificates, contracts and other instruments of the Corporation that are authorized.

**Section 3. Vice Chairperson of the Board of Directors.**

If appointed, the Vice Chairperson of the Board of Directors of the Corporation shall perform all duties and have all powers which are commonly incident to the office of Chairperson of the Board, with such duties to be performed and powers to be held in the absence of the Chairperson of the Board, or which are delegated to him or her by the Board of Directors.

**Section 4. Chief Executive Officer.**

If appointed, the Chief Executive Officer, subject to the control of the Board of Directors, shall serve in general executive capacity and have general power over the management and oversight of the administration and operation of the Corporation's business and general supervisory power and authority over its policies and affairs. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect.

**Section 5. President.**

The President shall perform the duties of the Chief Executive Officer in the Chief Executive Officer's absence or during his or her disability to act. In addition, the President shall perform the duties and exercise the powers usually incident to their respective office and/or such other duties and powers as may be properly assigned to the President from time to time by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer.

**Section 6. Vice President.**

The Vice President or Vice Presidents (including Executive Vice Presidents or other levels of Vice President designated by the Board of Directors), if any, shall perform the duties of the Chief Executive Officer in the absence of both the Chief Executive Officer and the President, or during their disability to act. In addition, the Vice Presidents shall perform the duties and exercise the powers usually incident to their respective office and/or such other duties and powers as may be properly assigned to the Vice Presidents from time to time by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer.

**Section 7. Secretary.**

The Secretary or an Assistant Secretary shall issue notices of meetings, shall keep the minutes of meetings, shall have charge of the seal and the corporate books, shall perform such other duties and exercise such other powers as are usually incident to such offices and/or such other duties and powers as are properly assigned thereto by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer.

**Section 8. Chief Financial Officer/Treasurer.**

The Chief Financial Officer/Treasurer shall have charge of all monies and securities of the Corporation, other than monies and securities of any division of the Corporation that has a treasurer or financial officer appointed by the Board of Directors, and shall keep regular books of account. The funds of the Corporation shall be deposited in the name of the Corporation by the Chief Financial Officer/Treasurer with such banks or trust companies or other entities as the Board of Directors from time to time shall designate. The Chief Financial Officer/Treasurer shall sign or countersign such instruments as require his or her signature, shall perform all such duties and have all such powers as are usually incident to such office and/or such other duties and powers as are properly assigned to him or her by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer, and may be required to give bond for the faithful performance of his or her duties in such sum and with such surety as may be required by the Board of Directors.

**Section 9. Other Officers.**

The Board of Directors may designate and fill such other offices in its discretion and the persons holding such other offices shall have such powers and shall perform such duties as the Board of Directors or Chief Executive Officer may from time to time assign.

**Section 10. Action with Respect to Securities of Other Corporations.**

Securities of other corporations or associations, registered in the name of the Corporation, may be voted by the Chief Executive Officer, the President, a Vice President, or a proxy appointed by either of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.

**Section 11. Age Limitation.**

No person seventy five (75) years of age shall be eligible for election, reelection, appointment, or reappointment as an officer of the Corporation and shall not serve the Corporation beyond the expiration of any term after reaching age seventy five (75), unless said officer has submitted a letter of resignation to the Chairman of the Board to be effective upon acceptance by a majority of the Board of Directors at any regular meeting following the submission of said letter, or, in lieu of prior action by the Board of Directors, a request by the submitting party for immediate acceptance of said letter of resignation.

**ARTICLE V<br> STOCK**

**Section 1. Certificates of Stock.**

The Board of Directors may determine to issue certificated or uncertificated shares of capital stock and other securities of the Corporation. For certificated stock, each stockholder is entitled to certificates which represent and certify the shares of stock the stockholder holds in the Corporation. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder or other person to whom it is issued, and the class of stock and number of shares it represents. It shall also include on its face or back (a) a statement of any restrictions on transferability and a statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation is authorized to issue, of the differences in the relative rights and preferences between the shares of each series of preferred stock which the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and preferences of subsequent series of preferred stock or (b) a statement which provides in substance that the Corporation will furnish a full statement of such information to any stockholder on request and without charge. Such request may be made to the Secretary or to the Corporation's transfer agent. Upon the issuance of uncertificated shares of capital stock, the Corporation shall send the stockholder a written statement of the same information required above with respect to stock certificates. Each stock certificate shall be in such form, not inconsistent with law or with the Articles of Incorporation, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairperson of the Board, the President, or a Vice-President, and countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. A certificate may not be issued until the stock represented by it is fully paid.

**Section 2. Transfers of Stock.**

Transfers of capital stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the capital stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article V of these Bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor.

**Section 3. Record Dates or Closing of Transfer Books.**

The Board of Directors may, and shall have the power to, set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote at a meeting, receive a dividend, or be allotted other rights. The record date may not be before the close of business on the day the record date is fixed nor, subject to Section 3 of Article I of these Bylaws, more than ninety (90) days before the date on which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than twenty (20) days; and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least ten (10) days before the date of the meeting. Any shares of the Corporation's own stock acquired by the Corporation between the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders and the time of the meeting may be voted at the meeting by the holder of record as of the record date and shall be counted in determining the total number of outstanding shares entitled to be voted at the meeting.

**Section 4. Lost, Stolen or Destroyed Certificates.**

The Board of Directors of the Corporation may determine the conditions for issuing a new stock certificate in place of one which is alleged to have been lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation or to the transfer agent designated to transfer shares of the stock of the Corporation. In their discretion, the Board of Directors or such officer or officers may require the owner of the certificate to give a bond, with sufficient surety, to indemnify the Corporation against any loss or claim arising as a result of the issuance of a new certificate. In their discretion, the Board of Directors or such officer or officers may refuse to issue such new certificate without the order of a court having jurisdiction over the matter.

**Section 5. Stock Ledger.**

The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock of each class which the stockholder holds. The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock or, if none, at the principal executive office of the Corporation.

**Section 6. Regulations.**

The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.

**ARTICLE VI<br> MISCELLANEOUS**

**Section 1. Facsimile Signatures.**

In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

**Section 2. Corporate Seal.**

The Board of Directors may provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. If the Corporation is required to place its corporate seal to a document, it is sufficient to meet the requirement of any law, rule, or regulation relating to a corporate seal to place the word "(seal)" adjacent to the signature of the person authorized to sign the document on behalf of the Corporation.

**Section 3. Books and Records.**

The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any committee when exercising any of the powers of the Board of Directors. The books and records of the Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The original or a certified copy of these Bylaws shall be kept at the principal office of the Corporation.

**Section 4. Reliance Upon Books, Reports and Records.**

Each director, each member of any committee designated by the Board of Directors, and each officer and agent of the Corporation shall, in the performance of his or her duties, in addition to any protections conferred upon him or her by law, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director, committee member, officer or agent reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

**Section 5. Fiscal Year.**

The fiscal year of the Corporation shall commence on the first day of January and end on the last day of December in each year.

**Section 6. Time Periods.**

In applying any provision of these Bylaws that requires that an act be done or not be done a specified number of days before an event or that an act be done during a period of a specified number of days before an event, calendar days shall be used, the day of the doing of the act shall be excluded and the day of the event shall be included.

**Section 7. Checks, Drafts, Etc.**

All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall be signed by any officer, employee or agent of the Corporation that is authorized by the Board of Directors.

**Section 8. Mail.**

Any notice or other document that is required by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.

**Section 9. Contracts and Agreements.**

To the extent permitted by applicable law, and except as otherwise prescribed by the Articles of Incorporation or these Bylaws, the Board of Directors may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer.

**ARTICLE VII<br> AMENDMENTS**

These Bylaws may be adopted, amended or repealed as provided in the Articles of Incorporation.

\# \# \#

Adopted: March 6, 2023

## Ex-4

**Exhibit 4**

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| | |
|:---|:---|
| No. | **PFS BANCORP, INC.**<br> **INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND** |

---

---

| |
|:---|
| **CUSIP:** |
| THE SHARES REPRESENTED BY THIS |
| CERTIFICATE ARE SUBJECT TO |
| RESTRICTIONS, SEE REVERSE SIDE |

---

THIS CERTIFIES that is the owner of

FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE

The shares evidenced by this certificate are transferable only on the books of PFS Bancorp, Inc. by the holder hereof, in person or by attorney, upon surrender of this certificate properly endorsed. **The capital stock evidenced hereby is not an account of an insurable type and is not insured by the Federal Deposit Insurance Corporation or any other Federal or state governmental agency.**

IN WITNESS WHEREOF, PFS Bancorp, Inc. has caused this certificate to be executed by the facsimile signatures of its duly authorized officers and has caused a facsimile of its seal to be hereunto affixed.

Dated: ________________, 2023

By:   [SEAL] By:   <br> Dale R. Tieman Eric J. Heagy <br> Corporate Secretary President, Chief Executive Officer and Chief Financial Officer

The Board of Directors of PFS Bancorp, Inc. (the "Company") is authorized by resolution or resolutions, from time to time adopted, to provide for the issuance of more than one class of stock, including preferred stock in series, and to fix and state the voting powers, designations, preferences, limitations and restrictions thereof. The Company will furnish to any stockholder upon request and without charge a full description of each class of stock and any series thereof.

The shares evidenced by this certificate are subject to a limitation contained in the Articles of Incorporation to the effect that in no event shall any record owner of any outstanding common stock which is beneficially owned, directly or indirectly, by a person who beneficially owns in excess of 10% of the outstanding shares of common stock (the "Limit") be entitled or permitted to any vote in respect of shares held in excess of the Limit.

The shares represented by this certificate may not be cumulatively voted on any matter. The Articles of Incorporation requires that, with limited exceptions, no amendment, addition, alteration, change or repeal of the Articles of Incorporation shall be made, unless such is first approved by the Board of Directors of the Company and approved by the stockholders by a majority of the total shares entitled to vote, or in certain circumstances approved by the affirmative vote of up to 80% of the shares entitled to vote.

The following abbreviations when used in the inscription on the face of this certificate shall be construed as though they were written out in full according to applicable laws or regulations.

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| | | | |
|:---|:---|:---|:---|
| TEN COM | - as tenants in common | UNIF GIFT MIN ACT | - _________ Custodian __________ |
| |  |  | *(Cust) (Minor)* |
| TEN ENT | - as tenants by the entireties |  | Under Uniform Gifts to Minors Act |
| JT TEN | - as joint tenants with right of survivorship and not as tenants in common |  | |
|  |  |  | (State) |

---

Additional abbreviations may also be used though not in the above list

For value received, <u>________</u> hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER

*(please print or typewrite name and address including postal zip code of assignee)*

------

<u> </u> Shares of the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint<u> </u>Attorney to transfer the said shares on the books of the within named corporation with full power of substitution in the premises.

Dated, ____________________

In the presence of Signature: <br>    

NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME OF THE STOCKHOLDER(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.

## Ex-5

**Exhibit 5**

**LUSE GORMAN, PC**

ATTORNEYS AT LAW

5335 Wisconsin Avenue, NW, Suite 780

Washington, D.C. 20015

Telephone (202) 274-2000

Facsimile (202) 362-2902

www.luselaw.com

March 10, 2023

The Board of Directors

PFS Bancorp, Inc.

1730 Fourth Street

Peru, Illinois 61354

**Re: PFS Bancorp, Inc.**

 **<u>Common Stock, Par Value $0.01 Per Share</u>**

Ladies and Gentlemen:

You have requested the opinion of this firm as to certain matters in connection with the offer, sale and issuance of the shares of common stock, par value $0.01 per share ("Common Stock"), of PFS Bancorp, Inc. (the "Company").

We have reviewed the Company's Articles of Incorporation and its Registration Statement on Form S-1 (the "Form S-1"), the Plan of Conversion of Peru Federal Savings Bank (the "Plan"), and applicable statutes and regulations governing the Company and the offer, sale and issuance of the Common Stock. The opinion expressed below is limited to the laws of the State of Maryland (which includes applicable provisions of the Maryland General Corporation Law, the Maryland Constitution and reported judicial decisions interpreting the Maryland General Corporation Law and the Maryland Constitution).

We are of the opinion that upon the declaration of effectiveness of the Form S-1, the Common Stock, when issued and sold in accordance with the Plan, will be legally issued, fully paid and non-assessable.

This opinion has been prepared solely for the use of the Company in connection with the preparation and filing of the Form S-1, and shall not be used for any other purpose without our prior express written consent. We hereby consent to our firm being referenced under the caption "Legal Matters" in the Prospectus contained in the Form S-1 and to the filing of this opinion as an exhibit to the Form S-1. By giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended.

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| |
|:---|
| Very truly yours, |
| /s/ Luse Gorman, PC |
| Luse Gorman, PC |

---

## Exhibit 8.1

**Exhibit 8.1**

**LUSE GORMAN, PC**

**Attorneys at Law**

**5335 Wisconsin Avenue, N.W., Suite 780**

**Washington, D.C. 20015**

**Telephone (202) 274-2000**

**Facsimile (202) 362-2902**

**<u>www.luselaw.com</u>**

March 7, 2023

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

1730 4<sup>th</sup> Street

Peru, Illinois 61354

Board of Directors:

You have requested this firm's opinion regarding the material federal income tax consequences of the proposed conversion (the "<u>Conversion</u>") of Peru Federal Savings Bank (the "<u>Bank</u>") from a federal mutual savings bank to a federal stock savings bank ("<u>Stock Bank</u>"), pursuant to the Plan of Conversion of Peru Federal Savings Bank adopted by the Board of Directors of the Bank on March 6, 2023 (the "<u>Plan</u>"). In the Conversion, all of the Bank's to-be-issued capital stock, consisting entirely of voting common stock, will be acquired by PFS Bancorp, Inc., a Maryland corporation (the "<u>Holding Company</u>"). All capitalized terms used but not defined herein shall have the same meaning as set forth in the Plan.

For purposes of this opinion, we have examined such documents and questions of law as we have considered necessary or appropriate, including but not limited to: (1) the Holding Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "<u>Registration Statement</u>"), relating to the proposed issuance of up to 2,380,500 shares (at the adjusted maximum of the offering range) of common stock, par value $0.01 per share; (2) the applications or notices for approval/non-objection of the Conversion and the formation of a new savings and loan holding company filed with the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System, respectively (the "<u>Applications</u>"); (3) the Plan; (4) the Charter and Bylaws of the Stock Bank; and (5) the Articles of Incorporation and Bylaws of the Holding Company. We have also relied upon, without independent verification, the representations of the Bank and Holding Company contained in their letter to us dated as of the date hereof. We have assumed and have not independently verified the authenticity of all original documents, the accuracy of all copies, and the genuineness of all signatures. We have further assumed the absence of adverse facts not apparent from the face of the instruments and documents we examined.

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

March 7, 2023

In issuing our opinion, we have assumed that the Bank will comply with the terms and conditions of the Plan, and that the various representations and warranties that are provided to us are accurate, complete, true and correct. Accordingly, we express no opinion concerning the effect, if any, of variations from the foregoing. We specifically express no opinion concerning tax matters relating to the Plan under state and local tax laws and under federal income tax laws except on the basis of the documents and assumptions described above.

In issuing the opinion set forth below, we have relied solely on existing provisions of the Internal Revenue Code of 1986, as amended (the "<u>Code</u>"), existing and proposed Treasury regulations (the "<u>Regulations</u>") thereunder, current administrative rulings, notices and procedures, and court decisions. Such laws, regulations, administrative rulings, notices and procedures and court decisions are subject to change at any time. Any such change could affect the continuing validity of the opinions set forth below. This opinion is as of the date hereof, and we disclaim any obligation to advise you of any change in any matter considered herein after the date hereof.

In rendering our opinion, we have assumed that the persons and entities identified in the Plan will at all times comply with applicable state and federal laws and the factual representations of the Bank. In addition, we have assumed that the activities of the persons and entities identified in the Plan will be conducted strictly in accordance with the Plan. Any variations may affect the opinions we are rendering. For purposes of this opinion, we are relying on the factual representations provided to us by the Bank, which are incorporated herein by reference.

We emphasize that the outcome of litigation cannot be predicted with certainty and, although we have attempted in good faith to opine as to the probable outcome of the merits of each tax issue with respect to which an opinion was requested, there can be no assurance that our conclusions are correct or that they would be adopted by the Internal Revenue Service or a court.

**<u>BACKGROUND</u>**

The Bank is a federal mutual savings bank that is in the process of converting to a federal stock savings bank. As a federal mutual savings bank, the Bank has no authorized capital stock. Instead the Bank, in mutual form, has a unique equity structure. A depositor in the Bank is entitled to payment of interest on his or her account balance as declared and paid by the Bank. A depositor has no right to a distribution of any earnings of the Bank, except for interest paid on the deposit balance, and such earnings become retained earnings of the Bank. However, a depositor has a pro-rata ownership interest in the net worth of the Bank based upon the deposit balance in his or her account. This interest may only be realized in the event of a complete liquidation of the Bank. A depositor who reduces or closes his or her deposit account with the Bank receives solely the balance of his or her deposit account. In connection with and at the time of the Conversion, Eligible Account Holders and Supplemental Eligible Account Holders will exchange their liquidation rights in the Bank for an interest in a liquidation account ("<u>Liquidation Account</u>") established at the Stock Bank.

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

March 7, 2023

**<u>PROPOSED TRANSACTION</u>**

The Holding Company has been formed under the laws of the State of Maryland for the purpose of the proposed transactions described herein, to engage in business as a savings and loan holding company and to own all of the outstanding capital stock of the Stock Bank. The Holding Company will issue shares of its voting common stock ("<u>Common Stock</u>"), upon completion of the mutual-to-stock conversion of the Bank, to persons purchasing such shares as described in greater detail below.

Following regulatory approval, the Plan provides for the offer and sale of shares of Common Stock in a Subscription Offering pursuant to nontransferable subscription rights on the basis of the following preference categories: (1) Eligible Account Holders; (2) the Bank's tax-qualified employee benefit plans, including the newly formed employee stock ownership plan; (3) Supplemental Eligible Account Holders; and (4) Other Members, all as described in the Plan. The amount of shares at the minimum of the offering range must be sold. If shares remain after all orders are filled in the categories described above, the Plan calls for a community offering to the general public with a preference given to residents of the general public residing in LaSalle County, Illinois ("<u>Community Offering</u>"), followed by a syndicated community offering ("<u>Syndicated Community Offering</u>") for the shares not sold in the Community Offering.

Pursuant to the Plan, all such shares will be issued and sold at a uniform price per share. The aggregate purchase price at which all shares of Common Stock will be offered and sold pursuant to the Plan will be equal to the estimated *pro forma* market value of the Holding Company and the Bank, as converted. The estimated *pro forma* market value will be determined by Feldman Financial Advisors, Inc., Inc., an independent appraiser. The conversion of the Bank from mutual-to-stock form and the sale of newly issued shares of the stock of the Stock Bank to the Holding Company will be deemed effective concurrently with the closing of the sale of Common Stock.

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

March 7, 2023

**<u>OPINION OF COUNSEL</u>**

Based solely upon the foregoing information, we render the following opinion:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The change in the form of operation of the Bank from a federal mutual savings bank to a federal stock savings bank, as described above, will constitute a reorganization within the meaning of Code Section 368(a)(1)(F), and no gain or loss will be recognized to either the Bank or to Stock Bank as a result of such Conversion. <u>See</u> Rev. Rul. 80-105, 1980-1 C.B. 78. The Bank and Stock Bank will each be a party to a reorganization within the meaning of Code Section 368(b). Rev. Rul. 72-206, 1972-1 C.B. 104.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. No gain or loss will be recognized by Stock Bank on the receipt of money from Holding Company in exchange for its shares or by Holding Company upon the receipt of money from the sale of Common Stock. Code Section 1032(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The assets of the Bank will have the same basis in the hands of Stock Bank as they had in the hands of the Bank immediately prior to the Conversion. Code Section 362(b).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The holding period of the Bank's assets to be received by Stock Bank will include the period during which the assets were held by the Bank prior to the Conversion. Code Section 1223(2).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. No gain or loss will be recognized by the account holders of the Bank upon the issuance to them of withdrawable deposit accounts in Stock Bank in the same dollar amount and under the same terms as their deposit accounts in the Bank and no gain or loss will be recognized by Eligible Account Holders or Supplemental Eligible Account Holders upon receipt by them of an interest in the Liquidation Account of Stock Bank, in exchange for their ownership interests in the Bank. Code Section 354(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. The basis of the account holders' deposit accounts in the Stock Bank will be the same as the basis of their deposit accounts in the Bank surrendered in exchange therefor. The basis of each Eligible Account Holder's and Supplemental Eligible Account Holder's interests in the Liquidation Account of the Stock Bank will be zero, that being the cost of such property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. It is more likely than not that the fair market value of the nontransferable subscription rights to purchase Common Stock will be zero. Accordingly, no gain or loss will be recognized by Eligible Account Holders or Supplemental Eligible Account Holders or Other Members upon the distribution to them of the nontransferable subscription rights to purchase Common Stock. No taxable income will be realized by the Eligible Account Holders, Supplemental Eligible Account Holders or Other Members as a result of the exercise of the nontransferable subscription rights. Rev. Rul. 56-572, 1956-2 C.B. 182.

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

March 7, 2023

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. It is more likely than not that the basis of the Common Stock to its holders will be the purchase price thereof. (Section 1012 of the Code). The stockholder's holding period will commence upon the exercise of the subscription rights. (Section 1223(5) of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. For purposes of Section 381 of the Code, the Stock Bank will be treated as if there had been no reorganization. Accordingly, the taxable year of the Bank will not end on the effective date of the Conversion merely because of the transfer of assets of the Bank to the Stock Bank, and the tax attributes of the Bank will be taken into account by the Stock Bank as if there had been no reorganization. (Treas. Reg. Section 1.381(b)-(1)(a)(2)).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. The part of the taxable year of the Bank before the reorganization and the part of the taxable year of Stock Bank after the reorganization will constitute a single taxable year of Stock Bank. <u>See</u> Rev. Rul. 57-276, 1957-1 C.B. 126. Consequently, the Bank will not be required to file a federal income tax return for any portion of that taxable year solely by reason of the Conversion. (Treas. Reg. Section 1.381(b)-1(a)(2)).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. The tax attributes of the Bank enumerated in Code Section 381(c) will be taken into account by Stock Bank. (Treas. Reg. Section 1.381(b)-1(a)(2)).

Notwithstanding any reference to Code Section 381 above, no opinion is expressed or intended to be expressed herein as to the effect, if any, of this transaction on the continued existence of, the carryover or carryback of, or the limitation on, any net operating losses of the Bank or its successor, Stock Bank, under the Code.

Our opinion under paragraph 5 above is based on the premise that the benefit provided by the Liquidation Account in the Stock Bank has a fair market value of zero at the time of the Conversion. The Stock Bank Liquidation Account payment obligation arises only in a liquidation of the Stock Bank including if the Stock Bank enters into a transaction to transfer its assets and liabilities to a credit union. We understand that: (i) no holder of an interest in a liquidation account has ever received payment of an interest in a liquidation account attributable to the liquidation of a solvent bank (other than as set forth below); (ii) the interests in the Stock Bank Liquidation Account are not transferable by an Eligible Account Holder or Supplemental Eligible Account Holder; (iii) the amounts due under the Stock Bank Liquidation Account with respect to each Eligible Account Holder and Supplemental Eligible Account

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

March 7, 2023

Holder will be reduced as their deposits in the Stock Bank are reduced, as described in the Plan; and (iv) holders of an interest in a liquidation account have received payments of their interest in only a limited number of instances (out of hundreds of transactions involving mergers, acquisitions and the purchase of assets and assumptions of liabilities of holding companies and subsidiary banks). These instances involved the purchase and assumption of a bank's assets by a credit union. However, not all states permit the sale of a bank's assets to a credit union, further limiting the opportunity for this type of transaction. We also note that the U.S. Supreme Court in *Paulsen v. Commissioner,* 469 U.S. 131 (1985) stated the following:

The right to participate in the net proceeds of a solvent liquidation is also not a significant part of the value of the shares. Referring to the possibility of a solvent liquidation of a mutual savings association, this Court observed: "It stretches the imagination very far to attribute any real value to such a remote contingency, and when coupled with the fact that it represents nothing which the depositor can readily transfer, any theoretical value reduces almost to the vanishing point." *Society for Savings v. Bowers,* 349 U.S. 143, 150 (1955).

In the present case, we believe that the same analysis as was applied in *Paulsen* and *Society for Savings* can be applied to the extremely remote contingency that a depositor will, at some undetermined time in the future, realize value from the sale of a bank's assets to a credit union. First, some states prohibit a credit union from acquiring a bank's assets through a purchase and assumption transaction. Second, although others do, as noted above, there have been only a limited number of instances where a credit union has acquired the assets of a bank where an amount representing the then-value of a liquidation account has been (or will be) paid to the bank's eligible depositors. These instances all involved former mutual banks that were required to establish liquidation accounts in a conversion to a stock bank and who later engaged in a purchase and assumption transaction with a credit union. Less than ten instances out of hundreds of converted former mutual banks since 1816 (the date the first mutual bank was chartered, in Massachusetts) have engaged in purchase and assumption transactions with credit unions and have been required to distribute to their depositors the remains of any liquidation accounts. Under these circumstances, we agree with the statement by the Supreme Court in *Society for Savings* that "any theoretical value reduces almost to the vanishing point."

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

March 7, 2023

In addition, we are relying on a letter from Feldman Financial Advisors, Inc., dated March 7, 2023, to you stating its belief that the benefit provided by the Stock Bank Liquidation Account does not have any economic value at the time of the Conversion. Based on the foregoing, we believe it is more likely than not that liquidation rights in the Stock Bank Liquidation Account have no value.

If the IRS were to subsequently find that the Stock Bank Liquidation Account had economic value as of the time of the Conversion, each Eligible Account Holder and Supplemental Eligible Account Holder may need to recognize income in the amount of the fair market value of their interest in the Stock Bank Liquidation Account as of the effective date of the Conversion. However, we are not aware of any situation where rights in a bank liquidation account have been found to have an economic value at the time of a mutual-to-stock conversion or a second-step conversion of a mutual holding company.

Our opinion under paragraph 7 above is predicated on the representation that no person shall receive any payment, whether in money or property, in lieu of the issuance of subscription rights. Our opinion under paragraphs 7 and 8 is based on the facts that the subscription rights will be granted at no cost to the recipients, will be legally non-transferable and of short duration, and will provide the recipient with the right only to purchase shares of Common Stock at the same price to be paid by members of the general public in any Community Offering. We also note that Feldman Financial Advisors, Inc. has issued a letter dated March 7, 2023 stating that the subscription rights will have no ascertainable market value. We further note that the Internal Revenue Service has not in the past reached a different conclusion with respect to the value of nontransferable subscription rights. If the subscription rights are subsequently found to have value, income may be recognized by various recipients of the subscription rights (in certain cases, whether or not the rights are exercised) and the Holding Company and/or Stock Bank may be taxable on the distribution of the subscription rights.

**<u>CONSENT</u>**

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and as an exhibit to the Applications with respect to the Conversion, as applicable. We also hereby consent to the references to this firm in the prospectus which is a part of the Registration Statement and the Applications.

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

March 7, 2023

**<u>USE OF OPINION</u>**

We hereby consent to the use of and reliance on this opinion by Wipfli, LLP in issuing its state tax opinion to the Bank related to the Conversion.

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| |
|:---|
| Very truly yours, |
| /s/ Luse Gorman, PC |
| LUSE GORMAN, PC |

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## Exhibit 8.2

**Exhibit 8.2**

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| | | |
|:---|:---|:---|
| ![](tm238313d1_ex8-2img01.jpg) | 4890 Owen Ayres Ct. | 715 832 3407 |
| ![](tm238313d1_ex8-2img01.jpg) | Suite 200 | wipfli.com |
| ![](tm238313d1_ex8-2img01.jpg) | Eau Claire, WI 54701 |  |
| ![](tm238313d1_ex8-2img01.jpg) |  |  |

---

**STATE TAX OPINION**

March 7, 2023

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

1730 4<sup>th</sup> Street

Peru, Illinois 61354

Dear Directors:

In accordance with your request, set forth below is the opinion of this firm relating to the material Illinois income tax consequences of the proposed conversion (the "Conversion") of Peru Federal Savings Bank (the "Bank") from a federal mutual savings bank to a federal stock savings bank ("Stock Bank").

In forming and issuing our opinion, we have relied on the written opinion regarding the federal tax treatment of the transaction prepared by Luse Gorman, PC. ("Federal Opinion" and Attachment A). Our opinion assumes that the Conversion will constitute a reorganization, a mere change in form, within the meaning of Internal Revenue Code Section 368(a)(1)(F). For purposes of this opinion, we have reviewed the applicable Illinois authority.

**Facts**

The Conversion is a transaction by which you will reorganize from your current form as a federal mutual savings bank to a federal stock savings bank form of ownership. The Conversion will be conducted pursuant to a plan of conversion, which you refer to as the Plan of Conversion (the "Plan"). Pursuant to the Plan, Peru Federal Savings Bank will undergo a conversion from a federal mutual savings bank to a federal stock savings bank. In the Conversion, all of the Bank's to-be-issued capital stock, consisting entirely of voting common stock, will be acquired by PFS Bancorp, Inc., a Maryland corporation (the "Holding Company").

The Holding Company has been formed under the laws of the State of Maryland for the purpose of the proposed transactions described herein, to engage in business as a savings and loan holding company and to own all of the outstanding capital stock of the Stock Bank.

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| | |
|:---|:---|
| Boards of Directors | 2.0 |
| Peru Federal Savings Bank |  |
| PFS Bancorp, Inc. |  |
| March 7, 2023 |  |

---

The Holding Company will issue shares of its voting common stock ("<u>Common Stock</u>"), upon completion of the mutual-to-stock conversion of the Bank, to persons purchasing such shares as described in greater detail below.

Following regulatory approval, the Plan provides for the offer and sale of shares of Common Stock in a Subscription Offering pursuant to nontransferable subscription rights on the basis of the following preference categories: (1) Eligible Account Holders; (2) the Bank's tax-qualified employee benefit plans, including the newly formed employee stock ownership plan; (3) Supplemental Eligible Account Holders; and (4) Other Members, all as described in the Plan. The amount of shares at the minimum of the offering range must be sold. If shares remain after all orders are filled in the categories described above, the Plan calls for a community offering to the general public with a preference given to residents of the general public residing in LaSalle County, Illinois ("<u>Community Offering</u>"), followed by a syndicated community offering ("<u>Syndicated Community Offering</u>") for the shares not sold in the Community Offering.

Pursuant to the Plan, all such shares will be issued and sold at a uniform price per share. The aggregate purchase price at which all shares of Common Stock will be offered and sold pursuant to the Plan will be equal to the estimated *pro forma* market value of the Holding Company and the Bank, as converted. The estimated *pro forma* market value will be determined by Feldman Financial Advisors, Inc., Inc., an independent appraiser. The conversion of the Bank from mutual-to-stock form and the sale of newly issued shares of the stock of the Stock Bank to the Holding Company will be deemed effective concurrently with the closing of the sale of Common Stock.

**Discussion of Relevant Illinois Income Tax Issues**

35 Ill. Comp. Stat. Section 5/202<sup>1</sup> defines "net income" of a corporation as the "base income" allocable to Illinois. 35 Ill. Comp. Stat. Section 5/203(b)(1)<sup>2</sup> defines "base income" as the taxpayer's "taxable income" as modified by Section 5/203(b)(2). 35 Ill. Comp. Stat. Section 5/203(e)<sup>3</sup> defines "taxable income" as "gross income, adjusted gross income, or taxable income" computed under the "Internal Revenue Code."

Net income is modified by 35 Ill. Comp. Stat. Section 5/203(b)(2)<sup>4</sup> and further modified for addbacks of credits and related subtraction items which, based on the facts provided, are not relevant to our analysis.

<sup>1</sup> 35 Ill. Comp. Stat. Section 5/202 as of February 17, 2023.

<sup>2</sup> 35 Ill. Comp. Stat. Section 5/203 as of February 17, 2023.

<sup>3</sup> 35 Ill. Comp. Stat. Section 5/203 as of February 17, 2023.

<sup>4</sup> 35 Ill. Comp. Stat. Section 5/203 as of February 17, 2023.

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| | |
|:---|:---|
| Boards of Directors | 3.0 |
| Peru Federal Savings Bank |  |
| PFS Bancorp, Inc. |  |
| March 7, 2023 |  |

---

Pursuant to 35 Ill. Comp. Stat. Section 5/1501(a)(11)<sup>5</sup>, the "Internal Revenue Code" is defined as the federal Internal Revenue Code in effect for the taxable year. Therefore, Illinois conforms to the Internal Revenue Code on a rolling basis and requires explicit decoupling of the Internal Revenue Code for any Illinois modifications.

**Opinion**

Illinois does not modify or exclude the provisions of Internal Revenue Code Section 368(a)(1)(F)<sup>6</sup>. Therefore, provided the transaction constitutes a reorganization within the meaning of Internal Revenue Code Section 368(a)(1)(F), Illinois will conform to the federal income tax treatment of the transaction.

**Scope of Opinion**

The scope of this opinion is expressly limited to the Illinois income tax consequences of the proposed transaction in connection with the representations and assumptions stated above.

Our opinion, as stated above, is based upon the analysis of the Illinois income tax statutes and administrative code, current administrative rulings, notices and procedures. Such laws, regulations, administrative rulings, notices and procedures are subject to change at any time and such change may be retroactively effective. If so, our views as set forth may be affected and may not be relied upon. This opinion is as of the date hereof, and we disclaim any obligation to advise you of any change in any matter considered herein after the date hereof. Further, any variation or differences in facts or representations recited herein, for any reason, could affect our conclusions, possibly in an adverse manner, and make them inapplicable.

This letter represents our views as to interpretation of existing law and, accordingly, no assurance can be given that the Illinois Department of Revenue upon audit will agree with the above analysis.

If you have any questions regarding this letter, please contact Traci Hollister at 715.858.6638.

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| |
|:---|
| Sincerely, |
| ![](tm238313d1_ex8-2img02.jpg) |
| Wipfli LLP |

---

<sup>5</sup> 35 Ill. Comp. Stat. Section 5/1501 as of February 17, 2023.

<sup>6</sup> For example, under 35 Ill. Comp. Stat. Section 5/203(b), taxable income for corporations is subject to several Illinois modifications under section (2), Modifications.

## Exhibit 10.4

**Exhibit 10.4**

**PERU FEDERAL SAVINGS BANK**

**SALARY CONTINUATION PLAN**

**FOR**

**ERIC J. HEAGY**

**THIS SALARY CONTINUATION PLAN FOR ERIC J. HEAGY** (the "Plan") is effective as of [date], and is entered into by Peru Federal Savings Bank (the "Bank") and Eric J. Heagy (the "Executive"). Any reference to the "Company" in this Plan shall mean PFS Bancorp, Inc.

**WHEREAS**, the purpose of the Plan is to provide additional retirement benefits to the Executive, who, as a member of senior management, has contributed significantly to the success of the Bank, and whose continued services are vital to the Bank's continued growth and success; and

**WHEREAS**, this Plan is intended to be an unfunded, non-qualified deferred compensation plan that complies with Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder, and is also intended to be a "top hat" pension plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

**ARTICLE I**

**DEFINITIONS**

When used herein, the following words and phrases shall have the meanings below unless the context clearly indicates otherwise:

1.1 "Accrued Benefit" means, as of any date, the liability that should be accrued by the Bank
under generally accepted accounting principles ("GAAP") to reflect the Bank's obligation to the Executive under the
Plan.

1.2 "Administrator" means the Bank and/or its Board of Directors, provided, however, the Board
of Directors can designate the Compensation Committee of the Board of Directors ("Committee") as the Administrator.

1.3 "Bank" means Peru Federal Savings Bank and any successor to its business and/or assets which
assumes and agrees to perform the duties and obligations under this Plan by operation of law or otherwise.

1.4 "Beneficiary" means the person or persons (and, if applicable, their heirs) designated by
the Executive as the beneficiary to whom the Executive's benefits are payable. The beneficiary designation shall be made on the
form acceptable to the Administrator and filed with the Administrator. If no Beneficiary is so designated, then the Executive's
Spouse, if living, will be deemed the Beneficiary. If the Executive's Spouse is not living at the time of the Executive's
death or dies prior to payment to her of the Survivor's Benefit, then the Children of the Executive will be deemed the Beneficiaries
and will take on a per stirpes basis. If there are no living Children, then the Executive's estate will be deemed the Beneficiary.
For this purpose, the term "Children" means the Executive's children, or the issue of any deceased Children, then living
at the time payments are due the Children under this Plan. The term "Children" shall include both natural and adopted children,
as well as stepchildren. Also, for this purpose, the term "Spouse" means the individual to whom the Executive is legally married
at the time of the Executive's death, provided, however, that the term "Spouse" shall not refer to an individual to
whom the Executive is legally married at the time of death if the Executive and the individual have entered into a formal separation agreement (provided that the separation agreement
does not provide otherwise or state that the individual is entitled to a portion of the benefits hereunder) or initiated divorce proceedings.

1.5 "Benefit Eligibility Date" shall be the date on which the Executive is entitled to commencement
of benefits under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event benefits become payable on account of the Executive's Separation from Service on or
after the Executive's Normal Retirement Age, the Benefit Eligibility Date shall be the first business day of the first month following
the Executive's Separation from Service, subject to Section 1.5(e).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event the Accrued Benefit becomes payable to the Executive on account of the Executive's
Separation from Service prior to the Executive's Normal Retirement Age, the Benefit Eligibility Date shall be the first business
day of the first month following the Executive's Separation from Service, subject to Section 1.5(e).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event the Survivor's Benefit becomes payable on account of the Executive's death, the
Benefit Eligibility Date shall be the first business day of the first month following the Executive's death.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the event the Accrued Benefit becomes payable pursuant to Section 2.5 on account of the Executive's
Separation from Service (other than for Cause) coincident with or within two (2) years following a Change in Control, the Benefit
Eligibility Date shall be the first business day of the first month following Separation from Service, subject to Section 1.5(e).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything in this Section 1.5 to the contrary, if the Executive is a Specified Employee
of a publicly-traded company and the payment(s) are due to the Executive's Separation from Service (other than due to death),
then the Benefit Eligibility Date shall be the first business day of the seventh month following the Executive's Separation from
Service (if later than the date otherwise specified as the Benefit Eligibility Date). The payments that otherwise would have been received
from the date of Separation from Service to the Specified Employee's Benefit Eligibility Date shall be aggregated and shall be paid,
without interest, on the same date as the initial payment (e.g., on the first business day of the seventh month) and all remaining payments
shall be made as otherwise scheduled. For purposes of Code Section 409A, the payments due hereunder shall be deemed a single payment.

1.6 "Board of Directors" shall mean the Board of Directors of the Bank.

1.7 "Cause" shall be deemed to exist if the Executive: (i) has engaged in any willful act
or omission that, in the judgment of the Board of Directors has caused or will likely cause substantial economic damage to the Bank or
the Company or substantial injury to the business reputation of the Bank or the Company; or (ii) has engaged in an act or acts of
dishonesty or fraud intended to result in enrichment or advantage to the Executive or a third party at the expense of the Bank or through
the use of the Bank's assets (including proprietary or confidential information); or (iii) has engaged in the willful failure
(other than due to substantiated physical or mental incapacity) to carry out the Executive's duties and responsibilities to the
Bank, including any reasonable directions from the Board or Directors, within the standards of performance which could reasonably be expected
of an executive working for a banking institution or bank holding company in a similar position, if the willful failure
continues for ninety (90) days or more after written notice of the failure is provided to the Executive by the Bank; or (iv) has
willfully failed or refused (A) to comply with any material term or provision of this Plan, (B) to adhere to the material terms
of any employment-related policies or procedures as have been or may be established by the Bank, or (C) to execute and comply with
the material terms of any instruments as may reasonably be requested by the Bank consistent with the foregoing clauses (A) and (B),
including, without limitation, the Bank's rules and policies with respect to conduct and ethics; or (v) has been convicted
or enters a plea of guilty or nolo contendere or enters into a pretrial diversion program or similar program relating to a felony or any
crime involving moral turpitude; or (vi) is subject to an order of a federal or state regulatory agency or a court of competent jurisdiction
requiring the termination of the Executive's employment with the Bank, unless the Executive has appealed that order and the appeal is
pending; or (vii) abuses alcohol or any controlled substance in a manner that materially negatively affects the Executive's
performance or abilities at the Bank, whether or not such activity constitutes a crime; or (viii) is prohibited from employment with
an FDIC-insured institution under applicable federal law or by order of any bank-regulatory agency. For purposes of this provision, no
act or failure to act on the Executive's part shall be considered "willful" unless done, or omitted to be done, by his/her
not in good faith without reasonable belief that his/her action or omission was in the best interest of the Bank.

1.8 "Change in Control" for purposes of this Agreement, the term "Change in Control"
means: (i) a change in the ownership of the Corporation; (ii) a change in the effective control of the Corporation; or (iii) a
change in the ownership of a substantial portion of the assets of the Corporation as defined in accordance with Code Section 409A,
and as set forth below in this Section 1.8. For purposes of this Section 1.8, the term "Corporation" means the Bank,
the Company or any of their successors, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) A change in the ownership of a Corporation occurs on the date that any one person, or more than one person
acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Corporation that, together
with stock held by such person or group, constitutes more than fifty (50) percent of the total fair market value or total voting power
of the stock of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A change in the effective control of the Corporation occurs on the date that either (A) any one person,
or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vi)(D)) acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Corporation possessing
thirty (30) percent or more of the total voting power of the stock of the Corporation, or (B) a majority of the members of the board
of directors is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority
of the members of the board of directors prior to the date of the appointment or election, provided that this subsection "(B)"
is inapplicable where a majority stockholder of the Corporation is another corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A change in a substantial portion of the Corporation's assets occurs on the date that any one person
or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during
the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Corporation
that have a total gross fair market value equal to or more than forty (40) percent of the total gross fair market value of (A) all
of the assets of the Corporation, or (B) the value of the assets being disposed of, either of which is determined without regard
to any liabilities associated with such assets.

For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Treasury Regulation 1.409A-3(i)(5), except to the extent that such regulations are superseded by subsequent guidance.

Notwithstanding anything herein to the contrary, a Change in Control shall not be deemed to have occurred in connection with the offering of shares of common stock by the Company pursuant to the Bank's Plan of Conversion dated as of [\*], 2023.

1.9 "Good Reason" shall mean: (i) a material diminution in the Executive's base salary;
(ii) a material diminution in the Executive's authority, duties, or responsibilities; or (iii) a material change in the
geographic location at which the Executive must perform his duties to the Bank; provided, however, that any such occurrence shall not
be deemed a "Good Reason" if the Executive consents thereto. A termination by the Executive shall not constitute Good Reason
unless the Executive shall first have delivered to the Bank written notice setting forth with specificity the occurrence deemed to give
rise to a right to terminate for Good Reason (which notice must be given no later than 60 days after the initial occurrence of such event),
and the Bank has failed within 30 days of such notice to correct the circumstance that would otherwise constitute Good Reason.

1.10 "Involuntary Separation from Service" is a Separation from Service that is not voluntary,
other than a Separation from Service for Cause or due to death, provided, however, that an Involuntary Separation from Service includes
a resignation for Good Reason.

1.11 "Normal Retirement Age" means age 62.

1.12 "Separation from Service" (or "Separated from Service") means the Executive's
termination of employment with the Bank within the meaning of Code Section 409A. No Separation from Service shall be deemed to occur
due to military leave, sick leave or other bona fide leave of absence if the period of the leave does not exceed six months or, if longer,
so long as the Executive's right to reemployment is provided by law or contract. If the leave exceeds six months and the Executive's
right to reemployment is not provided by law or by contract, then the Executive shall have a Separation from Service on the first date
immediately following such six-month period.

Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Bank and the Executive reasonably anticipated that no further services would be performed after a certain date or that the level of *bona fide* services the Executive would perform after that date (whether as an employee or as an independent contractor) would permanently decrease to less than 50% of the average level of *bona fide* services performed over the immediately preceding 36 months (or the lesser period of time in which the Executive performed services for the Bank). The determination of whether the Executive has had a Separation from Service shall be made by applying the presumptions set forth in the Treasury Regulations under Code Section 409A.

1.13 "Specified Employee" means an individual who also satisfies the definition of "key employee"
as that term is defined in Code Section 416(i) (without regard to paragraph (5) thereof). In the event the Executive is
a Specified Employee, no distribution shall be made to the Executive upon Separation from Service (other than due to death or disability)
prior to the date which is six (6) months following Separation from Service.

1.14 "Survivor's Benefit" means the benefit payable to the Executive's Beneficiary
following his death in accordance with Section 2.3 of the Plan.

**ARTICLE II**

**BENEFITS**

2.1 <u>Benefit on Separation from Service on or after Normal Retirement Age</u>.

If the Executive has a Separation from Service after reaching his Normal Retirement Age, the Executive shall be entitled to an annual benefit equal to $25,000. The benefit under this Section 2.1 shall commence on the Executive's Benefit Eligibility Date specified in Section 1.5(a) and shall be payable in monthly installments over a period of 120 months.

2.2 <u>Separation from Service Before Normal Retirement Age</u>.

If the Executive has a Separation from Service prior to the attainment of his Normal Retirement Age (other than due to Cause or death), the Executive shall be entitled to the Accrued Benefit, payable commencing on the Benefit Eligibility Date specified in Section 1.5(b) and payable in a single lump sum.

2.3 <u>Survivor's Benefit</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If the Executive dies while in the active service of the Bank and prior to attaining his Normal Retirement
Age, the Executive's Beneficiary shall be entitled to the Accrued Benefit. The Bank shall pay the Executive's Beneficiary
the Accrued Benefit on the Benefit Eligibility Date specified in Section 1.5(c) in a single lump sum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Executive dies following a Separation from Service after reaching his Normal Retirement Age but
prior to the commencement of benefit payments to the Executive, the Executive's Beneficiary shall be entitled to the benefit payments
that would have been made to the Executive had the Executive survived as provided in Section 2.1. If the Executive dies following
a Separation of Service and after the commencement of benefit payments, the Executive's Beneficiary shall be entitled to the remaining
benefit payments that would have been made to the Executive had the Executive survived as provided in Section 2.1.

2.4 <u>Termination for Cause</u>. Notwithstanding any other provision of this Plan to the contrary, if the
Executive is terminated for Cause all benefits under this Plan shall be forfeited by the Executive and the Executive's participation
in this Plan shall become null and void.

2.5 <u>Benefit Payable on Separation from Service within Two Years Following a Change in Control</u>. In the
event of the Executive's Involuntary Separation from Service or resignation for Good Reason within two (2) years following
a Change in Control, and prior to Normal Retirement Age, the Executive shall be entitled to an amount equal to the present value of the
benefits that would otherwise be due under Section 2.1, determined as if the Executive attained age sixty-two (62) prior to the Executive's
Separation from Service (and not discounted back to the date of Separation from Service), using the discount rate used to determine the
Accrued Benefit, unless otherwise determined by the Committee in writing, payable on the Benefit Eligibility Date specified in Section 1.5(d),
in a lump sum.

**ARTICLE III**

**BENEFICIARY DESIGNATION**

The Executive shall make an initial designation of primary and secondary Beneficiaries upon initial participation in the Plan by completion of a Beneficiary form acceptable to the Administrator and shall have the right to change the designation, at any subsequent time. Any Beneficiary designation shall become effective only when receipt thereof is acknowledged in writing by the Administrator.

**ARTICLE IV**

**EXECUTIVE'S RIGHT TO ASSETS, ALIENABILITY AND ASSIGNMENT PROHIBITION**

At no time shall the Executive be deemed to have any lien, right, title or interest in or to any specific investment or asset of the Bank. The rights of the Executive, any Beneficiary, or any other person claiming through the Executive under this Plan, shall be solely those of an unsecured general creditor of the Bank. The Executive, the Beneficiary, or any other person claiming through the Executive, shall only have the right to receive from the Bank those payments so specified under this Plan. Neither the Executive nor any Beneficiary under this Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by the Executive or his Beneficiary, nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise.

**ARTICLE V**

**ERISA PROVISIONS**

5.1 <u>Named Fiduciary and Administrator</u>. The Bank shall be the Named Fiduciary and Administrator of this
Plan. As Administrator, the Bank shall be responsible for the management, control and administration of the Plan as established herein.
The Administrator may delegate to others certain aspects of the management and operational responsibilities of the Plan, including the
employment of advisors and the delegation of ministerial duties to qualified individuals.

5.2 <u>Claims Procedure and Arbitration</u>. In the event that benefits under this Plan is not paid to the
Executive (or to his Beneficiary in the case of the Executive's death) and the claimant(s) feel he or they are entitled to
receive the benefits, then a written claim must be made to the Administrator within sixty (60) days from the date payments are refused.
The Administrator shall review the written claim and, if the claim is denied, in whole or in part, it shall provide in writing, within
thirty (30) days of receipt of such claim, its specific reasons for such denial, reference to the provisions of this Plan upon which the
denial is based, and any additional material or information necessary for such claimants to perfect the claim. The written notice by the
Administrator shall further indicate the additional steps which must be undertaken by claimants if an additional review of the claim denial
is desired.

If claimants desire a second review, they shall notify the Administrator in writing within thirty (30) days of the first claim denial. Claimants may review this Plan or any documents relating thereto and submit any issues and comments, in writing, they may feel appropriate. In its sole discretion, the Administrator shall then review the second claim and provide a written decision within thirty (30) days of receipt of such claim. This decision shall state the specific reasons for the decision and shall include reference to specific provisions of this Plan upon which the decision is based.

No claimant shall institute any action or proceeding in any state or federal court of law or equity or before any administrative tribunal or arbitrator for a claim for benefits under the Plan until the claimant has first exhausted the provisions set forth in this Section 5.2.

**ARTICLE VI**

**MISCELLANEOUS**

6.1 <u>No Effect on Employment Rights</u>. Nothing contained herein will confer upon the Executive the right
to be retained in the service of the Bank nor limit the right of the Bank to discharge or otherwise deal with the Executive without regard
to the existence of the Plan.

6.2 <u>State Law</u>. The Plan is established under, and will be construed according to, the laws of the State
of Illinois, to the extent such laws are not preempted by ERISA and valid regulations published thereunder or any other federal law.

6.3 <u>Severability and Interpretation of Provisions</u>. The Bank shall have full power and authority to
interpret, construe and administer this Plan and the Bank's interpretation and construction thereof and actions thereunder shall
be binding and conclusive on all persons for all purposes. No employee or representative of the Bank shall be liable to any person for
any actions taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his own willful
misconduct or lack of good faith. In the event that any of the provisions of this Plan or portion hereof are held to be inoperative or
invalid by any court of competent jurisdiction, or in the event that any provision is found to violate Code Section 409A and would
subject the Executive to additional taxes and interest on the amounts deferred hereunder, or in the event that any legislation adopted
by any governmental body having jurisdiction over the Bank would be retroactively applied to invalidate this Plan or any provision hereof
or cause the benefits under this Plan to be taxable, then: (1) insofar as is reasonable, effect will be given to the intent manifested
in the provisions held invalid or inoperative, and (2) the validity and enforceability of the remaining provisions will not be affected
thereby. In the event that the intent of any provision shall need to be construed in a manner to avoid taxability, this construction shall
be made by the Administrator in a manner that would manifest to the maximum extent possible the original meaning of such provisions.

6.4 <u>Incapacity of Recipient</u>. If a benefit is payable to a minor, to a person declared incompetent,
or to a person incapable of handling the disposition of his property, the Bank may pay such benefit to the guardian, legal representative
or person having the care or custody of such minor, incompetent person or incapable person. The Bank may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the benefit. The distribution shall completely discharge
the Bank for all liability with respect to the benefit.

6.5 <u>Unclaimed Benefit</u>. The Executive shall keep the Bank informed of his or her current address and
the current address of his Beneficiaries. If the location of the Executive is not made known to the Bank, the Bank shall delay payment
of the Executive's benefit payment(s) until the location of the Executive is made known to the Bank; however, the Bank shall
only be obligated to hold the benefit payment(s) for the Executive until the expiration of three (3) years. Upon expiration
of the three (3) year period, the Bank may discharge its obligation by payment to the Executive's Beneficiary. If the location
of the Executive's Beneficiary is not known to the Bank, the Executive and his Beneficiary(ies) shall thereupon forfeit any rights
to the balance, if any, of any benefits provided for such the Executive and/or Beneficiary under this Plan.

6.6 <u>Limitations on Liability</u>. Notwithstanding any of the preceding provisions of the Plan, no individual
acting as an employee or agent of the Bank, or as a member of the Board of Directors shall be personally liable to the Executive or any
other person for any claim, loss, liability or expense incurred in connection with the Plan.

6.7 <u>Gender</u>. Whenever in this Plan words are used in the masculine or neuter gender, they shall be read
and construed as in the masculine, feminine or neuter gender, whenever they should so apply.

6.8 <u>Effect on Other Corporate Benefit Plans</u>. Nothing contained in this Plan shall affect the right
of the Executive to participate in or be covered by any qualified or nonqualified pension, profit sharing, group, bonus or other supplemental
compensation or fringe benefit agreement constituting a part of the Bank's existing or future compensation structure.

6.9 <u>Inurement</u>. This Plan shall be binding upon and shall inure to the benefit of the Bank, its successors
and assigns, and the Executive, his successors, heirs, executors, administrators, and Beneficiaries.

6.10 <u>Acceleration of Payments</u>. Except as specifically permitted under this Section 6.10 or in other
sections of this Plan, no acceleration of the time or schedule of any payment may be made under this Plan. Notwithstanding the foregoing,
payments may be accelerated hereunder by the Bank, in accordance with the provisions of Treasury Regulation Section 1.409A-3(j)(4) and
any subsequent guidance issued by the United States Treasury Department.

6.11 <u>Headings</u>. Headings and sub-headings in this Plan are inserted for reference and convenience only
and shall not be deemed a part of this Plan.

6.12 <u>12 U.S.C. §1828(k</u>). Any payments made to the Executive pursuant to this Plan or otherwise
are subject to and conditioned upon compliance with 12 U.S.C. § 1828(k) or any regulations promulgated thereunder.

6.13 <u>Payment of Employment and Code Section 409A Taxes</u>. Any distribution under this Plan shall
be reduced by the amount of any taxes required to be withheld from the distribution. This Plan shall permit the acceleration of the time
or schedule of a payment to pay employment-related taxes as permitted under Treasury Regulation Section 1.409A-3(j) or to pay
any taxes that may become due at any time that the arrangement fails to meet the requirements of Code Section 409A and the regulations
and other guidance promulgated thereunder. In the latter case, such payments shall not exceed the amount required to be included in income
as the result of the failure to comply with the requirements of Code Section 409A.

6.14 <u>Successors to the Bank</u>. The Bank, as applicable, will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Bank to assume
expressly and agree to perform the duties and obligations under this Plan in the same manner and to the same extent as the Bank would
be required to perform it if no such succession had taken place.

6.15 <u>Legal Fees</u>. In the event the Executive retains legal counsel to enforce any of the terms of the
Plan, the Bank will pay his legal fees and related expenses reasonably incurred by him, but only if the Executive prevails in an action
seeking legal and/or equitable relief against the Bank.

**ARTICLE VII**

**AMENDMENT/TERMINATION**

7.1 This Plan may be amended or modified at any time, in whole or part, with the mutual written consent of
the Executive and the Bank. Notwithstanding anything to the contrary herein, the Plan may be amended without the Executive's consent
to the extent necessary to comply with existing tax laws or changes to existing tax laws.

7.2 <u>Termination of Plan</u>.

A complete termination of the Plan shall not reduce the Executive's accrued benefits under the Plan and shall occur only under the following circumstances and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Board of Directors may terminate the Plan within 12 months of a corporate dissolution taxed under
Code Section 331, or with approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the benefit is included
in the Executive's (or his Beneficiary's) gross income (and paid to the Executive or his Beneficiary) in the latest of (i) the
calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk
of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Board of Directors may terminate the Plan by Board of Directors action taken within the 30 days preceding
or 12 months following a Change in Control, provided that the Plan shall only be treated as terminated if all substantially similar arrangements
sponsored by the Bank are terminated so that the Executive and all participants under substantially similar arrangements are required
to receive all amounts payable under the terminated arrangements within 12 months of the date of the termination of the arrangements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Board of Directors may terminate the Plan at any time provided that (i) the termination does
not occur proximate to a downturn in the financial health of the Bank, (ii) all arrangements sponsored by the Bank that would be
aggregated with this Plan under Treasury Regulations Section 1.409A-1(c) if the Executive was also covered by any of those other
arrangements are also terminated; (iii) no payments other than payments that would be payable under the terms of the arrangements
if the termination had not occurred are made within 12 months of the termination of the arrangement (e.g., the Executive's benefit);
(iv) all payments are made within 24 months of the termination of the arrangements; and (v) the Bank does not adopt a new arrangement
that would be aggregated with any terminated arrangement under Treasury Regulations Section 1.409A-1(c) if the Executive participated
in both arrangements, at any time within three years following the date of termination of the arrangement.

**ARTICLE VIII**

**EXECUTION**

8.1 This Plan sets forth the entire understanding of the Bank and the Executive with respect to the transactions
contemplated hereby, and any previous agreements or understandings between them regarding the subject matter hereof are merged into and
superseded by this Plan.

8.2 This Plan shall be executed in duplicate, each copy of which, when so executed and delivered, shall be
an original, but both copies shall together constitute one and the same instrument.

[signature page follows]

IN WITNESS WHEREOF, the Bank has caused this Plan to be executed, effective as of the day and date first above written.

---

| |
|:---|
| **PERU FEDERAL SAVINGS BANK** |
| By: |
| Title: |
| **EXECUTIVE** |
| By: |

---

## Exhibit 10.5

**Exhibit 10.5**

**Peru Federal Savings Bank**

**AMENDED AND RESTATED**

**Supplemental Life Insurance Agreement**

THIS SUPPLEMENTAL LIFE INSURANCE AGREEMENT (this "Agreement") is adopted this May 1, 2014, by and between PERU FEDERAL SAVINGS BANK, located in Peru, Illinois (the "Bank"), and<u> </u>(the "Executive"). It amends and restates in its entirety the Endorsement Split Dollar Insurance Agreement between the Bank and the Executive dated June 4, 2004.

The purpose of this Agreement is to retain and reward the Executive, by dividing the death proceeds of certain life insurance policies which are owned by the Bank on the life of the Executive with the designated beneficiary of the Executive. The Bank will pay the life insurance premiums from its general assets.

**ARTICLE 1**

**DEFINITIONS**

Whenever used in this Agreement, the following terms shall have the meanings specified:

1.1 " <u>Bank's Interest</u> " means the benefit set forth in Section 3.2.

1.2 " <u>Beneficiary</u> "
 means each designated person, or the estate of the deceased Executive, entitled to benefits,
 if any, upon the death of the Executive.

1.3 " <u>Beneficiary Designation Form</u> " means the form established from time to time by the Plan Administrator
 that the Executive completes, signs and returns to the Plan Administrator to designate one
 or more Beneficiaries.

1.4 " <u>Board</u> "
 means the Board of Directors of the Bank as from time to time constituted.

1.5 " <u>Compensation</u> "
 means the total base annual salary of the Executive, before any voluntary deductions or withholdings,
 as of the date of the Executive's death.

1.6 " <u>Executive's Interest</u> " means the benefit set forth in Section 3.1.

1.7 " <u>Effective Date</u> " means May 1, 2014.

1.8 " <u>Insured</u> "
 means the Executive.

1.9 " <u>Insurer</u> "
 means the insurance company issuing the life insurance policy on the life of the insured.

1.10 " <u>Net Death Proceeds</u> " means the total death proceeds of the Policy minus the cash surrender
 value.

1.11 " <u>Policy</u> "
 means the individual insurance policy or policies adopted by the Bank for purposes of insuring
 the Executive's life under this Agreement.

1.12 " <u>Termination of Employment</u> " means the termination of Executive's service for any reason, voluntarily or involuntarily.

**ARTICLE 2**

**PARTICIPATION**

Unless the Board, in its sole discretion, elects to otherwise continue the Agreement, the Executive's rights under the Agreement shall automatically cease and his or her participation in this Agreement shall automatically terminate upon his or her Termination of Employment. In the event that the Bank decides to maintain the Policy after the Executive's termination of participation in the Agreement, the Bank shall be the direct beneficiary of the entire death proceeds of the Policy.

**ARTICLE 3**

**POLICY OWNERSHIP/INTERESTS**

3.1 <u>Executive's Interest</u>. The Executive, or the Executive's assignee, shall have the right to designate
 the Beneficiary of an amount of death proceeds equal to ONE TIMES COMPENSATION, not to exceed
 the Net Death Proceeds, subject to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Forfeiture
 of Executive's rights upon termination of Participation as set forth in Section 2;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Termination
 of the Agreement and the corresponding forfeiture of rights for all Executives or any one
 Executive in accordance with Section 9 hereof; and

3.2 <u>Bank's Interest</u>. The Bank shall own the Policy and shall have the right to exercise all incidents
 of ownership except that the Bank shall not sell, surrender or transfer ownership of a Policy
 so long as the Executive has an interest in the Policy as described in Section 3.1.
 However, the Bank may replace the Policy with a policy that provides comparable death benefits
 to cover the benefit provided under this Agreement. This provision shall not impair the right
 of the Bank, subject to Article 9, to terminate this Agreement. The Bank shall be the
 beneficiary of the remaining death proceeds of the Policy after the Executive's Interest
 is determined according to Section 3.1.

**ARTICLE 4**

**PREMIUMS**

4.1 <u>Premium Payment</u>. The Bank shall pay all premiums due on all policies.

4.2 <u>Economic Benefit</u>. The Bank shall determine the economic benefit attributable to the Executive
 based on the life insurance premium factor for the Executive's age multiplied by the
 aggregate death benefit payable to the Executive's beneficiary. The "life insurance
 premium factor" is the minimum factor applicable under guidance published pursuant
 to IRS Reg.§ l.61-22(d)(3)(ii) or any subsequent authority.

4.3 <u>Imputed Income</u>. The Bank shall impute the economic benefit to the Executive on an annual basis,
 by adding the economic benefit to the Executive's W-2, or if applicable, Form 1099.

**ARTICLE 5**

**BENEFICIARIES**

5.1 <u>Beneficiary</u>.
 The Executive shall have the right, at any time, to designate a Beneficiary(ies) to receive
 any benefits payable under the Agreement to a beneficiary upon the death of the Executive.
 The Beneficiary designated under this Agreement may be the same as or different from the
 Beneficiary designation under any other agreement or plan of the Bank in which the Executive
 participates.

5.2 <u>Beneficiary Designation; Change</u>. The Executive shall designate a Beneficiary by completing and signing
 the Beneficiary Designation Form, and delivering it to the Bank or its designated agent.
 The Executive's beneficiary designation shall be deemed automatically revoked if the
 Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and
 the marriage is subsequently dissolved. The Executive shall have the right to change a Beneficiary
 by completing, signing and otherwise complying with the terms of the Beneficiary Designation
 Form and the Bank's rules and procedures, as in effect from time to time.
 Upon the acceptance by the Bank of a new Beneficiary Designation Form, all Beneficiary designations
 previously filed shall be cancelled. The Bank shall be entitled to rely on the last Beneficiary
 Designation Form filed by the Executive and accepted by the Bank prior to the Executive's
 death.

5.3 <u>Acknowledgement</u>.
 No designation or change in designation of a Beneficiary shall be effective until received,
 accepted and acknowledged in writing by the Bank or its designated agent.

5.4 <u>No Beneficiary Designation</u>. If the Executive dies without a valid designation of beneficiary,
 or if all designated Beneficiaries predecease the Executive, then the Executive's surviving
 spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, the
 benefits shall be made payable to the personal representative of the Executive's estate.

5.5 <u>Facility of Payment</u>. If the Bank determines in its discretion that a benefit is to be paid to
 a minor, to a person declared incompetent, or to a person incapable of handling the disposition
 of that person's property, the Bank may direct payment of such benefit to the guardian, legal
 representative or person having the care of custody of such minor, incompetent person or
 incapable person. The Bank may require proof of incompetence, minority or guardianship as
 it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall
 be a payment for the account of the Executive and the Executive's Beneficiary, as the case
 may be, and shall be a complete discharge of any liability under the Agreement for such payment
 amount.

**ARTICLE 6**

**ASSIGNMENT**

The Executive may irrevocably assign without consideration all or part of the Executive's Interest in this Agreement to any person, entity or trust. In the event the Executive shall transfer all or part of the Executive's Interest, then all or part of the Executive's Interest in this Agreement shall be vested in the Executive's transferee, who shall be substituted as a party hereunder, and the Executive shall have no further interest in this Agreement.

**ARTICLE 7**

**INSURER**

The Insurer shall be bound only by the terms of its given Policy. The Insurer shall not be bound by or deemed to have notice of the provisions of this Agreement. The Insurer shall have the right to rely on the Bank's representations with regard to any definitions, interpretations or Policy interests as specified under this Agreement.

**ARTICLE 8**

**CLAIMS AND REVIEW PROCEDURE**

8.1 <u>Claims Procedure</u>. The Executive or Beneficiary ("claimant") who has not received
 benefits under the Agreement that he or she believes should be paid shall make a claim for
 such benefits as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.1 <u>Initiation - Written Claim</u>. The claimant initiates a claim by submitting to the Bank a written claim
 for the benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.2 <u>Timing of Bank Response</u>. The Bank shall respond to such claimant within 90 days after receiving
 the claim. If the Bank determines that special circumstances require additional time for
 processing the claim, the Bank can extend the response period by an additional 90 days by
 notifying the claimant in writing, prior to the end of the initial period 90-day period,
 that an additional period is required. The notice of extension must set forth the special
 circumstances and the date by which the Bank expects to render its decision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.3 <u>Notice of Decision</u>. If the Bank denies part of all the claim, the Bank shall notify the claimant
 in writing of such denial. The Bank shall write the notification in manner calculated to
 be understood by the claimant. The notification shall set forth:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The
 specified reasons for the denial;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A
 reference to the specified provisions of the Agreement on which the denial is based;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A
 description of any additional information or material necessary for the claimant to perfect
 the claim and an explanation of why it is needed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) An
 explanation of the Agreement's review procedures and the time limits applicable to such procedures;
 and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) A
 statement of the claimant's right to bring a civil action under ERISA Section 502(a) following
 an adverse benefit determination on review.

8.2 <u>Review Procedure</u>. If the Bank denies part or all of the claim, the claimant shall have the opportunity
 for a full and fair review by the Bank of the denial, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.1 <u>Initiation - Written Request</u>. To initiate the review, the claimant, within 60 days after receiving
 the Bank's notice of denial, must file with the Bank a written request for review.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.2 <u>Additional Submissions - Information Access</u>. The Claimant shall then have the opportunity to submit
 written comments, documents, records and other information relating to the claim. The Bank
 shall also provide the claimant, upon request and free of charge, reasonable access to, and
 copies of, all documents, records and other information relevant (as defined in applicable
 ERISA regulations) to the claimant's claim for benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.3 <u>Considerations on Review</u>. In considering the review, the Bank shall take into account all materials
 and information the claimant submits relating to the claim, without regard to whether such
 information was submitted or considered in the initial benefit determination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.4 <u>Timing of Bank's Response</u>. The Bank shall respond in writing to such claimant within 60 days
 after receiving the request for review. If the Bank determines that special circumstances
 require additional time for processing the claim, the Bank can extend the response period
 to an additional 60 days by notifying the claimant in writing, prior to the end of the initial
 60-day period, that an additional period is required. The notice of extension must set forth
 the special circumstances and the date by which the Bank expects to render its decision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.5 <u>Notice of Decision</u>. The Bank shall notify the claimant in writing of its decision on review.
 The Bank shall write the notification in a manner calculated to the understood by the claimant.
 The notification shall set forth:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The
 specific reasons of the denial;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A
 reference to the specific provisions of the Agreement on which the denial is based;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A
 statement that the claimant is entitled to receive, upon request and free of charge, reasonable
 access to, and copies of, all documents, records and other information relevant (as defined
 in applicable ERISA regulations) to the claimant's claim for benefits; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) A
 statement of the claimant's right to bring a civil action under ERISA Section 502(a).

**ARTICLE 9**

**AMENDMENTS AND TERMINATION**

The Board may amend or terminate this Agreement at any time prior to the Executive's death. Such an amendment or termination shall be by any written notice to the Executive. In the event that the Bank decides to maintain the Policy after the termination of the Agreement, the Bank shall be the direct beneficiary of the entire death proceeds of the Policy.

**ARTICLE 10**

**ADMINISTRATION**

10.1 <u>Bank Duties</u>. This Agreement shall be administered by the Bank, as the named fiduciary, which
 shall consist of the Board or such committee or persons as the Board may choose. The Bank
 shall also have the discretion and authority to (i) make, amend, interpret and enforce
 all appropriate rules and regulations for the administration of this Agreement and (ii) decide
 or resolve any and all questions including interpretations of this Agreement, as may arise
 in connection with this Agreement.

10.2 <u>Agents</u>.
 In the administration of this Agreement, the Bank may employ agents and delegate to them
 such administrative duties as it sees fit, (including acting through a duly appointed representative),
 and may from time to time consult with counsel who may counsel to the Bank.

10.3 <u>Binding Effect of Decisions</u>. The decision or action of the Bank with respect to any question
 arising out of or in connection with the administration, interpretation and application of
 this Agreement and the rules and regulations promulgated hereunder shall be final and
 conclusive and binding upon all persons having any interest in this Agreement.

10.4 <u>Indemnity of Bank</u>. The Bank shall indemnify and hold harmless the members of the Bank against any
 and all claims, losses, damages, expenses or liabilities arising from any action or failure
 to act with respect to this Agreement, except in the case of willful misconduct by the Bank
 or any of its members.

**ARTICLE 11**

**MISCELLANEOUS**

11.1 <u>Binding Effect</u>. This Agreement shall bind the Executive and the Bank, their beneficiaries, survivors,
 executors, administrators and transferees and any Beneficiary.

11.2 <u>No Guarantee of Employment</u>. This Agreement is not an employment policy or contract. It does
 not give the Executive the right to remain an Executive of the Bank, not does it interfere
 with the Bank's right to discharge the Executive. It also does not require the Executive
 to remain an Executive nor interfere with the Executive's right to terminate employment at
 any time.

11.3 <u>Applicable Law</u>. The Agreement and all rights hereunder shall be governed by and construed according
 to the laws of the state of Illinois, except to the extent preempted by the laws of the United
 States of America.

11.4 <u>Reorganization</u>.
 The Bank shall not merge or consolidate into or with another company, or reorganize, or sell
 substantially all of its assets to another company, firm or person unless such succeeding
 or continuing company, firm or person agrees to assume and discharge the obligations of the
 Bank under this Agreement. Upon the occurrence of such event, the term "Bank" as
 used in this Agreement shall be deemed to refer to the successor or survivor company.

11.5 <u>Notice</u>.
 Any notice or filing required or permitted to be given to the Bank under this Agreement shall
 be sufficient if in writing and hand-delivered, or sent by registered or certified mail,
 to the address below:

Peru Federal Savings Bank

Attention: Chairman of the Board

1730 Fourth Street,

Peru, Illinois 61354

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or the receipt for registration or certification. Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Executive.

11.6 <u>Entire Agreement</u>. This Agreement, along with the Executive's Beneficiary Designation Form constitute
 the entire agreement between the Bank and the Executive as to the subject matter hereof.
 No rights are granted to the Executive under this Agreement other than those specifically
 set forth herein.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated above.

---

| | |
|:---|:---|
| EXECUTIVE: | PERU FEDERAL SAVINGS BANK |
| | By |
| (Printed name) | |
| | Title |
| (Signature) | |

---

## Ex-16

**Exhibit 16**

Securities and Exchange Commission

100 F Street NE

Washington, D.C. 20549

Ladies and Gentlemen:

We have read the information required under Item 11 of Form S-1 as presented under the caption "Change in Auditor" in the Prospectus contained in the Form S-1 filed on March 10, 2023 of PFS Bancorp, Inc. (the "Company"), and are in agreement with the statements contained therein with respect to our firm. We have no basis to agree or disagree with other statements of the registrant contained therein.

/s/ FORVIS, LLP

(Formerly BKD, LLP)

March 10, 2023

Decatur, Illinois

## Ex-21

**Exhibit 21**

**Subsidiaries of the Registrant**

The following is a list of the subsidiaries of PFS Bancorp, Inc.:

<u>Name</u> <u>State/Jurisdiction of Incorporation</u> <br>Peru Federal Savings Bank Federal

## Exhibit 23.2

**Exhibit 23.2**

**Feldman Financial Advisors, Inc.**

8804 Mirador Place

McLean, VA 22102

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(202) 467-6862

March 10, 2023

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

1730 Fourth Street

Peru, Illinois 61354

Members of the Boards of Directors:

We hereby consent to the use of our firm's name in the Registration Statement on Form S-1, and any amendments thereto, to be filed with the Securities and Exchange Commission by PFS Bancorp, Inc. We also hereby consent to the inclusion of, summary of, and references to our Conversion Valuation Appraisal and any Conversion Valuation Appraisal Updates and our statements concerning subscription rights and liquidation rights in such filings and amendments, including the prospectus of PFS Bancorp, Inc. We also consent to the reference to our firm under the heading "Experts" in the prospectus.

Sincerely,

![](tm238313d1_ex23-2img001.jpg)

**Feldman Financial Advisors, Inc.**

## Exhibit 23.3

**Exhibit 23.3**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We hereby consent to the use in this Registration Statement on Form S-1 of PFS Bancorp, Inc. of our report dated March 3, 2023, on the consolidated financial statements of Peru Federal Savings Bank included in the Prospectus contained in such Registration Statement and to the reference to us under the heading "Experts" in the Prospectus.

---

| |
|:---|
| /s/ WIPFLI LLP |
| March 10, 2023 |
| Eau Claire, Wisconsin |

---

## Exhibit 99.1

**Exhibit 99.1**

**Feldman Financial Advisors, Inc.**

8804 Mirador Place

McLean, VA 22102

(202) 467-6862

December 20, 2022

**<u>Confidential</u>**

Board of Directors

Peru Federal Savings Bank

1730 Fourth Street

Peru, Illinois 61354

Members of the Board:

This letter sets forth the agreement ("Agreement") between Peru Federal Savings Bank (the "Bank") and Feldman Financial Advisors, Inc. ("FFA"), whereby the Bank has engaged FFA to provide an independent appraisal of the estimated aggregate pro forma market value (the "Valuation") of the Bank in connection with the conversion of the Bank from the mutual to stock form of organization and concurrent offering of all the capital stock by the Bank or its newly formed holding company (the "Conversion").

FFA agrees to deliver the Valuation, in a written report satisfying applicable regulatory guidelines for mutual-to-sock conversion appraisals, to the Bank at the address above on or before a mutually agreed upon date. Further, FFA agrees to perform such other services as are necessary or required of the independent appraiser in connection with comments from the Bank's regulatory authorities and subsequent updates of the Valuation as from time to time may be necessary, both after initial approval by the Bank's regulatory authorities and prior to the time the Conversion is completed. If requested, FFA will assist the Bank in responding to all regulatory inquiries regarding the Valuation and will also assist the Bank at all meetings with the regulatory authorities concerning the Valuation.

The Bank agrees to pay FFA a professional consulting fee of $37,500 for FFA's appraisal services related to preparation of the initial appraisal report. Any subsequent appraisal updates required in conjunction with the regulatory application and the Conversion will be subject to an additional fee of $7,500 per update. It is anticipated that there will be at least one appraisal update, specifically the appraisal update required after the completion of the stock offering.

The Bank also agrees to reimburse FFA for certain out-of-pocket expenses necessary and incident to the completion of the services described above. These expenses shall not exceed $5,000 without the prior consent of the Bank. Reimbursable expenses for copying, report reproduction, data materials, express mail delivery, and travel shall be paid to FFA as incurred and billed. Payment of the professional consulting fee shall be made according to the following schedule:

● $7,500 upon execution of this Agreement;

● $30,000 upon delivery of the initial appraisal report to the Bank; and,

● $7,500 upon completion of each updated appraisal report.

**Feldman Financial Advisors, Inc.**

Board of Directors

Peru Federal Savings Bank

December 20, 2022

If, during the course of the Conversion, unforeseen events occur so as to materially change the nature of the work content of the appraisal services described above such that FFA must supply services beyond that contemplated at the time this contract was executed, the terms of this Agreement shall be subject to renegotiation by the Bank and FFA. Such unforeseen events shall include, but not be limited to, material changes in regulations governing the Conversion, material changes in mutual-to-stock conversion appraisal guidelines or processing procedures as administered by the relevant regulatory authorities, major changes in the Bank's management or operating policies, and excessive delays or suspension of processing of the Conversion.

In the event the Bank shall for any reason discontinue the Conversion prior to delivery of the completed appraisal report and payment of the progress payment fee totaling $30,000, the Bank agrees to compensate FFA according to FFA's standard billing rates for consulting appraisal services based on accumulated and verifiable time expended, provided that the total of such charges shall not exceed $37,500 plus reimbursable expenses and less credit for payment of the initial retainer fee of $7,500.

In order to induce FFA to render the aforesaid services, the Bank agrees to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Bank agrees to supply FFA such information with respect to the Bank's business and financial
condition as FFA may reasonably request in order for FFA to perform the appraisal services. Such information shall include, without limitation:
annual financial statements, periodic regulatory filings and material agreements, corporate books and records, and such other documents
as are material for the performance by FFA of the appraisal services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Bank hereby represents and warrants to FFA (i) that to its best knowledge any information provided
to FFA by or on behalf of the Bank, will not, at any relevant time, contain any untrue statement of a material fact or fail to state a
material fact necessary to make the information or statements therein not false or misleading, (ii) that the Bank will not use the
product of FFA's services in any manner, including in a proxy or offering circular, in connection with any untrue statement of a
material fact or in connection with the failure to state a material fact necessary to make other statements not false or misleading, and
(iii) that all documents incorporating or relying upon FFA's services or the product of FFA's services will otherwise
comply with all applicable federal and state laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Any valuations or opinions issued by FFA may be included in its entirety in any communication by the Bank
in any regulatory application, proxy statement, or offering prospectus; provided that, such valuation or opinion may not be disclosed
in the prospectus, nor reproduced and distributed, nor may FFA be referred to in the prospectus without FFA's prior written consent.

**Feldman Financial Advisors, Inc.**

Board of Directors

Peru Federal Savings Bank

December 20, 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. FFA's Valuation will be based upon the Bank's representation that the information contained
in the Conversion application and additional information furnished to us by the Bank and its independent auditors is truthful, accurate,
and complete in all material respects. FFA will not independently verify the financial statements and other information provided by the
Bank and its independent auditors, nor will FFA independently value the assets or liabilities of the Bank. The Valuation will consider
the Bank only as a going concern and will not be considered as an indication of the liquidation value of the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. FFA's Valuation is not intended, and must not be represented to be, a recommendation of any kind
as to the advisability of purchasing shares of common stock in the Conversion. Moreover, because the Valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to change from time to time, FFA will give no assurance that
persons who purchase shares of common stock in the Conversion will thereafter be able to sell such shares at prices related to FFA's
Valuation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. The Bank agrees to indemnify FFA and its affiliates and all persons employed by or associated with FFA
or its affiliates against all claims, liabilities and related expenses, as incurred, arising out of this engagement, unless, upon final
adjudication, such claims, liabilities and expenses are found to have resulted primarily from FFA's gross negligence, bad faith,
or willful misconduct. Any provision for indemnification of the Bank shall be in accordance with federal banking law and applicable regulations
of the Federal Deposit Insurance Corporation (12 CFR Part 359). No termination, completion or modification hereof shall limit or
affect such indemnification obligation. In the event FFA becomes aware of a claim or a possible claim arising out of this Agreement, it
shall notify the Bank as soon as possible. The Bank will attempt to resolve the claim. In the event the Bank is not able to resolve the
claim, it has the option to retain legal counsel on behalf of FFA to defend the claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. The Bank and FFA are not affiliated, and neither the Bank nor FFA has an economic interest in, or is held
in common with, the other and has not derived a significant portion of its gross revenues, receipts or net income for any period from
transactions with the other. It is understood that FFA is not a seller of securities within the scope of any federal or state securities
law and any report prepared by FFA shall not be used as an offer or solicitation with respect to the purchase or sale of any security,
it being understood that the foregoing shall not be construed to prohibit the filing of any such report as part of the Conversion application
or Securities and Exchange Commission and blue sky filings or customary references thereto in applications, filings, proxy statements
and prospectuses.

**Feldman Financial Advisors, Inc.**

Board of Directors

Peru Federal Savings Bank

December 20, 2022

Please acknowledge your concurrence with the foregoing by signing as indicated below and returning to FFA a signed copy of this Agreement and the initial payment in the amount of $7,500.

---

| |
|:---|
| Yours very truly, |
| **Feldman Financial Advisors, Inc.** |
| Trent R. Feldman |
| President |

---

---

| | |
|:---|:---|
| **Agreed to and Accepted for:** | **Agreed to and Accepted for:** |
| **Peru Federal Savings Bank** | **Peru Federal Savings Bank** |
| By: | /s/ Eric J. Heagy |
| Title: | President/CEO |
| Date: | 12/27/22 |

---

## Exhibit 99.2

**Exhibit 99.2**

**Feldman Financial Advisors, Inc.**

8804 Mirador Place

McLean, VA 22102

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(202) 467-6862

March 7, 2023

Boards of Directors

Peru Federal Savings Bank

PFS Bancorp, Inc.

1730 Fourth Street

Peru, Illinois 61354

Members of the Boards of Directors:

It is the opinion of Feldman Financial Advisors, Inc., that the subscription rights to be received by the eligible account holders and other eligible subscribers of Peru Federal Savings Bank (the "Bank"), pursuant to the Plan of Conversion (the "Plan") adopted by the Board of Directors of Peru Federal Savings Bank, do not have any ascertainable market value at the time of distribution or at the time the rights are exercised in the subscription offering.

According to the Plan, the Bank will convert from the mutual form of organization to the stock form of organization. In connection with the conversion, Peru Federal has organized a new stock holding company, PFS Bancorp, Inc. (the "Company"), which will offer shares of its common stock for sale in a subscription offering to eligible account holders and other eligible subscribers. Any shares of common stock that remain unsubscribed for in the subscription offering will be offered by the Company for sale in the community or syndicated community offerings to certain members of the general public. When the conversion and stock offering are completed, all of the capital stock of the Bank will be owned by the Company, and all of the common stock of PFS Bancorp will be owned by its stockholders.

Our opinion is based on the fact that the subscription rights are acquired by the recipients without cost, are legally non-transferable and of short duration, and afford the recipients the right only to purchase shares of common stock of the Company at a price equal to its aggregate estimated pro forma market value, which will be the same price at which any unsubscribed shares will be purchased in the community or syndicated community offerings.

Changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external factors may occur from time to time, often with great unpredictability, and may materially impact the value of savings institution common stocks as a whole or the value of the Company alone. Accordingly, no assurance can be given that persons who subscribe to shares of common stock in the subscription offering will thereafter be able to buy or sell such shares at the same price paid in the subscription offering.

Sincerely,

![](tm238313d1_ex99-2img001.jpg)

**Feldman Financial Advisors, Inc.**

## Exhibit 99.3

**Exhibit 99.3**

**Feldman Financial Advisors, Inc.**

8804 Mirador Place

McLean, VA 22102

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(202) 467-6862

<br>**Peru Federal Savings Bank**<br> **Waukegan, Illinois**<br>**Conversion Valuation Appraisal Report**<br> **Valued as of February 21, 2023**<br>**Prepared By**<br>**Feldman Financial Advisors, Inc** **.**<br> **McLean, Virginia**<br>

**Feldman Financial Advisors, Inc.**

8804 Mirador Place

McLean, VA 22102

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(202) 467-6862

February 21, 2023

Board of Directors

Peru Federal Savings Bank

1730 Fourth Street

Peru, Illinois 61354

Members of the Board of Directors:

At your request, we have completed and hereby provide an independent appraisal (the "Appraisal") of the estimated pro forma market value of Peru Federal Savings Bank (the "Bank") as of February 21, 2023 in conjunction with the Bank's conversion (the "Conversion") from the mutual form of organization to the stock form of organization, issuance of all of its capital stock to a newly formed stock holding company known as PFS Bancorp, Inc. ("PFS Bancorp" or the "Company"), and offering for sale of PFS Bancorp's common stock to eligible depositors of the Bank, the Bank's employee stock ownership plan, and certain members of the general public in the subscription and community offering (the "Stock Offering"). The Conversion is being undertaken pursuant to a Plan of Conversion adopted by the Boards of Directors of the Bank. The Appraisal is furnished pursuant to the filing by the Bank of regulatory applications with respect to the Conversion and Stock Offering with the Office of the Comptroller of the Currency and the Securities and Exchange Commission.

Feldman Financial Advisors, Inc. ("Feldman Financial") is a financial consulting and advisory firm that specializes in valuations and analyses of business enterprises and securities in the thrift, banking, and mortgage industries. The background of Feldman Financial is presented in Exhibit I. In preparing the Appraisal, we conducted an analysis of the Bank that included discussions with the Bank's management, the Bank's legal counsel, Luse Gorman, PC, and the Bank's independent registered public accounting firm, Wipfli LLP. In addition, where appropriate, we considered information based on other available published sources that we believe are reliable; however, we cannot guarantee the accuracy and completeness of such information. We also reviewed, among other factors, the economy in the Bank's primary market area and compared the Bank's financial condition and operating performance with that of selected publicly traded thrift institutions. We reviewed conditions in the securities markets in general and in the market for thrift institution common stocks in particular.

The Appraisal is based on the Bank's representation that the information in the Conversion applications and additional evidence furnished to us by the Bank and its independent auditor are truthful, accurate, and complete. We did not independently verify the financial statements and other information provided by the Bank and its independent accounting firm, nor did we independently value the assets or liabilities of the Bank. The Appraisal considers the Bank only as a going concern and should not be considered as an indication of the liquidation value of the Bank.

**Feldman Financial Advisors, Inc.**

Board of Directors

Peru Federal Savings Bank

February 21, 2023

Page Two

Pursuant to the Plan of Conversion adopted and approved by the Bank's Board of Directors, the Bank will convert from the mutual to the stock form of organization. When the Conversion and Stock Offering are completed, all of the outstanding capital stock of Peru Federal will be owned by PFS Bancorp, and all of the common stock of PFS Bancorp will be owned by its stockholders. The Bank will operate as a wholly-owned subsidiary of PFS Bancorp.

The Plan of Conversion provides for the establishment of a new charitable foundation, the Peru Federal Savings Charitable Foundation, Inc. ("the Foundation"). The Foundation will be funded initially by cash and common stock of the Company. Upon the closing of the Conversion and Stock Offering, the Company and the Bank intend to contribute to the Foundation an amount of $100,000 in cash and 40,000 shares of our common stock, for an aggregate contribution of $500,000 based on the $10.00 per share offering price. The Bank regards that the purpose of the Foundation is to provide financial support to charitable organizations in its market area and to enable the communities that it serves to share in our long-term growth.

It is our opinion that, as of February 21, 2023, the estimated pro forma market value of the Bank (inclusive of the common stock contributed to the Foundation) was within a range (the "Valuation Range") of $15,700,000 to $21,100,000 with a midpoint of $18,400,000. Pursuant to applicable appraisal guidelines, the Valuation Range was based upon a decrease of approximately 15% from the midpoint value to determine the minimum value and an increase of approximately 15% from the midpoint value to establish the maximum value. Assuming an additional increase of approximately 15% above the maximum value would result in an adjusted maximum of $24,205,000. Based on the Valuation Range, the range of common stock to be sold in the Stock Offering (excluding the Foundation shares) is as follows: $15,300,000 at the minimum, $18,000,000 at the midpoint, $20,700,000 at the maximum, and $23,805,000 at the adjusted maximum of the offering range. Based on an initial offering price of $10.00 per share, the number of shares to be sold in the Stock Offering is as follows: 1,530,000 at the minimum, 1,800,000 at the midpoint, 2,070,000 at the maximum, and 2,380,500 at the adjusted maximum of the offering range.

Our Appraisal is not intended, and must not be construed, to be a recommendation of any kind as to the advisability of purchasing shares of common stock in the Stock Offering. Moreover, because the Appraisal is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of stock in the Stock Offering will thereafter be able to sell such shares at prices related to the foregoing estimate of the Bank's pro forma market value. Feldman Financial is not a seller of securities within the meaning of any federal or state securities laws, and any report prepared by Feldman Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities.

**Feldman Financial Advisors, Inc.**

Board of Directors

Peru Federal Savings Bank

February 21, 2023

Page Three

The Valuation Range reported herein will be updated as appropriate. These updates will consider, among other factors, any developments or changes in the Bank's operating performance, financial condition, or management policies, and current conditions in the securities markets for thrift institution common stocks. Should any such new developments or changes be material, in our opinion, to the valuation of the Bank, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in detail at that time.

---

| |
|:---|
| Respectfully submitted, |
| **Feldman Financial Advisors, Inc.** |
| ![](tm238313d1_ex99-3img01.jpg) |
| Trent R. Feldman |
| President |
| ![](tm238313d1_ex99-3img02.jpg) |
| Peter W. L. Williams |
| Principal |

---

Feldman Financial Advisors, Inc.

**TABLE OF CONTENTS**

---

| | | | |
|:---|:---|:---|:---|
| **<u>TAB</u>** | | | **<u>PAGE</u>** |
|  | **INTRODUCTION** | **INTRODUCTION** | 1 |
| **I.** | **Chapter One – Business of Peru Federal Savings Bank** | **Chapter One – Business of Peru Federal Savings Bank** |  |
|  | General Overview | General Overview | 3 |
|  | Financial Condition | Financial Condition | 9 |
|  | Income and Expense Trends | Income and Expense Trends | 18 |
|  | Interest Rate Risk Management | Interest Rate Risk Management | 24 |
|  | Asset Quality | Asset Quality | 28 |
|  | Office Facilities | Office Facilities | 31 |
|  | Market Area | Market Area | 32 |
|  | Summary Outlook | Summary Outlook | 43 |
| **II.** | **Chapter Two – Comparisons with Publicly Traded Companies** | **Chapter Two – Comparisons with Publicly Traded Companies** |  |
|  | General Overview | General Overview | 44 |
|  | Selection Criteria | Selection Criteria | 45 |
|  | Recent Financial Comparisons | Recent Financial Comparisons | 49 |
| **III.** | **Chapter Three – Market Value Adjustments** | **Chapter Three – Market Value Adjustments** |  |
|  | General Overview | General Overview | 61 |
|  | Earnings Growth and Viability | Earnings Growth and Viability | 62 |
|  | Financial Condition | Financial Condition | 63 |
|  | Market Area | Market Area | 63 |
|  | Management | Management | 65 |
|  | Dividend Payments | Dividend Payments | 66 |
|  | Liquidity of the Stock Issue | Liquidity of the Stock Issue | 66 |
|  | Subscription Interest | Subscription Interest | 68 |
|  | Recent Acquisition Activity | Recent Acquisition Activity | 69 |
|  | Effect of Banking Regulations and Regulatory Reform | Effect of Banking Regulations and Regulatory Reform | 69 |
|  | Stock Market Conditions | Stock Market Conditions | 71 |
|  | Adjustments Conclusion | Adjustments Conclusion | 78 |
|  | Valuation Approach | Valuation Approach | 78 |
|  | Valuation Conclusion | Valuation Conclusion | 82 |
| **IV.** | **Appendix -- Exhibits** | **Appendix -- Exhibits** |  |
|  | I | Background of Feldman Financial Advisors, Inc. | I-1 |
|  | II-1 | Consolidated Balance Sheets | II-1 |
|  | II-2 | Consolidated Income Statements | II-2 |
|  | II-3 | Loan Portfolio Composition | II-3 |
|  | II-4 | Cash and Investments Composition | II-4 |
|  | II-5 | Deposit Accounts Composition | II-5 |
|  | II-6 | Borrowed Funds Composition | II-6 |
|  | II-7 | Professional Background Summaries of Executive Officers | II-7 |
|  | III | Financial and Market Data for All Public Thrifts | III-1 |
|  | IV-1 | Pro Forma Assumptions for the Stock Offering | IV-1 |
|  | IV-2 | Pro Forma Conversion Valuation Range | IV-2 |
|  | IV-3 | Pro Forma Conversion Analysis at the Midpoint Value | IV-3 |
|  | IV-4 | Comparative Valuation Ratio Analysis | IV-4 |

---

i

Feldman Financial Advisors, Inc.

---

| | | | |
|:---|:---|:---|:---|
| **LIST OF TABLES** | **LIST OF TABLES** | **LIST OF TABLES** | **LIST OF TABLES** |
| **<u>TAB</u>** | | | **<u>PAGE</u>** |
| **I.** | **Chapter One – Business of Peru Federal Savings Bank** | **Chapter One – Business of Peru Federal Savings Bank** |  |
|  | Table 1 | Selected Financial Condition Data | 9 |
|  | Table 2 | Relative Balance Sheet Concentrations | 10 |
|  | Table 3 | Income Statement Summary | 19 |
|  | Table 4 | Income Statement Ratios | 21 |
|  | Table 5 | Yield and Cost Summary | 23 |
|  | Table 6 | Economic Value of Equity | 25 |
|  | Table 7 | Net Interest Income Sensitivity | 27 |
|  | Table 8 | Non-performing Asset Summary | 29 |
|  | Table 9 | Allowance for Loan Losses | 30 |
|  | Table 10 | Selected Demographic Data | 34 |
|  | Table 11 | Major Business Employers in the Illinois Valley Area | 36 |
|  | Table 12 | Total Employment Force by Industry Sector | 37 |
|  | Table 13 | Branch Office Deposit Data | 38 |
|  | Table 14 | Deposit Market Share in LaSalle County, Illinois | 40 |
|  | Table 15 | Deposit Market Share in the Ottawa MSA, Illinois | 41 |
| **II.** | **Chapter Two – Comparisons with Publicly Traded Companies** | **Chapter Two – Comparisons with Publicly Traded Companies** |  |
|  | Table 16 | Comparative Group Operating Summary | 48 |
|  | Table 17 | Key Financial Comparisons | 50 |
|  | Table 18 | General Operating Characteristics | 56 |
|  | Table 19 | Summary Financial Performance Ratios | 57 |
|  | Table 20 | Income and Expense Analysis | 58 |
|  | Table 21 | Balance Sheet Composition | 59 |
|  | Table 22 | Growth Rates, Credit Risk, and Loan Composition | 60 |
| **III.** | **Chapter Three – Market Value Adjustments** | **Chapter Three – Market Value Adjustments** |  |
|  | Table 23 | Comparative Market Area Data | 64 |
|  | Table 24 | Summary of Illinois Bank and Thrift Acquisition Activity | 70 |
|  | Table 25 | Comparative One-Year Stock Index Performance | 73 |
|  | Table 26 | Comparative Three-Year Stock Index Performance | 74 |
|  | Table 27 | Summary of Standard Conversion Stock Offerings | 76 |
|  | Table 28 | Comparative Pro Forma Market Valuation Analysis | 83 |

---

ii

Feldman Financial Advisors, Inc.

**INTRODUCTION**

At your request, we have completed and hereby provide an independent appraisal (the "Appraisal") of the estimated pro forma market value of Peru Federal Savings Bank (the "Bank") as of February 21, 2023 in conjunction with the Bank's conversion (the "Conversion") from the mutual form of organization to the stock form of organization, issuance of all of its capital stock to a newly formed stock holding company known as PFS Bancorp, Inc. ("PFS Bancorp" or the "Company"), and offering for sale of PFS Bancorp's common stock to eligible depositors of the Bank, the Bank's employee stock ownership plan, and certain members of the general public in the subscription and community offering (the "Stock Offering"). The Conversion is being undertaken pursuant to a Plan of Conversion adopted by the Boards of Directors of the Bank. The Appraisal is furnished pursuant to the filing by the Bank of regulatory applications with respect to the Conversion and Stock Offering with the Office of the Comptroller of the Currency and the Securities and Exchange Commission.

Feldman Financial Advisors, Inc. ("Feldman Financial") is a financial consulting and advisory firm that specializes in valuations and analyses of business enterprises and securities in the thrift, banking, and mortgage industries. The background of Feldman Financial is presented in Exhibit I. In preparing the Appraisal, we conducted an analysis of the Bank that included discussions with the Bank's management, the Bank's legal counsel, Luse Gorman, PC, and the Bank's independent registered public accounting firm, Wipfli LLP. In addition, where appropriate, we considered information based on other available published sources that we believe are reliable; however, we cannot guarantee the accuracy and completeness of such information. We also reviewed, among other factors, the economy in the Bank's primary market area and compared the Bank's financial condition and operating performance with that of selected publicly traded thrift institutions. We reviewed conditions in the securities markets in general and in the market for thrift institution common stocks in particular.

Feldman Financial Advisors, Inc.

The Appraisal is based on the Bank's representation that the information in the Conversion applications and additional evidence furnished to us by the Bank and its independent auditor are truthful, accurate, and complete. We did not independently verify the financial statements and other information provided by the Bank and its independent accounting firm, nor did we independently value the assets or liabilities of the Bank. The Appraisal considers the Bank only as a going concern and should not be considered as an indication of the liquidation value of the Bank.

**Our Appraisal is not intended, and must not be construed, to be a recommendation of any kind as to the advisability of purchasing shares of common stock in the Stock Offering. Moreover, because the Appraisal is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of stock in the Stock Offering will thereafter be able to sell such shares at prices related to the foregoing estimate of the Bank's pro forma market value. Feldman Financial is not a seller of securities within the meaning of any federal or state securities laws, and any report prepared by Feldman Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities.**

The Valuation Range reported herein will be updated as appropriate. These updates will consider, among other factors, any developments or changes in the Bank's operating performance, financial condition, or management policies, and current conditions in the securities markets for thrift institution common stocks. Should any such new developments or changes be material, in our opinion, to the valuation of the Bank, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in detail at that time.

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**I. Business of Peru Federal Savings Bank**

**General Overview**

Peru Federal is a federally-chartered mutual savings bank headquartered in Peru, Illinois. Originally chartered in 1887, the Bank conducts its operations from its main office and a branch office, both located in Peru, Illinois. The Bank's business consists primarily of accepting deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family residential mortgage loans secured by properties located in its primary market area. To a significantly lesser extent, the Bank also originates commercial real estate loans, multi-family mortgage loans, construction and land development loans, commercial loans, home equity loans and lines of credit, and consumer loans. In addition, the Bank offers electronic banking services including mobile banking, on-line banking and bill pay, and electronic funds transfer.

At December 30, 2022, the Bank had total assets of $174.1 million, total deposits of $152.6 million, net total loans of $84.9 million, and total equity of $20.2 million (measuring 11.57% of total assets). The Bank reported net income of $831,000 for the year ended December 31, 2022 and net income of $1.0 million for the year ended December 31, 2021. The Bank's deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation ("FDIC"). The Bank is subject to examination and regulation by the Office of the Comptroller of the Currency ("OCC"), and is also subject to examination by the FDIC. The Bank is a member of the Federal Home Loan Bank ("FHLB") of Chicago. At December 31, 2022, the Bank had 23 full-time employees and three part-time employees.

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The Bank was founded originally in 1887 and known as the Workmen's Loan Association of Peru, which converted to a federal charter and assumed the name of Peru Federal Savings and Loan Association (the "Association") in 1935. Initially, the offices of the Association were located at 1812 Fourth Street in Peru until 1939, when the Association purchased property at 1800 Fourth Street. In 1962, the Association purchased property at 1730 Fourth Street and constructed the present building, which houses the main office of Peru Federal. In 1974, the Association purchase a property that houses the branch office at 914 Shooting Park Road in Peru. In 1997, the Association changed its name and charter to be known as Peru Federal Savings Bank.

Since its inception, the Bank has operated as a traditional savings institution focused primarily on serving the banking needs of customers in its market area of LaSalle County, Illinois, and adjacent communities. In recent years, the Bank has increased its originations of higher yielding commercial real estate loans and commercial business loans. Peru Federal consider its primary market area for loan originations and deposit gathering to be LaSalle County, and contiguous areas, in north central Illinois, generally within a 30-mile to 35-mile radius from its offices which encompasses parts of adjacent Bureau County and Putnam County.

Peru is located on the western border of LaSalle County and within the Illinois Valley formed by the Illinois River. Located near the intersection of Interstate 80 and Interstate 39, Peru is located equidistant, approximately 100 miles, between Chicago to the east and the Quad Cities in Iowa to the west and equidistant, approximately 70 miles, between Rockford, Illinois, to the north and Bloomington, Illinois, to the south. Based on population estimates for 2023, LaSalle County had a population of approximately 108,000, Bureau County had a population of approximately 32,500, and Putnam County had a population of approximately 5,500. The Bank's primary market area is predominately rural.

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The Bank's long operating history has provided it with a familiarity of its local communities and customer base. The Bank believes that it has a strong community reputation as a residential mortgage lender and its staff and management are easily accessible for customers. The Bank continues to stress customer service and is community focused through its staff that is knowledgeable of the local customer base and very active in community endeavors. The Bank relies on its experienced and committed staff to meet the needs of customers and prides itself on its relatively lean and very efficient operations. Compared to its peers, the Bank's ratio of operating expense to average assets has been consistently lower. Peru Federal considers its mission statements as follows: "To meet the financial needs of each individual, to grow from exceptional customer service focused on relationships and personalized attention, and to be the community bank that continues to serve generations in the Illinois Valley."

Over the past ten years, the Bank has emphasized conservative lending, controlled growth, and an emphasis on managing liquidity and interest rate risk. The Bank's total assets increased at a compound annual growth rate ("CAGR") of 2.2% from $139.7 million at December 31, 2012 to $174.1 million at December 31, 2022. The Bank's total loans increased at CAGR of 2.2% from $69.0 million at December 31, 2012 to $85.5 million at December 31, 2022. The Bank's ratio of total loans to total deposits was relatively unchanged from 56.0% at year-end 2012 and 56.0% at year-end 2022. Over this same time period, the Bank's ratio of total equity to total assets increased from 11.20% at year-end 2012 to 11.57% at year-end 2022. The Bank was consistently profitable over the past ten years with earnings averaging 0.54% of average total assets.

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The Bank's current operating goal is to position the organization to succeed in an evolving and competitive financial services landscape and enhance its position as one of the leading community banking institutions in its market. The Bank believes that it can provide long-term value to its stockholders, customers, employees, and the communities it serves by executing a prudent business strategy that generates increasing profitability. The Bank also believes there is a significant opportunity for a community-focused banking institution to continue to compete effectively in its primary market area and that the increased capital it will have after the completion of the Stock Offering will facilitate this objective. The core elements of the Bank's business strategy are outlined in more detail below:

●  ***Continue to focus on originating one- to four-family residential mortgage loans for retention in the Bank's loan portfolio.*** The Bank is are primarily a one- to four-family residential mortgage loan lender for borrowers in its primary market area. As of December 31, 2022, $61.1 million, or 71.5% of its total loan portfolio, consisted of residential mortgage loans (including home equity loans and lines of credit). The Bank expects that residential mortgage lending will remain its primary lending activity.

●  ***Grow and diversify the Bank's loan portfolio prudently by increasing originations of commercial real estate loans and commercial business loans.*** While Peru Federal plans to continue its historical focus on the origination of residential mortgage loans, the Bank intends to prudently increase its originations of commercial real estate loans and commercial business loans to diversify its loan portfolio and increase yield. At December 31, 2022, commercial real estate loans (including agricultural real estate loans) amounted to $17.9 million, or 20.9% of total loans, and commercial business loan amounted to $2.1 million, or 2.5% of total loans..

●  ***Maintain strong asset quality through conservative loan underwriting.*** The Bank seeks intend to maintain strong asset quality through what it believes are conservative underwriting standards and credit monitoring processes. As of December 31, 2022, the Bank's non-performing assets amounted to $623,000, or 0.36% of total assets.

●  ***Continue to grow low-cost "core" deposits.*** Core deposits include all deposits other than certificates of deposit. The Bank plans to continue its efforts to increase its core deposits to provide a stable source of funds to support loan growth at costs consistent with improving its interest rate spread and net interest margin. Core deposits totaled $104.4 million, or 68.3% of total deposits, at December 31, 2022.

●  ***Remain a community-oriented institution and continue to rely on high quality service to maintain and build a loyal customer base.*** The Bank was established in 1887 and has been operating continuously in Peru, Illinois, since that time. Through the goodwill it has developed over years of providing timely, efficient banking services, the Bank believes that it has been able to attract a loyal base of local retail customers on which it seeks to continue to build its banking business.

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●  ***Grow organically and through opportunistic branching.*** The Bank plans to grow its balance sheet organically on a managed basis. Moreover, the capital that the Bank is raising through the Stock Offering will enable it to increase its lending and investment capacity. In addition to organic growth, the Bank may also consider expansion opportunities in its market area or in contiguous markets. These opportunities may include establishing loan production offices, establishing new branch offices, or acquiring branch offices. The capital raised from the Stock Offering would help the Company and the Bank fund any such opportunities that may arise. The Bank has no current plans or intentions regarding any such expansion activities.

While its equity level is solid at 11.57% of total assets as of December 31, 2022, the Bank believes it must raise additional capital in order to facilitate its growth objectives and loan generation activity, and provide a greater cushion in response to the risk profile associated with continued expansion and future economic conditions. As a stock organization upon completion of the Conversion, the Company and the Bank will be organized in the ownership form used by commercial banks, most major businesses, and a large number of thrift institutions. The ability to raise new equity capital through the issuance and sale of capital stock will allow the Company and the Bank the flexibility to increase its equity capital position more rapidly than by accumulating earnings.

The Bank also believes that the ability to attract new capital also will help address the needs of the communities it serves and enhance its ability to expand or to make acquisitions. After the Conversion, the Bank will have an increased ability to merge with or acquire other financial institutions or business enterprises; however, there are no current arrangements, understandings, or agreements regarding any such acquisition opportunities. Finally, the Bank expects to benefit from its employees and directors having stock ownership in its business, since that is viewed as an effective performance incentive and a means of attracting, retaining, and compensating employees and directors.

Feldman Financial Advisors, Inc.

In summary, the Bank's primary reasons for implementing the Conversion and undertaking the Stock Offering are to:

● Increase capital to support future growth and profitability.

● Retain and attract qualified personnel by establishing stock-based benefit plans for management and employees.

● Offer customers and employees an opportunity to purchase an equity interest in Peru Federal by purchasing shares of common stock of PFS Bancorp.

Moving forward, the Bank's strategic priorities have been identified and emphasized as described below:

● <u>Growth</u> – grow lending and retail deposit by gaining market share in the Bank's primary market.

● <u>Profitability</u> – continue to improve the overall profitability of the Bank through margin improvements, expanded services, and cost management.

● <u>Service</u> – continue efforts to improve the Bank's customer service and overall customer experience.

● <u>Personnel</u> – improve the knowledge, direction, and abilities of the staff and the overall organizational management processes.

The remainder of Chapter I examines in more detail the trends addressed in this section, including the impact of changes in the Bank's economic and competitive environment, and recent strategic initiatives. The discussion is supplemented by the exhibits in the Appendix. Exhibit II-1 presents the Bank's consolidated balance sheets as of December 31, 2020 to 2022. Exhibit II-2 summarizes the Bank's consolidated income statements for the years ended December 31, 2020 to 2022.

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**Financial Condition**

Table 1 presents selected data concerning the Bank's financial position as of December 31, 2020 to 2022. Table 2 displays relative balance sheet concentrations as of similar period-end dates.

**Table 1**

**Selected Financial Condition Data**

As of December 31, 2020 to 2022

(Dollars in Thousands)

---

| | | | |
|:---|:---|:---|:---|
|  | December 31, | December 31, | December 31, |
|  | 2022 | 2021 | 2020 |
| Total assets | $174134 | $185556 | $171983 |
| Cash and cash equivalents | 12651 | 21542 | 8115 |
| Investment securities (1) | 66563 | 74871 | 73769 |
| Federal Home Loan Bank stock | 347 | 330 | 254 |
| Total loans, net | 84916 | 80840 | 82068 |
| Premises and equipment, net | 2150 | 2159 | 2277 |
| Bank-owned life insurance | 3783 | 3696 | 3611 |
| Total deposits | 152707 | 155912 | 143475 |
| Federal Home Loan Bank advances |  | 5000 | 4000 |
| Total equity | 20139 | 23440 | 23321 |

---

(1) Includes available-for-sale debt securities, held-to-maturity debt securities, and equity securities. <br>Source: Peru Federal Savings Bank, financial statements.

**<u>Asset Composition</u>**

The Bank's total assets amounted to $174.1 million at December 31, 2022, reflecting a 6.2% or $11.4 million decrease from total assets of $185.6 million at December 31, 2021. In the prior year, the Bank's total assets increased by 7.9% or $13.6 million from $172.0 million at December 31, 2020 to $185.6 million at December 31, 2021. The recent contraction of total assets was primarily related to the payoff of a FHLB advance of $5.0 million and a moderate decrease of $3.2 million in total deposits.

Feldman Financial Advisors, Inc.

**Table 2** 

**Relative Balance Sheet Concentrations**

As of December 31, 2020 to 2022

(Percent of Total Assets)

---

| | | | |
|:---|:---|:---|:---|
|  | December 31, | December 31, | December 31, |
|  | 2022 | 2021 | 2020 |
| Cash and cash equivalents | 7.27% | 11.61% | 4.72% |
| Investment securities (1) | 38.23 | 40.35 | 42.89 |
| Federal Home Loan Bank stock | 0.20 | 0.18 | 0.15 |
| Total loans, net | 48.76 | 43.57 | 47.72 |
| Premises and equipment, net | 1.23 | 1.16 | 1.32 |
| Bank-owned life insurance | 2.17 | 1.99 | 2.10 |
| Other assets | 2.14 | 1.14 | 1.10 |
| &nbsp;&nbsp;&nbsp;Total assets | 100.00% | 100.00% | 100.00% |
| Total deposits | 87.70% | 84.02% | 83.42% |
| Federal Home Loan Bank advances |  | 2.69 | 2.33 |
| Other liabilities | 0.74 | 0.65 | 0.69 |
| &nbsp;&nbsp;&nbsp;Total liabilities | 88.43 | 87.37 | 86.44 |
| Total equity | 11.57 | 12.63 | 13.56 |
| &nbsp;&nbsp;&nbsp;Total liabilities and equity | 100.00% | 100.00% | 100.00% |

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(1) Includes available-for-sale debt securities, held-to-maturity debt securities, and equity securities. <br>Source: Peru Federal Savings Bank, financial statements.

Net total loans increased by $4.1 million or 5.0% from $80.8 million at year-end 2021 to $84.9 million at year-end 2022. As a result of the recent increase in the Bank's loan portfolio, the percentage of net total loans increased from 43.6% of total assets at December 31, 2021 to 48.8% of total assets at December 31, 2022. Cash and cash equivalents decreased by $8.9 million from $21.5 million at December 31, 2021 to $12.7 million at December 31, 2022. The decrease in cash and cash equivalents primarily reflected outgoing cash flows to fund the payoff of FHLB debt and the reduction in deposits. The aggregate amount of investment securities decreased by $8.3 million from $74.9 million, or 40.3% of total assets, at year-end 2021 to $66.6 million, or 38.2% of total assets, at year-end 2022.

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The cash surrender value of bank-owned life insurance ("BOLI") increased moderately from $3.7 million at December 31, 2020 to $3.8 million at December 31, 2022. BOLI provides the Bank with a funding offset for employee benefit plans and obligations and also generates non-interest that generally is non-taxable. The percentage of BOLI to total assets measured 2.2% of total assets at December 31, 2022.

The largest segment of the Bank's loan portfolio comprises residential estate mortgage loans. As of December 31, 2022, one- to four-family residential mortgage loans accounted for 69.2% of total loans as illustrated in Exhibit II-3. The Bank's loan portfolio also included commercial and multi-family real estate loans (20.9% of total loans), commercial business loans (2.5% of total loans), construction and land development loans (1.8% of total loans), home equity loans and lines of credit (2.4% of total loans), and consumer loans (3.3% of total loans) at December 31, 2022. During the year ended December 31, 2022, the Bank's loan originations totaled $19.4 million, comprised of $11.5 million of one- to four-family residential mortgage loans, $5.4 million of commercial real estate loans, $1.1 million of commercial business loans, and $1.4 million of consumer loans.

At December 31, 2022, the Bank had $59.1 million in one- to four-family residential mortgage loans, which represented 69.2% of total loans. Of the one- to four-family mortgage loans due after December 31, 2022, approximately $54.7 million or 92.6% consisted of fixed-rate loans and $4.4 million or 7.4% consisted of adjustable-rate loans. One- to four-family residential mortgage loans outstanding increased by $4.0 million or 7.2% from $55.1 million at year-end 2021 to $59.1 million. The Bank's residential mortgage loans are generally underwritten to secondary market guidelines. The Bank generally limits the loan-to-value ratios of its residential mortgage loans to 80% (95% with private mortgage insurance; 102% for loans guaranteed by the U.S Department of Agriculture) of the purchase price or appraised value, whichever is lower.

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At December 31, 2022, the Bank had $17.9 million in commercial real estate and multi-family real estate loans, which represented 20.9% of total loans. Of this aggregate total, the Bank's commercial real estate loans amounted to $16.4 million and multi-family residential loans amounted to $1.5 million as of December 31, 2022. The commercial real estate loan portfolio included $1.6 million of loans secured by agricultural properties as of December 31, 2022. The Bank's commercial and multi-family real estate lending activity is consistent with its strategy to diversify the loan portfolio and increase the overall portfolio yield with shorter-maturity loans. Commercial and multi-family real estate loans increased moderately by $175,000 or 1.0% from $17.7 million at year-end 2021 to $17.9 million at year-end 2022.

The Bank's commercial real estate loans are generally secured primarily by owner-occupied properties including warehouses, storage units, and store fronts. The Bank's commercial real estate loans are generally adjustable rate loans with a negotiated interest rate. The interest rate is fixed for the initial term of five, seven, or ten years, and then adjusts yearly thereafter based on the prime rate, plus a margin. Commercial real estate loans generally have terms up to 20 years. The Bank generally limits the loan-to-value ratios of its commercial mortgage loans to 75% of the purchase price or appraised value, whichever is lower. At December 31, 2022, the Bank's largest commercial real estate loan had an outstanding balance of $1.5 million and was secured by storage units located in the Bank's primary market area. At December 31, 2022, this loan was performing according to its original terms. The Bank's largest purchased loan participation at year-end 2022 had an outstanding balance of $909,000, representing a 10.3% participation interest in a $9.0 million commercial real estate loan secured by a medical building in Spring Valley, Illinois. At December 31, 2022, this loan was performing according to its original terms.

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As of December 31, 2022, the Bank had $2.1 million of commercial business loans, which represented 2.5% of the total loan portfolio. Commercial business loans outstanding declined by $74,000 or 3.4% from $2.2 million at year-end 2021 to $2.1 million at year-end 2022. The Bank's commercial business loans include both term loans and lines of credit. These loans are generally secured by business assets, such as equipment, inventory, and accounts receivable. Depending on the collateral used to secure the loans, commercial loans are made in amounts of up to 75% of the value of the collateral securing the loan. At December 31, 2022, the Bank's largest commercial loan totaled $249,000 and was secured by equipment. At December 31, 2022, this loan was performing according to its original terms.

The Bank's home equity loans and lines of credit amounted to $2.0 million or 2.4% of total assets as of December 31, 2022. Other consumer loans totaled $2.8 million or 3.3% of total assets as of December 31, 2022. The Bank's home equity loans are generally fixed-rate loans for terms of five, seven, or 10 years. The interest rates for home equity lines of credit are based on the prime rate. The loan-to-value ratio for home equity loans and lines of credit is generally up to 90%, taking into account any superior mortgage on the collateral property. The Bank's consumer loan portfolio generally consists of loans secured predominately by automobiles and trucks (new and used).

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Exhibit II-5 presents a summary of the Bank's portfolio of cash, short-term liquidity, and investment securities as of December 31, 2020 to 2022. The Bank's primary investment objective is to maximize portfolio yield over the long term in a manner that is consistent with minimizing risk, meeting liquidity needs, meeting pledging requirements, and meeting asset/liability management and interest rate risk strategies. Subject to loan demand and its internal interest rate risk analysis, the Bank will increase the balance of its investment securities portfolio when it has excess liquidity. The Bank's investment policy was adopted by the Board of Directors and is reviewed annually by the Board of Directors. All investment decisions are made by the Bank's Asset/Liability Committee according to Board-approved policies. The Bank's current investment policy authorizes, with certain limitations, investments in U.S. Treasury and federal agency securities, securities issued by the U.S. government and its agencies or government-sponsored enterprises ("GSEs") including mortgage-backed securities, state and municipal securities, and interest-bearing time deposits in other financial institutions, among other investments.

As shown in Exhibit II-4, the Bank's aggregate cash and investments amounted to $79.6 million or 45.7% of total assets as of December 31, 2022. The Bank's relatively large concentration of cash and investments is also integral to its overall balance sheet and interest rate risk management strategies. Cash and cash equivalents amounted to $12.7 million or 7.3% of the Bank's total assets as of year-end 2022. Cash and cash equivalents decreased from $21.5 million or 11.6% of total assets as of year-end 2021 as excess liquidity was used in 2022 to fund FHLB debt repayment and deposit outflows.

The Bank's available-for-sale securities portfolio, reported at fair value, totaled $63.3 million or 36.4% of total assets at December 31, 2022 and was composed of $38.2 million of residential mortgage-backed securities, $19.8 million of municipal obligations, and $5.3 million of U.S. Government and federal agency securities. The Bank's mortgage-backed securities are issued by U.S. Government-sponsored enterprises. The held-to-maturity securities portfolio, reported at amortized cost, totaled $3.1 million or 1.8% of total assets at year-end 2022 and was composed of $2.2 million of certificates of deposit, $917,000 of U.S. Government and federal agency securities, and $5,000 of residential mortgage-backed securities. As of December 31, 2022, the Bank had net unrealized losses of $5.2 million in its available-for-sale securities portfolio and net unrealized losses of $174,000 in its held-to-maturity securities portfolio. The Bank's available-for-sale investment securities portfolio had a weighted average yield of 2.10% and the held-to-maturity securities portfolio had a weighted average yield of 2.39% during the year ended December 31, 2022. The overall weighted average yield on investment securities increased from 1.81% in 2021 to 2.10% in 2022 as a result of the maturity of lower yielding securities and the effects of the rising interest rate environment. The Bank also owned $347,000 of common stock in the FHLB of Chicago as of December 31, 2022.

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**<u>Liability Composition</u>**

Deposits are the Bank's primary external source of funds for lending and investment purposes. Exhibit II-5 presents a summary of the Bank's deposit composition as of December 31, 2021 and 2022. Total deposits amounted to $152.7 million or 87.7% of total assets and 99.2% of total liabilities at December 31, 2022. Total deposits decreased by 2.1% or $3.2 million from $155.9 million at December 31, 2021 to $152.7 million at December 31, 2022. The recent decline in deposits was primarily due to consumer spending of stimulus funds received in conjunction with the economic response of federal and state governments to the coronavirus pandemic.

The Bank's certificate of deposit accounts increased by $1.4 million or 2.9% from $47.0 million or 30.1% of total deposits at year-end 2021 to $48.3 million or 31.7% of total deposit at year-end 2022. Core deposits, defined as total deposits excluding certificate of deposit accounts, decreased by $4.6 million or 4.2% from $108.9 million at year-end 2021 to $104.4 million at year-end 2022. The increase in certificates of deposit reflected the shift from core deposits to higher yielding certificate of deposit accounts due to the increase in market interest rates. The ratio of core deposits to total deposits decreased from 69.9% at December 31, 2021 to 68.3% at December 31, 2022, while the concentration of certificate deposits to total deposits increased from 30.1% to 31.7% over the same time period.

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The Bank relies on customer service and longstanding relationships with customers in its primary market area to attract and retain deposits. Deposit account terms vary according to the minimum balance required, the time period that funds must remain on deposit, and the interest rate, among other factors. In determining the rates and terms of its deposit accounts, the Bank considers the rates offered by competitors, liquidity needs, growth objectives, current operating strategies, and customer preferences and concerns. The Bank has placed a concerted emphasis on attracting core deposit accounts, which tend to represent lower cost and more stable funding sources. As of December 31, 2022, the Bank's weighted average cost of core deposits was 0.37%, the weighted average cost of certificate accounts was 1.50%, and the overall weighted average cost of total deposits was 0.73%.

Exhibit II-5 presents a summary of the Bank's borrowed funds activity as of and for the years ended December 31, 2021 and 2022. As a member of the FHLB of Chicago, the Bank may obtain FHLB borrowings based upon the security of FHLB capital stock owned and certain of the Bank's residential real estate mortgage loans. Historically, the Bank has not actively utilized FHLB borrowings as a source of funds. However, in 2020, the Bank obtained a $4.0 million, zero-rate FHLB advance that matured in 2021. Subsequently, in 2021, the Bank obtained a $5.0 million, zero-rate FHLB advance that matured in 2022. The FHLB of Chicago had offered these interest-free advances to eligible member institutions in connection with its coronavirus pandemic-related economic relief program.

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At December 31, 2022, the Bank had no outstanding advances from the FHLB of Chicago. As of December 31, 2022, based on available collateral and its ownership of FHLB of Chicago common stock, the Bank had access to up to $46.2 million of advances from the FHLB of Chicago. At December 31, 2022, the Bank also had a $4.0 million line of credit with a correspondent bank, with no outstanding balance at that date.

**<u>Equity Capital</u>**

The Bank has historically maintained solid capital levels and its total equity amounted to $20.1 million or 11.57% of total assets at year-end 2022. The ratio of total equity to assets decreased from 12.63% at year-end 2021 and 13.56% at year-end 2020. The Bank's total equity decreased by $3.3 million from $23.4 million at year-end 2021 to $20.1 million at year-end 2022 largely due to a decrease of $4.1 million in the Bank's accumulated other comprehensive income ("AOCI"). The Bank's AOCI is affected by unrealized gains (or losses) on available-for-sale securities. During 2022, the Bank's AOCI declined from a net positive amount of $443,000 to a net loss of $3.7 million. The increase in market interest rates had the effect of producing net unrealized losses in the Bank's available-for-sale securities portfolio as of December 31, 2022.

The Bank's capital level remains strong in comparison to minimum regulatory requirements. The Bank's regulatory capital ratios of tier 1 leverage capital, common equity tier 1 risk-based capital, tier 1 risk-based capital, and total risk-based capital were 13.81%, 28.07%, 28.07%, and 28.71%, respectively, as of December 31, 2022. In comparison, the minimum regulatory requirements under federal banking agency guidelines were 4.00%, 4.50%, 6.00%, and 8.00%, and the threshold requirements for regulatory "well capitalized" levels were 5.00%, 6.50%, 8.00%, and 10.00%, respectively. Based on these regulatory capital ratios and requirements, the Bank was considered well capitalized for regulatory purposes as of December 31, 2022.

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**Income and Expense Trends**

Table 3 displays the main components of the Bank's earnings performance for the years ended December 31, 2020 to 2022. Table 4 displays the Bank's principal income and expense ratios as a percent of average assets for the corresponding periods. Table 5 displays the Bank's weighted average yields on interest-earning assets and weighted average costs of interest-bearing liabilities.

**<u>General Overview</u>**

Over recent years, the Bank has exhibited a consistent trend of positive earnings. The Bank's net income amounted to $831,000 for the year ended December 31, 2022, as compared to net income of $1.0 million for the year ended December 31, 2021 and net income of $776,000 for the year ended December 31, 2020. The Bank reported a return on average assets ("ROA") of 0.47%, 0.55%, and 0.46% for 2020, 2021, and 2022, respectively. The Bank reported a return on average equity ("ROE") of 3.42%, 4.27%, and 3.99% for 2020, 2021, and 2022, respectively.

Compared to its asset size peer group ($100 million to $300 million) of FDIC-insured savings institutions, the Bank's three-year average ROA of 0.49% from 2020 to 2022 was positioned slightly below the peer group's three-year average ROA of 0.53%. The Bank's ROA of 0.46% for 2022 was below the peer group average ROA of 0.50% in 2022. Compared to its regulatory peer group on a historical basis, the Bank's profitability trends are characterized by a below-average net margin, offset partially by a lower non-interest expense ratio in relation to average assets. The Bank's net interest margin of 2.43% in 2022 was below the peer group average of 3.06%, primarily due to the Bank's lower ratio of net total loans to total assets, which measured 48.8% for Peru Federal versus the corresponding peer group average of 61.3%. The Bank's non-interest expense ratio of 2.00% of average assets was lower than the peer group average of 2.81%.

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**Table 3**

**Income Statement Summary**

For the Years Ended December 31, 2020 to 2022

(Dollars in Thousands)

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| | | | |
|:---|:---|:---|:---|
|  | Year Ended | Year Ended | Year Ended |
|  | December 31, | December 31, | December 31, |
|  | 2022 | 2021 | 2020 |
| Total interest and dividend income | $4803 | $4584 | $4847 |
| Total interest expense | 640 | 611 | 963 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income | 4163 | 3973 | 3884 |
| Provision (credit) for loan losses | 61 | (6) | 445 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income after provision | 4102 | 3979 | 3439 |
| Customer service fees | 368 | 339 | 294 |
| Net realized gain on loan sales | 140 | 144 | 295 |
| Loan servicing fees | 78 | 81 | 87 |
| Realized loss on sale of available-for-sale securities | (221) |  | (25) |
| Other income | 144 | 96 | 280 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-interest income | 509 | 660 | 931 |
| Salaries and employee benefits | 2002 | 1962 | 2076 |
| Occupancy and depreciation | 389 | 384 | 382 |
| Data processing | 573 | 434 | 387 |
| Professional fees | 152 | 100 | 99 |
| Marketing | 129 | 124 | 126 |
| Deposit insurance premium | 140 | 163 | 130 |
| Other expense | 240 | 195 | 274 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-interest expense | 3625 | 3362 | 3474 |
| Income before income taxes | 986 | 1277 | 896 |
| Provision for income taxes | 155 | 275 | 120 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income | $831 | $1002 | $776 |

---

Source: Peru Federal Savings Bank, financial statements.

**<u>Years Ended December 31, 2021 and 2022</u>**

Net income declined by 17.1% from $1.0 million in 2021 to $831,000 in 2022. The primary reasons for the decline in earnings were a $263,000 increase in non-interest expense, a $151,000 decrease in non-interest income, and a $67,000 increase in the provision for loan losses, offset partially by a $190,000 increase in net interest income. The increase in net interest income was largely attributable to an increase in the Bank's net interest spread from 2.12% in 2021 to 2.44% in 2022. The decrease in non-interest income was related mainly to the recording of a loss of $221,000 on sale of available-for-sale securities.

Feldman Financial Advisors, Inc.

Net interest income increased $190,000 or 4.8% to $4.8 million for the year ended December 31, 2022 compared to $4.6 million for the year ended December 31, 2021. The increase reflects the increase of 32 basis points in the net interest rate spread to 2.44% for the year ended December 31, 2022 from 2.12% for the year ended December 31, 2021, while average interest-earning assets decreased by $2.6 million or 1.5% on a year-to-year basis. The Bank's weighted average yield on interest-earning assets increased by 33 basis points from 2.56% in 2021 to 2.89% in 2022. In contrast, the weighted average cost of interest-bearing liabilities increased by only 1 basis point from 0.44% in 2021 to 0.45% in 2022. The net interest margin increased to 2.43% for the year ended December 31, 2022 from 2.10% for the year ended December 31, 2021. Both the net interest rate spread and net interest margin increased due to the rising interest rate environment.

The provision for loan losses increased by $67,000 to $6,000 for the year ended December 31, 2022 from a credit of $6,000 for the year ended December 31, 2021. Net loan charge-offs increased from $3,000 in 2021 to $85,000 in 2022. The allowance for loan losses decreased by $24,000 or 4.2% to $543,000 at December 31, 2022 from $567,000 at December 31, 2021. The allowance for loan losses measured 0.64% of total loans at December 31, 2022 and 0.70% of total loans as of December 31, 2021. Management's determination of the adequacy of the allowance for loan losses was based primarily on the low balances of non-performing loans, delinquent loans, and net charge-offs in both periods.

Feldman Financial Advisors, Inc.

**Table 4**

**Income Statement Ratios**

For the Years Ended December 31, 2020 and 2021

(Percent of Average Assets)

---

| | | | |
|:---|:---|:---|:---|
|  | Year Ended | Year Ended | Year Ended |
|  | December 31, | December 31, | December 31, |
|  | 2022 | 2021 | 2020 |
| Total interest and dividend income | 2.66% | 2.52% | 2.92% |
| Total interest expense | 0.36 | 0.34 | 0.57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income | 2.30 | 2.18 | 2.34 |
| Provision (credit) for loan losses | 0.03 | (0.01) | 0.27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income after provision | 2.27 | 2.19 | 2.07 |
| Customer service fees | 0.20 | 0.19 | 0.18 |
| Net realized gain on loan sales | 0.08 | 0.08 | 0.18 |
| Loan servicing fees | 0.04 | 0.04 | 0.05 |
| Realized loss on sale of available-for-sale securities | (0.12) | 0.00 | (0.02) |
| Other income | 0.08 | 0.05 | 0.17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-interest income | 0.28 | 0.36 | 0.56 |
| Salaries and employee benefits | 1.11 | 1.08 | 1.25 |
| Occupancy and depreciation | 0.22 | 0.21 | 0.23 |
| Data processing | 0.32 | 0.24 | 0.23 |
| Professional fees | 0.08 | 0.05 | 0.06 |
| Marketing | 0.07 | 0.07 | 0.08 |
| Deposit insurance premium | 0.08 | 0.09 | 0.08 |
| Other expense | 0.13 | 0.11 | 0.17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-interest expense | 2.00 | 1.85 | 2.09 |
| Income before income taxes | 0.55 | 0.70 | 0.53 |
| Provision for income taxes | 0.09 | 0.15 | 0.06 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income | 0.46 | 0.55 | 0.47 |

---

Source: Peru Federal Savings Bank, financial statements and internal data.

Non-interest income totaled $509,000 for the year ended December 31, 2022, a decrease of $110,000 or 22.9% from $610,000 for the year ended December 31, 2021. The decrease was primarily due to a $221,000 loss on available-for-sale securities resulting from a $6.3 million bond swap involving the sale of a lower yielding bond and using the sale proceeds to purchase a higher yielding bond. Customer service fees increased by $29,000 or 8.6% from $339,000 in 2021 to $368,000 in 2022. Net realized gain on loan sales declined by $4,000 or 2.8% from $144,000 in 2021 to $140,000 in 2022. The ratio of non-interest income to average assets decreased from 0.36% in 2021 to 0.28% in 2022. Excluding the loss on sale of securities, the ratio of non-interest income to average assets would have measured 0.40% in 2022.

Feldman Financial Advisors, Inc.

The Bank's non-interest expense increased $263,000 or 7.8% to $3.6 million for the year ended December 31, 2022, compared to $3.4 million for the year ended December 31, 2021. The increase was due primarily to a $139,000 or 32.0% increase in data processing expenses (which included a one-time write-off of $83,000 in prepaid fees), an increase in salaries and employee benefits of $49,000 or 2.47%, and an increase in professional services of $52,000 or 52.0%. The ratio of non-interest expense to average assets increased from 1.85% in 2021 to 2.00% in 2022.

The provision for income taxes decreased by $163,000 or 51.3% to $155,000 for the year ended December 31, 2022, compared to $318,000 for the year ended December 31, 2021. The decrease was due primarily to a $431,000 or 30.4% decrease in pre-tax income. The effective tax rates were 22.4% and 15.7% for the years ended December 31, 2021 and 2022, respectively. The decrease in the effective tax rate was primarily due to the higher level of tax-exempt income from municipal securities during 2022.

Feldman Financial Advisors, Inc.

**Table 5**

**Yield and Cost Summary**

For the Years Ended December 31, 2021 and 2022

---

| | | |
|:---|:---|:---|
|  | Year Ended | Year Ended |
|  | December 31, | December 31, |
|  | 2022 | 2021 |
| **<u>Weighted Average Yields</u>** |  |  |
| Cash and cash equivalents | 1.04% | 0.05% |
| Available-for-sale debt securities | 2.10 | 1.82 |
| Held-to-maturity debt securities | 2.39 | 1.97 |
| Loans receivable | 3.91 | 3.77 |
| Federal Home Loan Bank stock | 3.14 | 2.72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-earning assets | 2.89 | 2.56 |
| **<u>Weighted Average Costs</u>** |  |  |
| Regular savings deposits | 0.19 | 0.20 |
| NOW deposits | 0.11 | 0.10 |
| Money market deposits | 0.48 | 0.22 |
| Time deposits | 0.87 | 0.95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing deposits | 0.46 | 0.45 |
| Federal Home Loan Bank advances | 0.00 | 0.00 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | 0.45 | 0.44 |
| Net interest rate spread (1) | 2.44 | 2.12 |
| Net interest margin (2) | 2.43 | 2.10 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Weighted average yield on interest-earning assets less the weighted average cost of interest-bearing liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Net interest income divided by average total interest-earning assets.

Source: Peru Federal Savings Bank, financial data.

Feldman Financial Advisors, Inc.

**Interest Rate Risk Management**

The Bank seeks to reduce its earnings vulnerability and capital risk to changes in market interest rates by managing the mismatch between asset and liability maturities and interest rates. The Bank's Asset/Liability Committee ("ALCO") focuses on ensuring a stable and steadily increasing flow of net interest income through managing the asset and liability mix of the balance sheet. The ALCO is expected to integrate the Bank's asset/liability management process into its operational decision making, including portfolio structure, investments, business planning, funding decisions, and pricing.

The Bank attempts to manage the exposure of the net interest margin to unexpected changes due to interest rate fluctuations. The Bank's goal is not to eliminate interest rate risk, but to produce results that are consistent with the need for adequate liquidity, adequate capital, projected growth, acceptable risk, and appropriate profitability standards. The Bank's Interest Rate Risk Policy will define the maximum potential reduction in earnings and net worth that the Bank is prepared to accept. The Bank has implemented various strategies to manage its interest rate risk. By enacting these strategies, the Bank believes that it is better positioned to react to changes in market interest rates. These strategies include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Maintaining
 capital lees that exceed the thresholds for well-capitalized status under federal regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Maintaining
 a high level of liquidity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Growing
 core deposit accounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Managing
 the investment securities portfolio in a manner to reduce the average maturity and effective
 life of the portfolio.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Continuing
 to diversify the loan portfolio by adding more commercial real estate loans and commercial
 business loans, which typically have shorter maturities and/or balloon payments.

Feldman Financial Advisors, Inc.

The Bank monitors its interest rate sensitivity management through the use of models which generate estimates of the change in its net portfolio value of equity (economic value of equity or "EVE") over a range of interest rate scenarios. EVE represents the market value of portfolio equity, which is different from book value, and is equal to the market value of assets minus the market value of liabilities (representing the difference between incoming and outgoing discounted cash flows of assets and liabilities) with adjustments made for off-balance sheet items. The EVE ratio, under any interest rate scenario, is defined as the EVE in that scenario divided by the market value of assets in the same scenario. Table 6 sets forth the Bank's EVE as of December 31, 2022 and reflects the changes to EVE as a result of immediate and sustained changes in interest rates as indicated.

**Table 6**

**Economic Value of Equity**

As of December 31, 2022

(Dollars in Thousands)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Basis Point <br>Change in <br>Interest<br> Rates (1) | Estimated <br>EVE (2)<br> ($000s) | Amount <br>Change <br> from Level <br>($000s) | Percent <br>Change <br> from Level | EVE<br> Ratio (3) | Basis Point<br> Change in<br> EVE Ratio |  |
| + 400 b.p. | $22330 | $(15596) | (41.12)% | 15.80% | (676) |) b.p. |
| + 300 b.p. | 26791 | (11207) | (29.55)% | 18.11% | (445) |) b.p. |
| + 200 b.p. | 30718 | (7208) | (19.01)% | 19.90% | (266) |) b.p. |
| + 100 b.p. | 34565 | (3361) | (8.86)% | 21.47% | (109) |) b.p. |
| Level | 37926 |  |  | 22.56% |  |  |
| - 100 b.p. | 39471 | 1545 | 4.07% | 22.68% | 12 | &nbsp;&nbsp;&nbsp;&nbsp;b.p. |
| - 200 b.p. | 39355 | 1429 | 3.77% | 21.99% | (57) |) b.p. |

---

(1) Assumes an immediate uniform change in interest rates at all maturities.

(2) EVE is the discounted present value of expected cash flows from assets, liabilities, and off-balance sheet contracts.

(3) EVE ratio represents EVE divided by the present value of assets, which is calculated as the discounted value of incoming cash flows on interest-earning assets.

Source: Peru Federal Savings Bank, financial data.

Feldman Financial Advisors, Inc.

Table 6 indicates that at December 31, 2022, in the event of an instantaneous parallel 100 basis point increase in interest rates, the Bank would experience an 8.8% decrease in EVE. In the event of an instantaneous 100 basis point decrease in interest rates, the Bank would experience a 4.1% increase in EVE. In the event of an instantaneous 200 basis point increase in interest rates, the Bank would experience a 19.0% decrease in EVE. In the event of an instantaneous 200 basis point decrease in interest rates, the Bank would experience a 3.8% increase in EVE. The EVE simulations give no effect to any steps that the Bank might take to counter the impact of such interest rate movement.

In addition to modeling changes in EVE, the Bank also analyzes potential changes to net interest income for a 12-month period under rising and falling interest rate scenarios. The Bank estimates its net interest income for a 12-month period, and then calculates what net interest income would be for the same period under the assumptions that the U.S. Treasury yield curve increases or decreases instantly by up to 400 basis points or decreases instantly by up to 200 basis points, in 100 point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

Table 7 below sets forth, as of December 31, 2022, the calculation of the estimated changes in the Bank's net interest income resulting from the designated immediate changes in the U.S. Treasury yield curve. As shown in Table 7, an upward change of 100 basis points in market interest rates would decrease net interest income by $67,000 and a downward change of 100 basis points would increase net interest income by $60,000. An upward change of 200 basis points in market interest rates would decrease net interest income by $139,000 and a downward change of 200 basis points would increase net interest income by $235,000.

Feldman Financial Advisors, Inc.

**Table 7**

**Net Interest Income Sensitivity**

As of December 31, 2022

(Dollars in Thousands)

---

| | | | |
|:---|:---|:---|:---|
| Basis Point <br>Change in <br>Interest<br> Rates (1) | Estimated<br> Net Interest <br> Income<br> ($000s) | Change in<br> Net Interest <br> Income<br> ($000s) | Percent<br> Change<br> from Level <br> (%) |
| + 400 b.p. | $3325 | $(922) | (21.68)% |
| + 300 b.p. | 4404 | (157) | (4.77)% |
| + 200 b.p. | 4108 | (139) | (3.27)% |
| + 100 b.p. | 4180 | (67) | (1.57)% |
| Level | 4247 |  |  |
| - 100 b.p. | 4307 | 60 | 1.42% |
| - 200 b.p. | 4482 | 235 | 5.54% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Assumes an immediate uniform change in interest rates at all maturities.

Source: Peru Federal Savings Bank, financial data.

Feldman Financial Advisors, Inc.

**Asset Quality**

Table 8 summarizes the Bank's total non-performing assets as of December 31, 2021 and 2022. The Bank has a solid record of reporting satisfactory asset quality in recent years. Non-accruing loans decreased from $268,000 at December 31, 2021 to $117,000 at December 31, 2022. Relative to total loans, non-accruing loans measured 0.33% and 0.14% as of December 31, 2021 and December 31, 2022, respectively. Including accruing troubled debt restructurings ("TDRs"), the Bank's total non-performing assets measured 0.36% and 0.42% as of year-end 2021 and year-end 2022, respectively. As of December 31, 2022, all of the Bank's non-accruing loans and TDRs were secured by one- to four-family residential properties.

Table 9 summarizes the Bank's allowance for loan losses ("ALL") as of and for the years ended December 31, 2021 and 2022. The allowance for loan losses decreased from $567,000 at December 31, 2021 to $543,000 at December 31, 2022. The Bank's provision (credit) for loan losses increased from -$6,000 in 2021 to $61,000 in 2022. Net charge-offs increased from $3,000 in 2021 to $85,000 in 2022, of which $84,000 was related to commercial business loans and $1,000 to residential mortgage loans. As a result, the ratio of the ALL to total loans decreased from 0.70% at year-end 2021 to 0.64% at year-end 2022. The ratio of the ALL to total non-performing loans (including TDRs) increased from 72.3% at December 31, 2021 to 87.2% at December 31, 2022. The ratio of the ALL to non-performing loans including TDRs increased from 211.6% at December 31, 2021 to 464.1% at December 31, 2022.

Feldman Financial Advisors, Inc.

**Table 8**

**Non-performing Assets Summary**

As of December 31, 2020 to 2022

(Dollars in Thousands)

---

| | | |
|:---|:---|:---|
|  | December 31, | December 31, |
|  | 2022 | 2021 |
| <u>Non-accruing Loans</u> |  |  |
| One- to four-family residential | $117 | $169 |
| Multi-family real estate loans |  |  |
| Commercial real estate loans |  |  |
| Construction and land development |  |  |
| Commercial business loans |  | 99 |
| Home equity loans and lines of credit |  |  |
| Consumer loans | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-accruing loans | 117 | 268 |
| Accruing loans 90 days or more past due | - | - |
| Total non-performing loans | 117 | 268 |
| Real estate owned | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-performing assets | $117 | $268 |
| Accruing troubled debt restructured loans (TDRs) | 506 | 516 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-performing assets and TDRs | $623 | $784 |
| Total non-accruing loans to total loans | 0.14% | 0.33% |
| Total non-performing loans to total loans | 0.14% | 0.33% |
| Total non-performing assets to total assets | 0.07% | 0.14% |
| Total non-performing assets and TDRs to total assets | 0.36% | 0.42% |

---

Source: Peru Federal Savings Bank, financial data.

Feldman Financial Advisors, Inc.

**Table 9**

**Allowance for Loan Losses**

As of or For the Years Ended December 31, 2021 and 2022

(Dollars in Thousands)

---

| | | |
|:---|:---|:---|
|  | As of For the Year Ended | As of For the Year Ended |
|  | December 31, | December 31, |
|  | 2022 | 2021 |
| Allowance at beginning of period | $567 | $576 |
| Charge-offs: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;One- to four-family residential loans | (1) | (3) |
| &nbsp;&nbsp;&nbsp;&nbsp;Multi-family real estate loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Construction and land development |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial business loans | (84) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Home equity loans and lines of credit |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer loans | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total charge-offs | (85) | (3) |
| Recoveries: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;One- to four-family residential loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Multi-family real estate loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Construction and land development |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial business loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Home equity loans and lines of credit |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer loans | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total recoveries |  |  |
| Net (charge-offs) recoveries | (85) | (3) |
| Provision (credit)for loan losses | 61 | (6) |
| Allowance at end of period | $543 | $567 |
| Allowance to non-accruing loans | 464.10% | 211.57% |
| Allowance to non-performing loans | 464.10% | 211.57% |
| Allowance to non-performing loans and TDRs | 87.16% | 72.32% |
| Allowance to gross total loans | 0.64% | 0.70% |
| Net (charge-offs) recoveries to average loans | -0.03% | -0.01% |

---

Source: Peru Federal Savings Bank, financial data.

Feldman Financial Advisors, Inc.

**Office Facilities**

Peru Federal conducts business from its main office located on Fourth Street in Peru, Illinois, and a branch office located on Shooting Park Road in Peru, Illinois. Both of the Bank's offices are full-service facilities and offer a full range of consumer banking products. Both offices also feature drive-up access and automated teller machines ("ATMs"). The net book value of the Bank's premises and equipment totaled $2.2 million (net of accumulated depreciation of $2.6 million) at December 31, 2022. The Bank believes that its current facilities are adequate to meet its present and foreseeable needs, subject to possible future expansion. The Bank currently has no specific plans regarding the establishment of new branch offices or loan production offices.

Feldman Financial Advisors, Inc.

**Market Area**

**<u>Overview of Market Area</u>**

Peru Federal operates its main office and a branch office in Peru, Illinois, which is located in LaSalle County. The Bank's primary market area encompasses LaSalle County and contiguous areas of adjacent Bureau and Putnam counties. Peru and its twin city, LaSalle, make up the core of the Illinois Valley. The Ottawa micropolitan statistical area ("MSA") includes LaSalle, Bureau, and Putnam counties and is anchored by the city of Ottawa in LaSalle County. A map of the Bank's office network is presented below as situated in north central Illinois. The map on the following page shows detail on the geographical boundaries for LaSalle, Bureau, and Putnam counties. Peru lies three miles west of the intersection of two major interstate highways, Interstate 39 and Interstate 80, and is a driving distance of approximately 100 miles from Chicago, Illinois.

![](tm238313d1_ex99-3img03.jpg)

● Peru Federal Savings Bank - full-service offices

Feldman Financial Advisors, Inc.

![](tm238313d1_ex99-3img04.jpg)

● Peru Federal Savings Bank - full-service offices

Table 10 provides selected demographic data for the United States, the state of Illinois, the Ottawa MSA, LaSalle County, and Bureau County. The city of Peru, Illinois had an estimated 2023 population of 9,802. Peru's population declined 6.1% from the 2010 census total of 10,437 and is projected to decline by 1.5% over the next five years through 2028. The median age in Peru was 46.4 years, above the state and national median ages of 39.4 and 39.3, years, respectively. The estimated 2023 median household income of Peru was $56,992, below the Ottawa MSA and Illinois state levels of $63,393 and $77,287, respectively. The Ottawa MSA had an estimated 2023 population of 146,180, reflecting a 5.6% decline since 2010 and a projected decline of 1.7% over the next five years. The city of Ottawa, with a population of 18,551 is the county seat and most populous municipality in LaSalle County. Many of the residents of LaSalle County live in cities and towns along the Illinois River. Princeton, with a population of 7,729, is the county seat and most populous city in Bureau County.

Feldman Financial Advisors, Inc.

**Table 10<br> Selected Demographic Data**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | United<br>States |<br>Illinois | Ottawa<br>MSA | LaSalle<br>County | Bureau<br>County |
| Total Population |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;2010 - Base | 308745377 | 12830623 | 154907 | 113923 | 34978 |
| &nbsp;&nbsp;&nbsp;2023 - Current | 334500069 | 12633738 | 146180 | 108128 | 32554 |
| &nbsp;&nbsp;&nbsp;2028 - Projected | 341662969 | 12518254 | 143655 | 106493 | 31815 |
| &nbsp;&nbsp;&nbsp;% Change 2010-2023 | 8.34% | -1.53% | -5.63% | -5.09% | -6.93% |
| &nbsp;&nbsp;&nbsp;% Change 2023-2028 | 2.14% | -0.91% | -1.73% | -1.51% | -2.27% |
| Age Distribution, 2023 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;0 - 14 Age Group | 17.97% | 17.82% | 16.60% | 16.74% | 16.40% |
| &nbsp;&nbsp;&nbsp;15 - 34 Age Group | 26.49% | 26.40% | 23.55% | 23.98% | 22.47% |
| &nbsp;&nbsp;&nbsp;35 - 54 Age Group | 24.96% | 25.39% | 23.43% | 23.73% | 22.65% |
| &nbsp;&nbsp;&nbsp;55 - 69 Age Group | 18.50% | 18.56% | 21.70% | 21.50% | 21.90% |
| &nbsp;&nbsp;&nbsp;70+ Age Group | 12.07% | 11.83% | 14.72% | 14.05% | 16.58% |
| &nbsp;&nbsp;&nbsp;Median Age (years) | 39.3 | 39.4 | 43.4 | 42.7 | 45.0 |
| Total Households |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;2010 - Base | 116716406 | 4836988 | 62119 | 45349 | 14261 |
| &nbsp;&nbsp;&nbsp;2023 - Current | 128298155 | 4958627 | 61263 | 44877 | 14006 |
| &nbsp;&nbsp;&nbsp;2028 - Projected | 131437810 | 4945885 | 60708 | 44553 | 13825 |
| &nbsp;&nbsp;&nbsp;% Change 2010-2023 | 9.92% | 2.51% | -1.38% | -1.04% | -1.79% |
| &nbsp;&nbsp;&nbsp;% Change 2023-2028 | 2.45% | -0.26% | -0.91% | -0.72% | -1.29% |
| Household Income, 2023 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;< $25,000 | 16.03% | 15.60% | 17.14% | 17.71% | 16.17% |
| &nbsp;&nbsp;&nbsp;$25000 - $49999 | 18.81% | 17.92% | 23.31% | 23.18% | 23.95% |
| &nbsp;&nbsp;&nbsp;$50000 - $99999 | 28.73% | 27.86% | 31.71% | 31.50% | 31.93% |
| &nbsp;&nbsp;&nbsp;$100000 - $199999 | 25.15% | 26.57% | 22.73% | 22.39% | 23.03% |
| &nbsp;&nbsp;&nbsp;$200,000+ | 11.28% | 12.05% | 5.11% | 5.23% | 4.92% |
| Average Household Income |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;2023 - Current | $104972 | $108495 | $81427 | $81200 | $81561 |
| &nbsp;&nbsp;&nbsp;2028 - Projected | $118758 | $122261 | $89734 | $90088 | $88227 |
| &nbsp;&nbsp;&nbsp;% Change 2023-2028 | 13.13% | 12.69% | 10.20% | 10.95% | 8.17% |
| Median Household Income |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;2023 - Current | $73503 | $77287 | $63393 | $62927 | $63474 |
| &nbsp;&nbsp;&nbsp;2028 - Projected | $83333 | $87217 | $69073 | $69093 | $67852 |
| &nbsp;&nbsp;&nbsp;% Change 2023-2028 | 13.37% | 12.85% | 8.96% | 9.80% | 6.90% |
| Unemployment Rate |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;December 2020 | 6.5% | 7.6% | 7.5% | 7.8% | 6.7% |
| &nbsp;&nbsp;&nbsp;December 2021 | 3.7% | 4.2% | 4.5% | 4.7% | 4.1% |
| &nbsp;&nbsp;&nbsp;December 2022 | 3.3% | 4.2% | 4.7% | 4.8% | 4.4% |

---

Feldman Financial Advisors, Inc.

**Table 10 (continued)<br> Selected Demographic Data**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | United<br>States |<br>Illinois | Ottawa<br>MSA | LaSalle<br>County | Bureau<br>County |
| Total Housing Units, 2023 | 142570295 | 5429018 | 68329 | 49733 | 15558 |
| &nbsp;&nbsp;&nbsp;Owner Occupied | 82637768 | 3287204 | 44974 | 32484 | 10556 |
| &nbsp;&nbsp;&nbsp;Renter Occupied | 45660387 | 1671423 | 16289 | 12393 | 3450 |
| &nbsp;&nbsp;&nbsp;Vacant | 14272140 | 470391 | 7066 | 4856 | 1552 |
| &nbsp;&nbsp;&nbsp;Owner Occupied | 57.96% | 60.55% | 65.82% | 65.32% | 67.85% |
| &nbsp;&nbsp;&nbsp;Renter Occupied | 32.03% | 30.79% | 23.84% | 24.92% | 22.18% |
| &nbsp;&nbsp;&nbsp;Vacant | 10.01% | 8.66% | 10.34% | 9.76% | 9.98% |
| Owner Occupied Units |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;2023 - Current | 82637768 | 3287204 | 44974 | 32484 | 10556 |
| &nbsp;&nbsp;&nbsp;2028 - Projected | 84671748 | 3278727 | 44552 | 32246 | 10415 |
| &nbsp;&nbsp;&nbsp;% Change 2010-2023 | 8.75% | 0.72% | -3.70% | -3.82% | -2.66% |
| &nbsp;&nbsp;&nbsp;% Change 2023-2028 | 2.46% | -0.26% | -0.94% | -0.73% | -1.34% |

---

Source: Claritas; Illinois Department of Employment Security; S&P Global; and U.S. Department of Labor.

The Bank's local economy is relatively stable. Major employers include hospital and health care facilities, school districts, Illinois Valley Community College, and city and county governments. Table 11 shows the top business employers in the Illinois Valley. The Order of St. Francis ("OSF") Saint Elizabeth Medical Center is the largest business employer with approximately 1,000 employees, followed by Walmart Distribution Center with 920 employees, Constellation Energy (nuclear power plant) with 800 employees, St. Margaret's Hospital - Spring Valley with 685 employees, Vactor Manufacturing (industrial trucks and tractors) with 680 employees, Ace Hardware Distribution Center with 605 employees, and Martin Engineering (bulk material handling technologies) with 500 employees Local unemployment rates have hovered above the state and national averages. The December 2022 unemployment rates were 4.8%, 4.4%, and 4.7% for LaSalle County, Bureau County, and the Ottawa MSA, respectively. By comparison, the state and national unemployment rates were 4.2% and 3.3%, respectively, in December 2022.

Feldman Financial Advisors, Inc.

**Table 11**

**Major Business Employers in the Illinois Valley Area**

---

| | | | |
|:---|:---|:---|:---|
| **Business** | **Type** | **Location** | **Employees** |
| OSF, Saint Elizabeth Medical Center | Healthcare | Ottawa | 1000 |
| Walmart Distribution Center | Distribution | Spring Valley | 920 |
| Constellation Energy | Power plant | Marseilles | 800 |
| St. Margaret's Hospital, Spring Valley | Healthcare | Spring Valley | 685 |
| Vactor Manufacturing | Manufacturing | Streator | 680 |
| Ace Hardware Distribution Center | Distribution | Princeton | 605 |
| Martin Engineering | Manufacturing | Neponset | 500 |
| PetSmart Distribution Center | Distribution | Ottawa | 420 |
| Eakas Corporation | Manufacturing | Peru | 400 |
| Marquis Energy, LLC | Power plant | Hennepin | 380 |
| Monterey Mushrooms | Food processing | Princeton | 375 |
| Carus Group Inc. | Manufacturing | Peru | 350 |
| OSF, St. Paul Medical Center | Healthcare | Mendota | 350 |
| Mennie Machine Company | Manufacturing | Mark | 340 |
| SABIC Innovative Plastics | Manufacturing | Ottawa | 285 |
| Kohl's Distribution Center | Distribution | Ottawa | 270 |
| Clover Technologies | Manufacturing | Ottawa | 258 |
| Ottawa Dental Laboratory | Manufacturing | Ottawa | 250 |
| Allegion | Manufacturing | Princeton | 250 |
| James Hardie Building Products | Manufacturing | Peru | 250 |
| Mitsuboshil Belting Ltd. | Manufacturing | Ottawa | 236 |
| Owens-Illinois Glass Container, Inc. | Manufacturing | Streator | 225 |
| Sigan America, LLC | Manufacturing | Ottawa | 225 |
| HCC | Manufacturing | Mendota | 220 |
| Cookie Kingdom, Inc. | Food processing | Oglesby | 200 |
| L.W. Schneider, Inc. | Manufacturing | Princeton | 200 |
| HR Imaging | Manufacturing | Ottawa | 180 |
| U.S. Silica Company | Manufacturing | Ottawa | 180 |
| Unfi | Distribution | Oglesby | 175 |
| JC Whitney Automotive Distribution | Distribution | LaSalle | 175 |
| Pilkington North America, Inc. | Manufacturing | Ottawa | 170 |
| Archer Daniels Midland Company | Manufacturing | 5 locations | 157 |
| Illinois Cement Company | Manufacturing | LaSalle | 150 |
| Unytite, Inc. | Manufacturing | Peru | 140 |
| Attman Specialty Plants | Floriculture | Granville | 130 |
| American Nickeloid Company | Manufacturing | Peru | 128 |

---

Source: Illinois Valley Chamber of Commerce and Economic Development.

Feldman Financial Advisors, Inc.

Table 12 presents the total employment force by industry sectors in the state of Illinois, LaSalle County, and Bureau County during December 2022. The aggregate labor force numbered 40,415 in LaSalle County and 10,686 in Bureau County. As displayed in Table 12, trade, transportation, and utilities (25.7%), government (16.1%), manufacturing (14.8%), and leisure and hospitality (10.1%) accounted for the largest employment concentrations in LaSalle County. Trade, transportation, and utilities (32.7%), government (21.0%), manufacturing (14.1%), and educational and health services (11.2%) were the largest employment sectors in Bureau County. Compared to the overall state, the local counties exhibited relatively higher employment concentrations in trade, transportation, and utilities, government, and manufacturing and lower levels of employment in professional and business services and educational and health services.

**Table 12**

**Total Employment Force by Industry Sector**

For the Month of December 2022

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | State of | State of | LaSalle | LaSalle | Bureau | Bureau |
|  | Illinois | Illinois | County | County | County | County |
|  | Total | % | Total | % | Total | % |
| Industry | Employment | of Total | Employment | of Total | Employment | of Total |
| Natural resources and mining | 6500 | 0.11 | 579 | 1.43 | NA | NA |
| Construction | 228900 | 3.73 | 1450 | 3.59 | 444 | 4.15 |
| Manufacturing | 576800 | 9.39 | 5986 | 14.81 | 1506 | 14.09 |
| Trade, transportation, and utilities | 1268200 | 20.65 | 10371 | 25.66 | 3498 | 32.73 |
| Information | 91800 | 1.49 | 248 | 0.61 | NA | NA |
| Financial activities | 411000 | 6.69 | 1657 | 4.10 | 263 | 2.46 |
| Professional and business services | 979500 | 15.95 | 3455 | 8.55 | 443 | 4.15 |
| Educational and health services | 940900 | 15.32 | 4002 | 9.90 | 1195 | 11.18 |
| Leisure and hospitality | 577900 | 9.41 | 4098 | 10.14 | 639 | 5.98 |
| Other services | 249500 | 4.06 | 2060 | 5.10 | 285 | 2.67 |
| Government | 810300 | 13.19 | 6509 | 16.11 | 2240 | 20.96 |
| &nbsp;&nbsp;&nbsp;Total Employment | 6141300 | 100.00 | 40415 | 100.00 | 10686 | 100.00 |

---

Source: Illinois Department of Employment Security.

Feldman Financial Advisors, Inc.

**<u>Overview of Office Network</u>**

Table 13 provides deposit data for the Bank's full-service banking offices as of June 30, 2017, June 30, 2021, and June 30, 2022. The Bank's deposits increased by 4.1% over the observed one-year period from June 30, 2021 to 2022 and increased by a compound annual growth rate of 4.5% over the five-year period from June 30, 2017 to 2022. The Bank's largest office based on deposits is the main office in Peru, which had total deposits of $121.9 million or 76.7% of the Bank's total deposits at June 30, 2022. The Bank's branch office in Peru had total deposits of $37.0 million or 23.3% of the Bank's total deposits at June 30, 2022.

**Table 13**

**Branch Office Deposit Data**

Data as of June 30, 2017, 2021, and 2022

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | Branch Deposits at June 30, | Branch Deposits at June 30, | Branch Deposits at June 30, | 1-Year | 5-Year |
|  |  |  | 2022 | 2021 | 2017 | Growth | CAGR |
| Address | City | St. | ($000) | ($000) | ($000) | (%) | (%) |
| **<u>LaSalle County</u>** |  |  |  |  |  |  |  |
| 1730 Fourth Street | Peru | IL | $121891 | $117283 | $98295 | 3.93 | 4.40 |
| 914 Shooting Park Road | Peru | IL | 37020 | 34944 | 29544 | 5.94 | 4.61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bank Total |  |  | $158911 | $152227 | $127839 | 4.39 | 4.45 |

---

Source: S&P Global.

**<u>Deposit Market Share Analysis</u>**

Table 14 displays branch deposit data for the financial institutions (commercial banks and thrift institutions) in LaSalle County as of June 30, 2022 (with deposit data adjusted for subsequently completed mergers). Peru Federal ranked 8th in LaSalle County out of 23 financial institutions with total deposits of $158.9 million in two offices as of June 30, 2022 for a market share of 4.6%. The deposit market share leaders in LaSalle County were American Commercial Bank & Trust (Ottawa, Illinois) with a market share of 15.8%, First State Bank (Mendota, Illinois) with a market share of 14.9%, Midland States Bank (Effingham, Illinois) with a market share of 11.6%, Eureka Savings Bank (LaSalle, Illinois) with a market share of 8.4%, and OSB Community Bank (Ottawa, Illinois) with a market share of 6.3%. The deposit market total in LaSalle County increased by 4.2% from $3.3 billion at June 30, 2021 to $3.4 billion at June 30, 2022.

Feldman Financial Advisors, Inc.

Table 15 displays branch deposit data for the financial institutions in the Ottawa MSA as of June 30, 2022. Peru Federal ranked 11<sup>th</sup> in the Ottawa MSA out of 27 financial institutions with total deposits of $158.9 million for a market share of 3.3%. The deposit market share leaders in the Ottawa MSA were First State Bank with a market share of 13.0%, Midland States Bank with a market share of 11.6%, American Commercial Bank & Trust with a market share of 11.0%, and Heartland Bank and Trust Company at 8.2%. The deposit market total in the Ottawa MSA increased by 5.2% from $4.6 billion at June 30, 2021 to $4.9 billion at June 30, 2022. Of the 27 financial institutions operating branches in the Ottawa MSA, 20 of 27 had aggregate total deposits under $1 billion and 17 of 27 had aggregate total deposits under $500 billion. The largest banks (based on aggregate total deposits) operating in the Ottawa MSA included Old National Bank, Midland States Bank, Old Second National Bank, Woodforest National Bank, and Heartland Bank and Trust Company. Among these larger banks, only Midland States Bank and Heartland Bank and Trust Company had meaningful deposit market shares in the Ottawa MSA.

Feldman Financial Advisors, Inc.

**Table 14**

**Deposit Market Share in LaSalle County, Illinois**

Data as of June 30, 2022

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | No. of | Market | Market | Market | Market | 1-Year | 5-Year |
| Market |  | Branch | Deposits | Share | Deposits | Share | Deposit | Deposit |
| Rank | Financial | Offices | 2022 | 2022 | 2021 | 2021 | Growth | CAGR |
| 2022 | Institution | 2022 | ($000) | (%) | ($000) | (%) | (%) | (%) |
| **LaSalle County, Illinois** | **LaSalle County, Illinois** |  |  |  |  |  |  |  |
| 1 | American Comm'l Bank & Trust (IL) | 6 | 539525 | 15.77 | 459496 | 14.00 | 17.42 | 16.93 |
| 2 | First State Bank (IL) | 5 | 509565 | 14.89 | 520969 | 15.87 | (2.19) | 0.80 |
| 3 | Midland States Bank (IL) | 4 | 396477 | 11.59 | 382005 | 11.64 | 3.79 | 6.71 |
| 4 | Eureka Savings Bank (IL) | 4 | 288763 | 8.44 | 278450 | 8.48 | 3.70 | 1.20 |
| 5 | OSB Community Bank (IL) | 2 | 214445 | 6.27 | 213386 | 6.50 | 0.50 | 4.43 |
| 6 | Hometown National Bank (IL) | 1 | 211409 | 6.18 | 219232 | 6.68 | (3.57) | 6.45 |
| 7 | First Federal Savings Bank (IL) | 6 | 171669 | 5.02 | 178257 | 5.43 | (3.70) | (1.06) |
| **8** | **Peru Federal Savings Bank (IL)** | **2** | **158911** | **4.64** | **152227** | **4.64** | **4.39** | **4.45** |
| 9 | Heartland Bank and Trust Co. (IL) | 2 | 141290 | 4.13 | 131538 | 4.01 | 7.41 | 7.57 |
| 10 | LaSalle State Bank (IL) | 3 | 136420 | 3.99 | 125103 | 3.81 | 9.05 | 5.19 |
| 11 | Streator Home Savings Bank (IL) | 1 | 121647 | 3.56 | 122659 | 3.74 | (0.83) | (0.58) |
| 12 | Illini State Bank (IL) | 3 | 121487 | 3.55 | 113462 | 3.46 | 7.07 | 8.87 |
| 13 | Marseilles Bank (IL) | 2 | 70660 | 2.07 | 67049 | 2.04 | 5.39 | 6.79 |
| 14 | Old Second National Bank (IL) | 1 | 57654 | 1.69 | 58140 | 1.77 | (0.84) | 2.80 |
| 15 | Old National Bank (IN) | 1 | 57167 | 1.67 | 54949 | 1.67 | 4.04 | (4.78) |
| 16 | Pioneer State Bank (IL) | 1 | 46922 | 1.37 | 48233 | 1.47 | (2.72) | 2.97 |
| 17 | Granville National Bank (IL) | 1 | 42426 | 1.24 | 41339 | 1.26 | 2.63 | 9.11 |
| 18 | Grand Ridge National Bank (IL) | 1 | 39982 | 1.17 | 36800 | 1.12 | 8.65 | 4.91 |
| 19 | Central Bank Illinois (IL) | 1 | 39676 | 1.16 | 32839 | 1.00 | 20.82 | NA |
| 20 | Resource Bank NA (IL) | 2 | 22015 | 0.64 | 18162 | 0.55 | 21.21 | NA |
| 21 | Peoples Nat'l Bank of Kewanee (IL) | 1 | 21809 | 0.64 | 19612 | 0.60 | 11.20 | 13.08 |
| 22 | Spring Valley City Bank (IL) | 1 | 7732 | 0.23 | 5537 | 0.17 | 39.64 | NA |
| 23 | Woodforest National Bank (TX) | 1 | 3847 | 0.11 | 3211 | 0.10 | 19.81 | 23.39 |
|  | **Market Total** | **52** | **3421498** | **100.00** | **3282655** | **100.00** | **4.23** | **5.43** |

---

Source: S&P Global.

Feldman Financial Advisors, Inc.

**Table 15**

**Deposit Market Share in the Ottawa MSA, Illinois**

Data as of June 30, 2022

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | No. of | Market | Market | Market | Market | 1-Year | 5-Year |
| Market |  | Branch | Deposits | Share | Deposits | Share | Deposit | Deposit |
| Rank | Financial | Offices | 2022 | 2022 | 2021 | 2021 | Growth | CAGR |
| 2022 | Institution | 2022 | ($000) | (%) | ($000) | (%) | (%) | (%) |
| **Ottawa MSA, Illinois** | **Ottawa MSA, Illinois** |  |  |  |  |  |  |  |
| 1 | First State Bank (IL) | 8 | 631999 | 12.97 | 634897 | 13.71 | (0.46) | 2.95 |
| 2 | Midland States Bank (IL) | 5 | 567108 | 11.63 | 553459 | 11.95 | 2.47 | 4.39 |
| 3 | American Comm'l Bank & Trust (IL) | 6 | 539525 | 11.07 | 459496 | 9.92 | 17.42 | 16.93 |
| 4 | Heartland Bank and Trust Co. (IL) | 6 | 401417 | 8.24 | 377558 | 8.15 | 6.32 | 6.12 |
| 5 | Eureka Savings Bank (IL) | 4 | 288763 | 5.92 | 278450 | 6.01 | 3.70 | 1.20 |
| 6 | Central Bank Illinois (IL) | 2 | 285774 | 5.86 | 224342 | 4.84 | 27.38 | 11.86 |
| 7 | OSB Community Bank (IL) | 2 | 214445 | 4.40 | 213386 | 4.61 | 0.50 | 4.43 |
| 8 | Hometown National Bank (IL) | 1 | 211409 | 4.34 | 219232 | 4.73 | (3.57) | 6.45 |
| 9 | Spring Valley City Bank (IL) | 2 | 189447 | 3.89 | 188927 | 4.08 | 0.28 | 3.44 |
| 10 | First Federal Savings Bank (IL) | 7 | 186321 | 3.82 | 192205 | 4.15 | (3.06) | (0.67) |
| **11** | **Peru Federal Savings Bank (IL)** | **2** | **158911** | **3.26** | **152227** | **3.29** | **4.39** | **4.45** |
| 12 | LaSalle State Bank (IL) | 3 | 136420 | 2.80 | 125103 | 2.70 | 9.05 | 5.19 |
| 13 | North Central Bank (IL) | 2 | 134104 | 2.75 | 121803 | 2.63 | 10.10 | 3.85 |
| 14 | Streator Home Savings Bank (IL) | 1 | 121647 | 2.50 | 122659 | 2.65 | (0.83) | (0.58) |
| 15 | Illini State Bank (IL) | 3 | 121487 | 2.49 | 113462 | 2.45 | 7.07 | 8.87 |
| 16 | Granville National Bank (IL) | 2 | 103472 | 2.12 | 98237 | 2.12 | 5.33 | 6.90 |
| 17 | State Bank of Cherry (IL) | 1 | 101145 | 2.08 | 99550 | 2.15 | 1.60 | 6.59 |
| 18 | Peoples Nat'l Bank of Kewanee (IL) | 3 | 74620 | 1.53 | 66645 | 1.44 | 11.97 | 10.98 |
| 19 | Marseilles Bank (IL) | 2 | 70660 | 1.45 | 67049 | 1.45 | 5.39 | 6.79 |
| 20 | Community State Bank (IL) | 2 | 65783 | 1.35 | 64455 | 1.39 | 2.06 | 4.92 |
| 21 | Old Second National Bank (IL) | 1 | 57654 | 1.18 | 58140 | 1.26 | (0.84) | 2.80 |
| 22 | Old National Bank (IN) | 1 | 57167 | 1.17 | 54949 | 1.19 | 4.04 | (4.78) |
| 23 | Pioneer State Bank (IL) | 1 | 46922 | 0.96 | 48233 | 1.04 | (2.72) | 2.97 |
| 24 | First State Bank of Van Orin (IL) | 2 | 42211 | 0.87 | 39662 | 0.86 | 6.43 | 3.19 |
| 25 | Grand Ridge National Bank (IL) | 1 | 39982 | 0.82 | 36800 | 0.79 | 8.65 | 4.91 |
| 26 | Resource Bank NA (IL) | 2 | 22015 | 0.45 | 18162 | 0.39 | 21.21 | NA |
| 27 | Woodforest National Bank (TX) | 1 | 3847 | 0.08 | 3211 | 0.07 | 19.81 | 23.39 |
|  | **Market Total** | **73** | **4874255** | **100.00** | **4632299** | **100.00** | **5.22** | **5.44** |

---

Source: S&P Global.

Feldman Financial Advisors, Inc.

Peru Federal faces significant competition in originating loans and attracting deposits. This competition stems primarily from commercial banks, other savings institutions, credit unions, and mortgage-banking companies. Many of the financial service providers operating in the Bank's market area are significantly larger and have greater financial resources. The Bank faces additional competition for deposits from online banking institutions, short-term money market funds, other corporate and government securities funds, mutual funds, and from other non-depository financial institutions such as brokerage firms and insurance companies.

Competition for residential mortgage lending in the Bank's market area is high. In addition to local and regional participants, many nationwide lenders are present in the Bank's lending market. Central Bank (Geneseo, Illinois) was the leading residential mortgage lender in 2021 in the Ottawa MSA, followed by Rocket Mortgage (Detroit, Michigan), Eureka Savings Bank, American Commercial Bank & Trust, OSB Community Bank, and First State Bank (Saint Clair Shores, Michigan).

Feldman Financial Advisors, Inc.

**Summary Outlook**

The Bank has consistently reported moderate levels of profitability over the past three years. The Bank's ROA measured 0.47%, 0.55%, and 0.46% in 2020, 2021, and 2022, respectively. The Bank's profitability in 2022 was impacted by the loss on sale of securities as the Bank attempted to restructure a portion of its securities portfolio to generate increased yields in future periods. The Bank's net interest income increased by 4.8% from $4.0 million in 2021 to $4.2 million in 2022, as its net interest margin expanded from 2.14% in 2021 to 2.40% in 2022 due to the effects of rising market interest rates. However, the Bank's net interest margin remains under pressure and well below peer group averages. The large concentrations of liquidity and investments have the effect of restraining the Bank's net interest income. As noted earlier, total cash and investments amounted to 45.7% of total assets and net total loans composed 48.8% of total assets at December 31, 2022. In recent years, the Bank's provision for loan losses has amounted to relatively small levels as asset quality has remained satisfactory.

The Bank plans to continue its emphasis on residential mortgage lending. Commercial real estate and commercial business lending has expanded in recent years as the Bank sought to improve its earning asset yields and interest rate sensitivity with shorter-maturity loans. A key element of the Bank's operating strategy is to continue to aggressively manage credit risk, so as to maintain the Bank's favorable measures of credit quality. The Bank strong capital position helps to support its net interest margin and interest rate risk management, although the loan portfolio continues to reflect a large concentration of fixed-rate residential mortgage loans.

The Bank's traditional thrift institution orientation reflects a business model that operates efficiently with below-average levels of non-interest expense. The infusion of additional capital from the Stock Offering will fortify the Bank's already strong capital position and allow for the implementation of prudent growth strategies, which would serve to leverage operating expenses and provide additional flexibility to evaluate adding additional products and services that would enhance the Bank's competitive position and contribute to improved profitability. As a public company following the completion of the Conversion and Stock Offering, the Bank will experience an increase in operating expenses related to the compensation costs of stock-benefit plans and the additional costs related to resources, systems, and controls necessary to satisfy the ongoing public company financial reporting requirements. The incremental expenses may present an impediment to generating meaningful earnings growth over the near term until the additional capital is leveraged to support higher-yielding loan expansion.

Feldman Financial Advisors, Inc.

**II. COMPARISONS WITH PUBLICLY TRADED THRIFTS**

**General Overview**

The comparative market approach provides a sound basis for determining estimates of going-concern valuations where a regular and active market exists for the stocks of peer institutions. The comparative market approach was utilized in determining the estimated pro forma market value of the Bank because: (1) reliable market and financial data are readily available for comparable institutions; (2) the comparative market method is required by the applicable regulatory guidelines; and (3) other alternative valuation methods (such as income capitalization, liquidation analysis, or discounted cash flow) are unlikely to produce a valuation relevant to the future trading patterns of the related equity interest. The generally employed valuation method in initial public offerings, where possible, is the comparative market approach, which also can be relied upon to determine pro forma market value in a thrift stock conversion.

The comparative market approach derives valuation benchmarks from the trading patterns of selected peer institutions which, due to certain factors such as financial performance and operating strategies, enable the appraiser to estimate the potential value of the subject institution in a stock conversion offering. The pricing and trading history of recent initial public offerings of thrifts are also examined to provide evidence of the "new issue discount" that must be considered. In Chapter II, our valuation analysis focuses on the selection and comparison of the Bank with a comparable group of publicly traded thrift institutions (the "Comparative Group"). Chapter III will detail any additional discounts or premiums that we believe are appropriate to the Bank's pro forma market value.

Feldman Financial Advisors, Inc.

**Selection Criteria**

Selected market price and financial performance data for all public thrifts listed on major stock exchanges are shown in Exhibit III. The list excludes companies that are subject to being acquired under a pending transaction and companies that have a majority ownership interest controlled by a mutual holding company. Several criteria, discussed below, were used to select the individual members of the Comparative Group from the overall universe of publicly traded thrifts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Operating characteristics</u> – An institution's operating characteristics are the most
 important factors because they affect investors' expected rates of return on a company's
 stock under various business/economic scenarios, and they influence the market's general
 perception of the quality and attractiveness of a given company. Operating characteristics,
 which may vary in importance during the business cycle, include financial variables such
 as profitability, balance sheet growth, capitalization, asset quality, and other factors
 such as lines of business and management strategies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Degree of marketability and liquidity</u> – Marketability of a stock reflects the relative
 ease and promptness with which a security may be sold when desired, at a representative current
 price, without material concession in price merely because of the necessity of sale. Marketability
 also connotes the existence of buying interest as well as selling interest and is usually
 indicated by trading volumes and the spread between the bid and asked price for a security.
 Liquidity of the stock issue refers to the organized market exchange process whereby the
 security can be converted into cash. We attempted to limit our selection to companies that
 have access to a regular trading market or price quotations, and therefore only considered
 companies listed on major stock exchanges. We eliminated from the Comparative Group companies
 whose market prices were materially influenced by announced acquisitions or other unusual
 circumstances. However, the expectation of continued industry consolidation is currently
 embedded in thrift equity valuations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Geographic Location</u> – The region of the country where a company operates is also of importance
 in selecting the comparative group. The operating environment for thrift institutions varies
 from region to region with respect to business and economic environments, real estate market
 conditions, speculative takeover activity, and investment climates. Economic and investor
 climates can also vary greatly within a region, particularly due to takeover activity.

Feldman Financial Advisors, Inc.

The operations of the Bank fit the general profile of a smaller thrift institution, concentrating primarily on real estate lending in its local market and relying on retail deposits as a funding source. Residential mortgage loans remain the core product in the Bank's loan portfolio, drawing upon its roots as a traditional home lender. The Bank has made some progress in diversifying its loan mix through the expanded origination of commercial real estate and commercial business loans.

In determining the Comparative Group composition, we focused on the Bank's asset size, capitalization, asset quality, earnings fundamentals, and geographic location. Attempting to concentrate on the Bank's performance characteristics and to develop a meaningful number of comparables for valuation purposes, we expanded the criteria to include a statistically significant number of companies. In addition, because of the scarcity of candidates meeting the criteria precisely, we expanded the asset size and geographic criteria to generate a significant number of comparables. As with any composition of a group of comparable companies, the selection criteria were broadened sufficiently to assemble a significant number of members. We performed an initial screening for publicly traded thrifts headquartered in the Midwest region of the United States with total assets less than $1 billion. We then expanded the selection criteria to other geographic regions and applied the following selection criteria:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Publicly traded thrift</u> – stock-form thrift whose shares are traded on the New York Stock
 Exchange ("NYSE"), NYSE American, or NASDAQ Stock Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Excludes mutual holding companies</u> – company's corporate structure is not organized
 in the mutual holding company ("MHC") form.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Seasoned trading issue</u> – company has been publicly traded in the fully-converted stock form
 for at least one year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Non-acquisition target</u> – company is not subject to a pending acquisition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Asset size</u> – total assets less than $1 billion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Capital level</u> – tangible common equity to tangible assets greater than 7.0%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Market capitalization</u> – total market value of common stock is less than $100 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Credit quality</u> – non-performing assets (including troubled debt restructurings) to total
 assets less than 2.0%.

Feldman Financial Advisors, Inc.

As a result of applying the stated criteria, the screening process produced a reliable representation of public thrifts. A general operating summary of the 12 companies included in the Comparative Group is presented in Table 16. All of the selected companies are traded on the NASDAQ Stock Market. The Comparative Group companies ranged in asset size from $263.3 million at Catalyst Bancorp to $823.7 million at IF Bancorp. The median asset size of the Comparative Group was $391.4 million and larger than the Bank's total assets of $174.1 million as of December 31, 2022.

The Comparative Group includes four thrifts based in the Midwest region, IF Bancorp (Illinois), NSTS Bancorp (Illinois), Mid-Southern Bancorp (Indiana), and 1895 Bancorp (Wisconsin). NSTS Bancorp is based in Waukegan, Illinois and completed its mutual-to-stock conversion in January 2022. IF Bancorp is based in Watseka, Illinois and completed its mutual-to-sock conversion in July 2011. The Comparative Group's remaining members are located in the Southwest (three companies) Mid-Atlantic (three companies), and Southeast (two companies).

Of the 27 public thrifts based in the Midwest, most were excluded because their stock issues are not traded on a major stock exchange and are instead listed on over-the-counter ("OTC") markets. In addition, several other Midwest thrifts were excluded due to their corporate structure in the MHC form or their asset size exceeded the asset threshold of $1 billion. While some differences inevitably may exist between the Bank and the individual companies, we believe that the chosen Comparative Group, on the whole, provides a meaningful basis of financial comparison for valuation purposes.

Feldman Financial Advisors, Inc.

**Table 16**

**Comparative Group Operating Summary**

As of December 31, 2022

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Initial<br> Public | Total | Tang. <br>Equity/ |
|  |  |  | No. of | Offering | Assets | Assets |
| Company | City | St. | Offices | Date | ($Mil.) | (%) |
| Peru Federal Savings Bank | Peru | IL | 2 | NA | $174.1 | 11.57 |
| <u>Comparative Group</u> |  |  |  |  |  |  |
| 1895 Bancorp (1) | Greenfield | WI | 6 | 01/08/19 | 529.3 | 14.34 |
| Catalyst Bancorp, Inc. | Opelousas | LA | 6 | 10/12/21 | 263.3 | 33.60 |
| Cullman Bancorp, Inc. (1) | Cullman | AL | 4 | 10/08/09 | 406.1 | 24.26 |
| Generations Bancorp (1) | Seneca Falls | NY | 10 | 07/10/06 | 373.6 | 9.71 |
| Home Federal Bancorp, Inc. | Shreveport | LA | 11 | 01/18/05 | 576.5 | 8.44 |
| IF Bancorp, Inc. | Watseka | IL | 8 | 07/07/11 | 823.7 | 8.63 |
| Magyar Bancorp, Inc. | New Brunswick | NJ | 7 | 01/23/06 | 821.6 | 12.16 |
| Mid-Southern Bancorp, Inc. (1) | Salem | IN | 3 | 04/08/98 | 264.5 | 11.65 |
| NSTS Bancorp, Inc. (1) | Waukegan | IL | 3 | 01/18/22 | 268.2 | 29.52 |
| PB Bankshares, Inc. (1) | Coatesville | PA | 4 | 07/14/21 | 376.7 | 11.84 |
| TC Bancshares, Inc. (1) | Thomasville | GA | 2 | 07/20/21 | 406.2 | 20.84 |
| Texas Community Bancshs. (1) | Mineola | TX | 6 | 07/14/21 | 375.7 | 14.71 |

---

(1) As of September 30, 2022.

Source: Peru Federal Savings Bank; S&P Global.

Feldman Financial Advisors, Inc.

**Recent Financial Comparisons**

Table 17 summarizes certain key financial comparisons between the Bank and the Comparative Group. Tables 18 through 22 contain the detailed financial comparisons of the Bank with the individual Comparative Group companies based on measures of profitability, income and expense components, capital levels, balance sheet composition, asset quality, and growth rates. Financial data for the Bank, the Comparative Group, and All Public Thrift aggregate were utilized for the latest available period as of or for the last twelve months ("LTM") ended December 31, 2022. Companies in the Comparative Group reporting financial data through the LTM ended September 30, 2022 are indicated as such.

The Bank's LTM earnings amounted to $831,000 for an LTM ROA of 0.46%, reflecting profitability below the Comparative Group median of 0.56% and the All Public Thrift median of 0.74%. The Bank's lower ROA was attributable mainly to a lower level of net interest income. . The Bank's LTM ROE was 3.97% and eclipsed the Comparative Group median of 3.56%. The Bank's ROA was below the ROA results of half of the members of the Comparative Group. The Comparative Group's ROA results ranged from a low of -0.08% at 1895 Bancorp to 1.05% at Cullman Bancorp.

Based on core earnings (as adjusted to exclude securities gains or losses, intangibles amortization expense, and other non-recurring items), the Bank's core profitability was slightly lower than the Comparative Group's levels. The Bank's LTM core earnings ratio measured 0.56% of average assets and positioned below the corresponding Comparative Group median of 0.58% and the All Public Thrift median of 0.91%. The Bank's core earnings exclude the impact of $221,000 in realized losses on sale of securities and reflect a resulting amount of core earnings equal to $1.0 million for the LTM ended December 31, 2022.

Feldman Financial Advisors, Inc.

**Table 16**

**Key Financial Comparisons**

**Peru Federal Savings Bank and the Comparative Group**

As of or For the Last Twelve Months Ended December 31, 2022

---

| | | | |
|:---|:---|:---|:---|
|  |<br>Peru<br>Federal | Comparative<br>Group<br>Median | All Public<br>Thrift<br>Median |
| **<u>Profitability Ratios</u>** |  |  |  |
| LTM Return on Average Assets (ROA) | 0.46% | 0.56% | 0.74% |
| LTM Return on Average Equity (ROE) | 3.99 | 3.56 | 6.27 |
| Core Return on Avg. Assets (Core ROA) | 0.56 | 0.58 | 0.91 |
| Core Return on Avg. Equity (Core ROE) | 4.84 | 3.77 | 6.80 |
| Net Interest Margin | 2.43 | 2.99 | 3.18 |
| Efficiency Ratio | 74.09 | 76.97 | 66.82 |
| **<u>Income and Expense</u>** (% of avg. assets) |  |  |  |
| Total Interest Income | 2.66 | 3.43 | 3.44 |
| Total Interest Expense | 0.36 | 0.33 | 0.37 |
| Net Interest Income | 2.30 | 2.93 | 3.04 |
| Provision for Loan Losses | 0.03 | 0.05 | 0.05 |
| Other Operating Income | 0.40 | 0.46 | 0.41 |
| Net Securities Gains and Non-rec. Income | (0.12) | 0.00 | 0.00 |
| General and Administrative Expense | 2.00 | 2.57 | 2.56 |
| Intangibles Amortization Expense | 0.00 | 0.00 | 0.00 |
| Non-recurring Expense | 0.00 | 0.00 | 0.00 |
| Pre-tax Core Earnings | 0.67 | 0.72 | 1.02 |
| **<u>Equity Capital Ratios</u>** |  |  |  |
| Total Equity / Total Assets | 11.57 | 13.25 | 11.61 |
| Tangible Equity / Tangible Assets | 11.57 | 13.25 | 11.41 |
| **<u>Growth Rates</u>** |  |  |  |
| Total Assets | (6.16) | 4.78 | 4.56 |
| Net Total Loans | 5.04 | 13.79 | 13.29 |
| Total Deposits | (2.06) | 3.64 | 1.69 |

---

Feldman Financial Advisors, Inc.

**Table 16 (continued)**

**Key Financial Comparisons**

**Peru Federal Savings Bank and the Comparative Group**

As of or For the Last Twelve Months Ended December 31, 2022.

---

| | | | |
|:---|:---|:---|:---|
|  |<br>Peru<br>Federal | Comparative<br>Group<br>Median | All Public<br>Thrift<br>Median |
| **<u>Balance Sheet Composition</u>** (% of total assets) |  |  |  |
| Cash and Securities | 45.69% | 24.31% | 17.33% |
| Loans Receivable, net | 48.76 | 70.62 | 76.55 |
| Real Estate Owned | 0.00 | 0.02 | 0.00 |
| Intangible Assets | 0.00 | 0.00 | 0.03 |
| Other Assets | 5.55 | 5.33 | 5.05 |
| Total Deposits | 87.70 | 76.58 | 76.88 |
| Borrowed Funds | 0.00 | 5.24 | 7.86 |
| Other Liabilities | 0.74 | 1.04 | 1.16 |
| Total Liabilities | 88.43 | 86.75 | 88.38 |
| Total Equity | 11.57 | 13.25 | 11.62 |
| **<u>Loan Portfolio Composition</u>** (% of total loans) |  |  |  |
| Residential Real Estate Loans (1) | 71.53 | 41.49 | 31.90 |
| Other Real Estate Loans | 22.73 | 41.26 | 50.54 |
| Non-Real Estate Loans | 5.74 | 18.04 | 17.56 |
| **<u>Credit Risk Ratios</u>** |  |  |  |
| Non-performing Loans (2) / Total Loans | 0.73 | 0.65 | 0.53 |
| Non-performing Assets (2) /Total Assets | 0.36 | 0.44 | 0.40 |
| Reserves / Total Non-performing Loans (2) | 87.16 | 103.25 | 179.10 |
| Reserves / Total Loans | 0.64 | 1.14 | 1.00 |

---

(1) Includes home equity and second mortgage loans.

(2) Includes accruing troubled debt restructurings.

Source: Peru Federal Savings Bank; S&P Global.

Feldman Financial Advisors, Inc.

As shown in Table 20, the Bank's level of net interest income at 2.30% of average assets was significantly below the Comparative Group median of 2.93%, owing to the Bank's relatively high concentration of assets invested in cash equivalents and investment securities, which generally carry lower yields than loans. The Bank's total interest income measured 2.66% of average assets for the LTM period, trailing the Comparative Group median of 3.43%. The Bank's interest expense amounted to 0.36% of average assets and was slightly above the Comparative Group median of 0.33%. As reflected by its lower net interest margin of 2.43% versus the corresponding Comparative Group median of 2.99%, the earning power of the Bank's balance sheet is restrained by the relatively large concentration of cash and investments.

The Bank's non-interest operating income totaled 0.40% of average assets, lagging moderately behind the Comparative Group median of 0.46%. The Bank's primary sources of non-interest income include customer service charges, loan servicing fees, and BOLI income. Most of the Comparative Group companies reported higher levels of non-interest income, particularly expanded revenue from mortgage banking operations producing significant loan origination and servicing fees and gains on sale of loans.

The Bank's loan loss provision amounted to 0.03% of average assets for the recent LTM period and was positioned below the Comparative Group median of 0.05%. After recognizing a $6,000 credit for loan losses in 2021, the Bank recorded a $61,000 provision for loan losses in 2022 in recognition of increased net charge-offs and loan portfolio growth. While the Bank's assets shrank by 6.2% in 2022, its total loan portfolio expanded by 5.0%. The Bank's total non-performing assets (including accruing TDRs) measured 0.36% at December 31, 2022, which was lower than the Comparative Group median of 0.44% and the All Public Thrift median of 0.40%. However, the Bank's total non-performing loans (including accruing TDRs) measured 0.73% of total loans at December 31, 2022, which was higher than the Comparative Group and All Public Thrift medians of 0.65% and 0.53%, respectively. The Bank's 0.64% ratio of loan loss allowance to total loans was lower than the corresponding Comparative Group median of 1.14% and All Public Thrift median of 1.00%. Furthermore, the Bank's 87.2% ratio of loan loss allowance to total non-performing loans (including accruing TDRs) was positioned below the Comparative Group median of 103.3% and All Public Thrift median of 179.1%.

Feldman Financial Advisors, Inc.

The Bank's operating expense ratio at 2.00% of average assets was lower than the Comparative Group median of 2.57% and All Public Thrift median of 2.56%. The Bank's 74.1% efficiency ratio (defined as non-interest expense less intangibles amortization expense as a percent of the sum of net interest income before provision plus non-interest operating income) compared favorably to the Comparative Group median of 77.0%. Only four members of the Comparative Group exhibited efficiency ratios below the Bank's efficiency ratio, which is supported by the Bank's comparatively lower operating expense ratio notwithstanding its lower net interest margin. Further improving the efficiency ratio is a strategic goal for the Bank as it seeks to leverage the operating infrastructure and staffing resources in place to grow the balance sheet and generate increased levels of market share penetration and banking activity.

As reflected in Table 21, the overall balance sheet composition of the Bank reflected a much lower concentration of loans to assets versus that of the overall Comparative Group. The Bank's net total loans amounted to 48.8% of total assets as of December 31, 2022, well below the median of 70.6% for the Comparative Group. Among the Comparative Group companies, only NSTS Bancorp at 36.5% had a lower ratio of net total loans to total assets than evidenced by Peru Federal. The Bank's ratio of cash and securities to total assets was 45.7% and appreciably above the median of 24.3% for the Comparative Group. The Bank had no intangible assets or real estate owned on its balance sheet as of December 31, 2022. The Bank's ratio of other assets to total assets measured 5.6% and was slightly higher than the Comparative Group median of 5.3%. The Bank's other assets primarily comprised BOLI (2.2% of total assets), premises and equipment (1.2% of total assets), and deferred income taxes (1.1% of total assets) as of December 31, 2022.

Feldman Financial Advisors, Inc.

The Bank's ratio of borrowed funds to total assets amounted to 0.0% at December 31, 2022 and was lower than the Comparative Group median of 5.2%. The Bank historically has not actively utilized borrowings as a supplemental source of funds. However, the Bank obtained interest-free FHLB borrowings in 2020 and 2021 that were offered on a limited basis by the FHLB of Chicago to its eligible member institutions as part of its coronavirus relief funding program. In 2020, the Bank obtained a $4.0 million, one-year, zero-rate FHLB advance that matured in 2021. In 2021, the Bank obtained a $5.0 million, one-year, zero-rate FHLB advance that matured in 2022. The Bank had no outstanding borrowings as of December 31, 2022.

The Bank's level of deposits at 87.7% of total assets was above the Comparative Group median of 76.6% of total assets due to the absence of borrowed funds at the Bank. The Bank's equity level before the Stock Offering was 11.57% relative to total assets as of December 31, 2022, which was below the Comparative Group median of 13.25%. The Comparative Group includes a several companies that completed full conversion or second-step conversion offerings over the past two years and have emerged with extraordinarily high capital levels that have not been notably leveraged due to the relatively short passage of time.

The Bank's level of residential real estate loans (including home equity and second mortgage loans) measured 71.5% of total loans based on regulatory financial data as of December 31, 2022, outdistancing the Comparative Group median of 41.5% and reflective of the Bank's traditional thrift orientation. Three other members of the Comparative Group exhibited a majority of loans in the residential category: NSTS Bancorp at 90.1%, Catalyst Bancorp at 65.5%, and Texas Community Bancshares at 65.5%. Other companies within the Comparative Group exhibited more diverse loan portfolio compositions with higher percentages of non-residential real estate loans and non-real estate loans in portfolio than the levels exhibited by Peru Federal.

Feldman Financial Advisors, Inc.

The Bank's concentration of non-residential real estate loans (which category includes commercial real estate, multi-family real estate, and construction and land development loans) represented 22.7% of total loans and was lower than the Comparative Group median of 41.3%. The Bank also exhibited a lower level of non-real estate loans, which accounted for 5.7% of total loans versus the Comparative Group median of 18.0%.

The Bank's asset growth rate measured -6.2% over the recent LTM period versus the Comparative Group median asset growth rate of 4.8%. The Bank exhibited a deposit growth rate of -2.1% versus the Comparative Group median of 3.6%. The Bank's loan growth rate of 5.0% also trailed the Comparative Group median of 13.8%. The lack of meaningful balance sheet growth at Peru Federal poses a major challenge to the Bank's capacity to improve earnings by generating incremental net interest income.

In summary, the Bank's recent earnings performance measured slightly below the results exhibited by the Comparative Group, while its capital ratio was lower (before the effect of the Stock Offering) and its asset quality ratios were relatively comparable to the levels represented by the Comparative Group medians. The Bank's profitability was characterized by a much lower net interest margin and a favorably lower non-interest expense ratio. Similar to most financial institutions its size, the Bank is faced with the ongoing challenge of improving its efficiency ratio either through bolstering its net interest margin, enhancing non-interest income generation, or improving the efficiency and productivity of its operating infrastructure. The Bank's earnings growth outlook will depend largely on its ability to maintain satisfactory loan quality as it grows the portfolio, to improve the net interest margin across movements in the interest rate environment, and to control non-interest expense as it seeks to expand its operations and transition to a public company.

Feldman Financial Advisors, Inc.

**Table 18**

**General Operating Characteristics**

As of December 31, 2022

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | <br>City/State | <br>Ticker | <br>Exchange |<br>No. of<br>Offices |<br>IPO<br>Date | <br>Total<br>Assets<br>($000s) | <br>Total<br>Deposits<br>($000s) | <br>Total<br>Equity<br>($000s) | Tang.<br>Common<br>Equity<br>($000s) |
| **Peru Federal Savings Bank** | **Peru, IL** | **NA** | **NA** | **2** | **NA** | **174134** | **152707** | **20139** | **20139** |
| **Comparative Group Average** |  |  |  |  |  | **457135** | **356171** | **67926** | **67763** |
| **Comparative Group Median** |  |  |  |  |  | **391410** | **298968** | **73497** | **73497** |
| <u>Comparative Group</u> |  |  |  |  |  |  |  |  |  |
| 1895 Bancorp of Wisconsin, Inc. (1) | Greenfield, WI | BCOW | NASDAQ | 6 | 01/08/19 | 529317 | 379298 | 75903 | 75903 |
| Catalyst Bancorp, Inc. | Opelousas, LA | CLST | NASDAQ | 6 | 10/12/21 | 263324 | 165094 | 88474 | 88474 |
| Cullman Bancorp, Inc. (1) | Cullman, AL | CULL | NASDAQ | 4 | 10/08/09 | 406081 | 286751 | 98521 | 98521 |
| Generations Bancorp NY, Inc. (1) | Seneca Falls, NY | GBNY | NASDAQ | 10 | 07/10/06 | 373612 | 308308 | 37653 | 36126 |
| Home Federal Bancorp, Inc. | Shreveport, LA | HFBL | NASDAQ | 11 | 01/18/05 | 576543 | 518211 | 48689 | 48689 |
| IF Bancorp, Inc. | Watseka, IL | IROQ | NASDAQ | 8 | 07/07/11 | 823727 | 667337 | 71090 | 71090 |
| Magyar Bancorp, Inc. | New Brunswick, NJ | MGYR | NASDAQ | 7 | 01/23/06 | 821626 | 676083 | 99918 | 99918 |
| Mid-Southern Bancorp, Inc. (1) | Salem, IN | MSVB | NASDAQ | 3 | 04/08/98 | 264548 | 201815 | 30810 | 30810 |
| NSTS Bancorp, Inc. (1) | Waukegan, IL | NSTS | NASDAQ | 3 | 01/18/22 | 268178 | 183461 | 79159 | 79159 |
| PB Bankshares, Inc. (1) | Coatesville, PA | PBBK | NASDAQ | 4 | 07/14/21 | 376739 | 289628 | 44618 | 44618 |
| TC Bancshares, Inc. (1) | Thomasville, GA | TCBC | NASDAQ | 2 | 07/20/21 | 406223 | 315870 | 84647 | 84647 |
| Texas Community Bancshares, Inc. (1) | Mineola, TX | TCBS | NASDAQ | 6 | 07/14/21 | 375697 | 282201 | 55627 | 55197 |

---

(1) As of September 30, 2022. <br>Source: Peru Federal Savings Bank; S&P Global.

Feldman Financial Advisors, Inc.

**Table 19**

**General Financial Performance Ratios**

As of or For the Last Twelve Months Ended December 31, 2022

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |<br>Total<br>Assets<br>($000s) |<br>Total<br>Deposits<br>($000s) | Total<br>Equity/<br>Assets<br>(%) | Tang.<br>Equity/<br>Assets<br>(%) | Net<br>Interest<br>Margin<br>(%) |<br>Effcy.<br>Ratio<br>(%) |<br>LTM<br>ROA<br>(%) |<br>LTM<br>ROE<br>(%) |<br>Core<br>ROA<br>(%) |<br>Core<br>ROE<br>(%) |
| **Peru Federal Savings Bank** | **174134** | **152707** | **11.57** | **11.57** | **2.43** | **74.09** | **0.46** | **3.99** | **0.56** | **4.84** |
| **Comparative Group Average** | **457135** | **356171** | **16.68** | **16.64** | **3.10** | **80.41** | **0.53** | **4.01** | **0.54** | **4.13** |
| **Comparative Group Median** | **391410** | **298968** | **13.25** | **13.25** | **2.99** | **76.97** | **0.56** | **3.56** | **0.58** | **3.77** |
| **All Public Thrift Average** | **5122766** | **3701097** | **13.53** | **13.01** | **3.37** | **69.98** | **0.68** | **5.67** | **0.79** | **6.54** |
| **All Public Thrift Median** | **1636381** | **1252412** | **11.62** | **11.41** | **3.18** | **66.82** | **0.74** | **6.27** | **0.91** | **6.80** |
| <u>Comparative Group</u> |  |  |  |  |  |  |  |  |  |  |
| 1895 Bancorp of Wisconsin, Inc. (1) | 529317 | 379298 | 14.34 | 14.34 | 2.77 | 99.09 | (0.08) | (0.52) | 0.02 | 0.10 |
| Catalyst Bancorp, Inc. | 263324 | 165094 | 33.60 | 33.60 | 2.72 | 99.31 | 0.06 | 0.19 | 0.11 | 0.33 |
| Cullman Bancorp, Inc. (1) | 406081 | 286751 | 24.26 | 24.26 | 4.01 | 66.82 | 1.05 | 3.91 | 1.05 | 3.91 |
| Generations Bancorp NY, Inc. (1) | 373612 | 308308 | 10.08 | 9.71 | 3.47 | 81.60 | 0.42 | 3.74 | 0.44 | 3.98 |
| Home Federal Bancorp, Inc. | 576543 | 518211 | 8.44 | 8.44 | 3.65 | 65.90 | 0.99 | 11.45 | 0.99 | 11.45 |
| IF Bancorp, Inc. | 823727 | 667337 | 8.63 | 8.63 | 2.98 | 69.35 | 0.69 | 7.51 | 0.74 | 8.00 |
| Magyar Bancorp, Inc. | 821626 | 676083 | 12.16 | 12.16 | 3.62 | 60.21 | 1.01 | 8.11 | 1.01 | 8.11 |
| Mid-Southern Bancorp, Inc. (1) | 264548 | 201815 | 11.65 | 11.65 | 3.01 | 75.35 | 0.72 | 4.69 | 0.72 | 4.69 |
| NSTS Bancorp, Inc. (1) | 268178 | 183461 | 29.52 | 29.52 | 1.82 | 112.74 | (0.02) | (0.09) | (0.16) | (0.63) |
| PB Bankshares, Inc. (1) | 376739 | 289628 | 11.84 | 11.84 | 2.85 | 77.74 | 0.35 | 2.66 | 0.38 | 2.86 |
| TC Bancshares, Inc. (1) | 406223 | 315870 | 20.84 | 20.84 | 3.59 | 76.20 | 0.68 | 3.13 | 0.68 | 3.13 |
| Texas Community Bancshares, Inc. (1) | 375697 | 282201 | 14.81 | 14.71 | 2.75 | 80.56 | 0.44 | 3.37 | 0.48 | 3.63 |

---

(1) As of or for the last twelve months ended September 30, 2022. <br>Source: Peru Federal Savings Bank; S&P Global.

Feldman Financial Advisors, Inc.

---

| |
|:---|
| &nbsp;&nbsp;**Table 20** |
| &nbsp;&nbsp;**Income and Expense Analysis** |
| &nbsp;&nbsp;For the Last Twelve Months Ended December 31, 2022 |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | As a Percent of Average Assets | As a Percent of Average Assets | As a Percent of Average Assets | As a Percent of Average Assets | As a Percent of Average Assets | As a Percent of Average Assets | As a Percent of Average Assets | As a Percent of Average Assets | As a Percent of Average Assets | As a Percent of Average Assets |
|  |<br>Interest<br>Income |<br>Interest<br>Expense | Net<br>Interest<br>Income | Other<br>Oper.<br>Income | Gains &<br>Non-rec.<br>Income | Loan<br>Loss<br>Prov. | Gen. &<br>Admin.<br>Expense | Intang.<br>Amort.<br>Expense |<br>Non-rec.<br>Expense | Pre-tax<br>Core<br>Earnings |
| **Peru Federal Savings Bank** | **2.66** | **0.36** | **2.30** | **0.40** | **(0.12)** | **0.03** | **2.00** | **0.00** | **0.00** | **0.67** |
| **Comparative Group Average** | **3.32** | **0.37** | **2.95** | **0.45** | **(0.01)** | **0.06** | **2.67** | **0.00** | **0.01** | **0.68** |
| **Comparative Group Median** | **3.43** | **0.33** | **2.93** | **0.46** | **(0.00)** | **0.05** | **2.57** | **0.00** | **0.00** | **0.72** |
| **All Public Thrift Average** | **3.65** | **0.47** | **3.19** | **0.54** | **0.00** | **0.16** | **2.75** | **0.02** | **0.05** | **1.21** |
| **All Public Thrift Median** | **3.44** | **0.37** | **3.04** | **0.41** | **0.00** | **0.05** | **2.56** | **0.00** | **0.00** | **1.02** |
| <u>Comparative Group</u> |  |  |  |  |  |  |  |  |  |  |
| 1895 Bancorp of Wisconsin, Inc. (1) | 2.90 | 0.27 | 2.63 | 0.47 | (0.12) | 0.04 | 3.07 | 0.00 | 0.00 | (0.01) |
| Catalyst Bancorp, Inc. | 2.83 | 0.24 | 2.59 | 0.43 | (0.02) | (0.13) | 3.01 | 0.00 | 0.08 | 0.15 |
| Cullman Bancorp, Inc. (1) | 4.13 | 0.30 | 3.83 | 0.41 | 0.00 | 0.08 | 2.82 | 0.00 | 0.00 | 1.34 |
| Generations Bancorp NY, Inc. (1) | 3.51 | 0.39 | 3.12 | 0.66 | (0.02) | 0.16 | 3.08 | 0.02 | 0.00 | 0.53 |
| Home Federal Bancorp, Inc. | 3.74 | 0.36 | 3.38 | 0.44 | 0.00 | 0.15 | 2.53 | 0.00 | 0.00 | 1.15 |
| IF Bancorp, Inc. | 3.40 | 0.51 | 2.89 | 0.63 | (0.06) | 0.10 | 2.44 | 0.00 | 0.00 | 0.98 |
| Magyar Bancorp, Inc. | 3.88 | 0.44 | 3.44 | 0.32 | 0.00 | 0.07 | 2.27 | 0.00 | 0.00 | 1.43 |
| Mid-Southern Bancorp, Inc. (1) | 3.18 | 0.29 | 2.97 | 0.49 | 0.00 | 0.01 | 2.60 | 0.00 | 0.00 | 0.85 |
| NSTS Bancorp, Inc. (1) | 1.99 | 0.28 | 1.71 | 0.28 | 0.17 | (0.04) | 2.24 | 0.00 | 0.00 | (0.21) |
| PB Bankshares, Inc. (1) | 3.45 | 0.69 | 2.76 | 0.22 | (0.03) | 0.20 | 2.31 | 0.00 | 0.00 | 0.46 |
| TC Bancshares, Inc. (1) | 3.65 | 0.20 | 3.45 | 0.55 | 0.00 | 0.02 | 3.09 | 0.00 | 0.00 | 0.89 |
| Texas Community Bancshares, Inc. (1) | 3.15 | 0.50 | 2.65 | 0.50 | (0.01) | 0.04 | 2.53 | 0.04 | 0.00 | 0.59 |

---

(1) For the last twelve months ended September 30, 2022. <br>Source: Peru Federal Savings Bank; S&P Global.

Feldman Financial Advisors, Inc.

---

| |
|:---|
| &nbsp;&nbsp;**Table 21** |
| &nbsp;&nbsp;**Balance Sheet Composition** |
| &nbsp;&nbsp;As of December 31, 2022 |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | As a Percent of Total Assets | As a Percent of Total Assets | As a Percent of Total Assets | As a Percent of Total Assets | As a Percent of Total Assets | As a Percent of Total Assets | As a Percent of Total Assets | As a Percent of Total Assets | As a Percent of Total Assets | As a Percent of Total Assets |
|  | Cash and<br>Securities | Net<br>Loans | Real<br>Estate | Intang.<br>Assets | Other<br>Assets | Total<br>Deposits | Borrowed<br>Funds | Other<br>Liabs. | Total<br>Liabs. | Total<br>Equity |
| **Peru Federal Savings Bank** | **45.69** | **48.76** | **0.00** | **0.00** | **5.55** | **87.70** | **0.00** | **0.74** | **88.43** | **11.57** |
| **Comparative Group Average** | **26.49** | **67.42** | **0.04** | **0.04** | **6.00** | **76.26** | **5.91** | **1.15** | **83.32** | **16.68** |
| **Comparative Group Median** | **24.31** | **70.62** | **0.02** | **0.00** | **5.33** | **76.58** | **5.24** | **1.04** | **86.75** | **13.25** |
| **All Public Thrift Average** | **20.92** | **73.08** | **0.06** | **0.69** | **5.09** | **75.74** | **9.16** | **1.29** | **86.47** | **13.53** |
| **All Public Thrift Median** | **17.33** | **76.55** | **0.00** | **0.03** | **5.05** | **76.88** | **7.86** | **1.16** | **88.38** | **11.62** |
| <u>Comparative Group</u> |  |  |  |  |  |  |  |  |  |  |
| 1895 Bancorp of Wisconsin, Inc. (1) | 26.46 | 67.09 | 0.00 | 0.00 | 6.46 | 71.66 | 10.76 | 3.24 | 85.66 | 14.34 |
| Catalyst Bancorp, Inc. | 41.15 | 50.05 | 0.12 | 0.00 | 8.68 | 62.70 | 3.49 | 0.21 | 66.40 | 33.60 |
| Cullman Bancorp, Inc. (1) | 14.11 | 80.18 | 0.02 | 0.00 | 5.69 | 70.61 | 3.69 | 1.43 | 75.74 | 24.26 |
| Generations Bancorp NY, Inc. (1) | 11.40 | 78.06 | 0.02 | 0.41 | 10.11 | 82.52 | 6.45 | 0.95 | 89.92 | 10.08 |
| Home Federal Bancorp, Inc. | 22.17 | 73.10 | 0.05 | 0.00 | 4.69 | 89.88 | 1.43 | 0.24 | 91.56 | 8.44 |
| IF Bancorp, Inc. | 26.91 | 68.14 | 0.00 | 0.00 | 4.96 | 81.01 | 9.22 | 1.14 | 91.37 | 8.63 |
| Magyar Bancorp, Inc. | 13.37 | 81.07 | 0.04 | 0.00 | 5.53 | 82.29 | 4.04 | 1.52 | 87.84 | 12.16 |
| Mid-Southern Bancorp, Inc. (1) | 41.39 | 53.86 | 0.04 | 0.00 | 4.72 | 76.29 | 11.72 | 0.35 | 88.35 | 11.65 |
| NSTS Bancorp, Inc. (1) | 55.24 | 36.49 | 0.00 | 0.00 | 8.27 | 68.41 | 0.00 | 2.07 | 70.48 | 29.52 |
| PB Bankshares, Inc. (1) | 16.65 | 80.00 | 0.00 | 0.00 | 3.36 | 76.88 | 10.78 | 0.50 | 88.16 | 11.84 |
| TC Bancshares, Inc. (1) | 17.51 | 77.13 | 0.23 | 0.00 | 5.13 | 77.76 | 0.00 | 1.40 | 79.16 | 20.84 |
| Texas Community Bancshares, Inc. (1) | 31.54 | 63.93 | 0.00 | 0.11 | 4.42 | 75.11 | 9.32 | 0.76 | 85.19 | 14.81 |

---

(1) As of September 30, 2022. <br>Source: Peru Federal Savings Bank; S&P Global.

Feldman Financial Advisors, Inc.

---

| |
|:---|
| &nbsp;&nbsp;**Table 22** |
| &nbsp;&nbsp;**Growth Rates, Credit Risk, and Loan Composition** |
| &nbsp;&nbsp;As of or For the Last Twelve Months Ended December 31, 2022 |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |<br>Asset<br>Growth<br>Rate |<br>Loan<br>Growth<br>Rate |<br>Deposit<br>Growth<br>Rate |<br>NPLs(1)/<br>Total<br>Loans |<br>NPAs(1)/<br>Total<br>Assets | Loan<br>Loss<br>Allow./<br>NPLs(1) | Loan<br>Loss<br>Allow./<br>Loans | Resid.<br>Real Est.<br>Loans(2)/<br>Loans | Other<br>Real Est.<br>Loans/<br>Loans | Non-<br>Real Est.<br>Loans/<br>Loans |
| **Peru Federal Savings Bank** | **(6.16)** | **5.04** | **(2.06)** | **0.73** | **0.36** | **87.16** | **0.64** | **71.53** | **22.73** | **5.74** |
| **Comparative Group Average** | **4.10** | **14.14** | **4.02** | **0.73** | **0.51** | **161.52** | **1.06** | **45.53** | **35.49** | **18.98** |
| **Comparative Group Median** | **4.78** | **13.79** | **3.64** | **0.65** | **0.44** | **103.25** | **1.14** | **41.49** | **41.26** | **18.04** |
| **All Public Thrift Average** | **7.51** | **14.63** | **4.70** | **0.77** | **0.54** | **220.23** | **1.04** | **36.22** | **40.75** | **23.03** |
| **All Public Thrift Median** | **4.56** | **13.29** | **1.69** | **0.53** | **0.40** | **179.10** | **1.00** | **31.90** | **50.54** | **17.56** |
| <u>Comparative Group</u> |  |  |  |  |  |  |  |  |  |  |
| 1895 Bancorp of Wisconsin, Inc. (3) | (2.19) | 6.88 | 1.33 | 0.33 | 0.22 | 272.96 | 0.89 | 23.44 | 58.03 | 18.53 |
| Catalyst Bancorp, Inc. | (7.80) | 1.52 | (6.62) | 1.64 | 1.00 | 82.44 | 1.35 | 65.50 | 16.94 | 17.56 |
| Cullman Bancorp, Inc. (3) | 8.98 | 34.77 | 21.70 | 0.89 | 0.75 | 91.29 | 0.82 | 48.91 | 30.06 | 21.02 |
| Generations Bancorp NY, Inc. (3) | (1.00) | 1.47 | (1.03) | 2.07 | 1.65 | 38.16 | 0.79 | 43.96 | 5.99 | 50.05 |
| Home Federal Bancorp, Inc. | 0.92 | 13.45 | 1.18 | 0.01 | 0.05 | NM | 1.12 | 31.36 | 41.44 | 27.20 |
| IF Bancorp, Inc. | 6.62 | 14.13 | 3.91 | 0.06 | 0.04 | NM | 1.26 | 26.19 | 51.40 | 22.41 |
| Magyar Bancorp, Inc. | 5.25 | 15.99 | 4.39 | 0.05 | 0.03 | NM | 1.30 | 31.90 | 57.68 | 10.42 |
| Mid-Southern Bancorp, Inc. (3) | 4.87 | 20.57 | 3.37 | 1.10 | 0.64 | 104.16 | 1.15 | 43.01 | 41.09 | 15.90 |
| NSTS Bancorp, Inc. (3) | 3.19 | 0.75 | (10.56) | 1.08 | 0.40 | 64.08 | 0.70 | 90.10 | 7.50 | 2.40 |
| PB Bankshares, Inc. (3) | 20.56 | 33.39 | 16.53 | 0.62 | 0.50 | 199.95 | 1.24 | 36.55 | 57.08 | 6.37 |
| TC Bancshares, Inc. (3) | 5.05 | 15.97 | 7.33 | 0.27 | 0.45 | 497.36 | 1.37 | 39.97 | 41.45 | 18.58 |
| Texas Community Bancshares, Inc. (3) | 4.69 | 10.77 | 6.70 | 0.68 | 0.43 | 103.25 | 0.70 | 65.52 | 17.17 | 17.31 |

---

---

| |
|:---|
| (1) Includes accruing troubled debt restructurings. |
| (2) Includes home equity and second mortgage loans. |
| (3) As of or for the last twelve months ended September 30, 2022. |
| Source: Peru Federal Savings Bank; S&P Global. |

---

Feldman Financial Advisors, Inc.

**III. MARKET VALUE ADJUSTMENTS**

**General Overview**

This concluding chapter of the Appraisal identifies certain additional adjustments to the Bank's estimated pro forma market value relative to the Comparative Group selected in Chapter II. The adjustments discussed in this chapter are made from the viewpoints of potential investors, which would include depositors holding subscription rights and unrelated parties who may purchase stock in a community offering. It is assumed that these potential investors are aware of all relevant and necessary facts as they would pertain to the value of the Bank relative to other publicly traded thrift institutions and relative to alternative investments.

Our appraised value is predicated on a continuation of the current operating environment for the Bank and thrift institutions in general. Changes in the Bank's operating performance along with changes in the local and national economy, the stock market, interest rates, the regulatory environment, and other external factors may occur from time to time, often with great unpredictability, which could materially impact the pro forma market value of the Bank or thrift stocks in general. Therefore, the Valuation Range provided herein is subject to a more current re-evaluation prior to the actual completion of the Conversion and Stock Offering.

In addition to the comparative operating fundamentals discussed in Chapter II, it is important to address additional market value adjustments based on certain financial and other criteria, which include, among other factors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Earnings
Growth and Viability

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Financial
Condition

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Market
Area

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Management

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Dividend
Payments

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Liquidity
of the Stock Issue

Feldman Financial Advisors, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Subscription
Interest

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Recent
Acquisition Activity

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Effect
of Banking Regulations and Regulatory Reform

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Stock
Market Conditions

**<u>Earnings Growth and Viability</u>**

Earnings prospects are dependent upon the sensitivity of asset yields and liability costs to changes in market rates, the credit quality of assets, the stability of non-interest components of income and expense, and the ability to leverage the balance sheet. Each of the foregoing is an important factor for investors in assessing earnings growth and viability. The Bank's profitability in recent years has been restrained due by its relatively low net interest margin owing to the high concentration of liquidity and low level of loans on the balance sheet. These disadvantages are offset somewhat by the Bank's lower level of non-interest expense.

The Bank's recent earnings ROA measured 0.46% for the LTM period versus the Comparative Group median of 0.56%. On a core earnings basis which excludes non-recurring items, the Bank's LTM core ROA of 0.56% slightly trailed the Comparative Group median of 0.58%. The Bank's increased capital position after the Stock Offering will help to improve its net interest margin across changing interest rate and business cycles, provide added interest rate risk protection, and support additional leverage capacity to grow the balance sheet. In the near term, the Bank's profitability will continue to be challenged by net interest margin pressure, new stock benefit plans, public company costs, and regular loan loss provisions to ensure that the Bank's reserves increase commensurately with the risk profile of the anticipated loan portfolio expansion. Based on the Bank's basic earnings fundamentals and ongoing challenge to grow the loan portfolio and net interest margin, we believe that the uncertain viability of increasing profitability warrants a downward adjustment to the Bank's pro forma market value relative to the Comparative Group.

Feldman Financial Advisors, Inc.

**<u>Financial Condition</u>**

As discussed and summarized in Chapter I, the Bank's balance sheet composition reflects a large concentration of cash liquidity and investments along with a loan portfolio predominantly comprising fixed-rate residential mortgage loans. The Bank relies mainly on its deposit base as a funding source and utilizes borrowings sparingly to supplement deposits. Historically, the Bank's deposit base was heavily reliant upon certificate accounts. In recent years, the Bank has emphasized growing its core deposits, which have increased to 68.3% of total deposits at December 31, 2022. Meanwhile, in the sustained low interest rate environment, certificate accounts have declined to 31.7% of total deposits.

In contrast to the Comparative Group, the Bank exhibited a lower level of equity capital, a lower ratio of loans to assets, and slightly favorable measures of asset quality. Before the infusion of net capital proceeds, the Bank's total equity ratio at 11.57% of assets was positioned moderately below the 13.25% median of the Comparative Group. The selection criteria for the Comparative Group ensured a collection of companies with solid capital positions, emphasis on real estate lending, and satisfactory asset quality, similar to the Bank's financial profile. Therefore, on the whole, we believe that no adjustment is warranted for the Bank's financial condition relative to the Comparative Group.

**<u>Market Area</u>**

The members of the Comparative Group are located in the Midwest, Southwest, Southeast, and Mid-Atlantic regions of the country. The Comparative Group companies are characterized by a cross-section of market areas that constitute smaller to larger metropolitan areas with relatively stable economies and moderate population growth prospects. The Bank's primary market area encompasses LaSalle, Bureau, and Putnam counties, which comprise the Ottawa MSA.

Feldman Financial Advisors, Inc.

As shown in Table 23, the median household income was $62,972 in LaSalle County and $63,393 in the Ottawa MSA. These areas are projecting population declines over the next five year of 1.5% in LaSalle County and 1.7% in the Ottawa MSA. The unemployment rates for December 2022 were 4.8% and 4.7% in LaSalle County and the Ottawa MSA, respectively. Most of the Comparative Group companies exhibited more favorable demographic data for household income levels, population growth, and unemployment rates as indicated by the Comparative Group average and median data. In recognition of the less favorable demographic factors in the Bank's primary market area, we believe that a downward adjustment is warranted for market area.

**Table 23**

**Comparative Market Area Data**

**Peru Federal Savings Bank and the Comparative Group**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Wtd. Avg. | Wtd. Avg. | |
|  |  | Median | Estimated | Unemployment |
|  |  | Household | Population | Rate (2) |
|  |  | Income | Growth | December |
|  | Headquarters | 2023 (1) | 2023-28 (1) | 2022 |
| Company | Location | ($) | (%) | (%) |
| Peru Federal Savings Bank | Peru, IL |  |  |  |
|  | [LaSalle County, IL] | 62927 | (1.51) | 4.8 |
|  | [Ottawa, IL-MSA] | 63393 | (1.73) | 4.7 |
| Comparative Group Average |  | 70341 | 0.71 | 3.1 |
| Comparative Group Median |  | 66853 | 0.72 | 2.8 |
| <u>Comparative Group</u> |  |  |  |  |
| 1895 Bancorp of Wisconsin, Inc. | Greenfield, WI | 72553 | 0.05 | 2.4 |
| Catalyst Bancorp, Inc. | Opelousas, LA | 43918 | (0.76) | 4.2 |
| Cullman Bancorp, Inc. | Cullman, AL | 55021 | 4.12 | 1.6 |
| Generations Bancorp NY, Inc. | Seneca Falls, NY | 66647 | (1.22) | 2.8 |
| Home Federal Bancorp, Inc. | Shreveport, LA | 51874 | (1.34) | 3.4 |
| IF Bancorp, Inc. | Watseka, IL | 56004 | (3.14) | 4.8 |
| Magyar Bancorp, Inc. | New Brunswick, NJ | 105819 | 1.70 | 2.7 |
| Mid-Southern Bancorp, Inc. | Salem, IN | 68374 | 1.33 | 2.8 |
| NSTS Bancorp, Inc. | Waukegan, IL | 101023 | 0.10 | 4.1 |
| PB Bankshares, Inc. | Coatesville, PA | 99365 | 2.13 | 2.4 |
| TC Bancshares, Inc. | Thomasville, GA | 56438 | 1.79 | 2.7 |
| Texas Community Bancshares, Inc. | Mineola, TX | 67058 | 3.72 | 3.8 |

---

(1) Weighted average based on pro rata branch deposit totals of each company in its primary MSA (or county) markets.

(2) Based on unemployment rate in company's primary MSA (or county) market as ranked by deposits.

Source: Claritas; S&P Global; U.S. Bureau of Labor Statistics.

Feldman Financial Advisors, Inc.

**<u>Management</u>**

Management's principal challenges are to generate profitable results, monitor credit risks, and control operating costs while the Bank competes in an increasingly challenging financial services environment. The normal challenges facing the Bank in attempting to deliver earnings growth and enhance its competitiveness remain paramount as it attempts to leverage the net capital proceeds from the Stock Offering. Eric Heagy serves as President, Chief Executive Officer ("CEO"), and Chief Financial Officer ("CFO") of Peru Federal. Mr. Heagy joined the Bank in 2002, was promoted to CFO in 2004 and then to President and CEO in 2007. Dale Tieman is the Executive Vice President and Chief Operations Officer of Peru Federal. Mr. Tieman has been with the Bank since 2001. Other senior management includes Christopher Vaske, who has served as Senior Vice President and Chief Lending Officer since 2012. Additional background information of the Bank's senior management is summarized in Exhibit II-7.

The Bank's management team has ongoing challenges ahead in improving earnings results, growing the banking franchise, and controlling operating expenses as the organization transitions to a public company and seeks to leverage the incremental capital. Because of the Bank's relatively small size and lean staffing profile, its executive officers fulfill a broad range of job functions and the Bank's successful operation is significantly dependent on its senior management team. Investors will likely rely upon actual financial results as the means of evaluating the future performance of management as the Bank pursues its asset growth and earnings improvement objectives. We have taken these factors into account collectively and believe that no adjustment is warranted relative to the Comparative Group for this factor.

Feldman Financial Advisors, Inc.

**<u>Dividend Payments</u>**

Following the completion of the Conversion and Stock Offering, the Company's Board of Directors will have the authority to declare cash dividends on the shares of common stock, subject to statutory and regulatory requirements. However, no decision has been made with respect to the amount, if any, and timing of any dividend payments. The payment and amount of any dividends will depend upon many factors, including the following: (1) the financial condition and operating results of the Company and the Bank; (2) regulatory capital requirements and limitations on dividends; (3) other uses of funds for the long-term value of stockholders; (4) tax considerations; and (5) general economic conditions. There is no assurance that PFS Bancorp will actually pay cash dividends or that, if paid, such dividends will not be reduced or eliminated in the future.

Payment of cash dividends has become commonplace among publicly traded thrifts with solid capital levels. Of the 12 members of the Comparative Group, six currently pay regular cash dividends. The median dividend yields of the Comparative Group and All Public Thrift aggregate were 0.31% and 1.02% as of February 21, 2023, respectively. Based on the anticipated strong capital levels of the Bank and PFS Bancorp after the Stock Offering, investors are likely to expect that PFS Bancorp will commence paying regular dividends not too long after the Stock Offering is completed as a means of enhancing shareholder returns. Therefore, we have concluded that no adjustment is warranted for purposes of dividend policy.

**<u>Liquidity of the Stock Issue</u>**

With the increased number of market makers and institutional investors following thrift stocks, the majority of initial public offerings by thrift institutions are able to develop a public market for their new stock issues. Most publicly traded thrift stocks continue to be traded on the NASDAQ Stock Market. All 12 members of the Comparative Group are listed on the NASDAQ Stock Market. PFS Bancorp expects that its shares of common stock will be quoted on the OTCQB Market operated by OTC Markets Group upon conclusion of the Conversion and Stock Offering.

Feldman Financial Advisors, Inc.

Stock liquidity connotes the relative ease and promptness with which a security may be sold when desired, at a representative current price, without material concession in price merely because of the necessity of sale. Empirical evidence demonstrates that investors are willing to pay a premium for this level of liquidity, or conversely, extract a discount relative to actively traded securities or other investment interests that lack this high degree of liquidity. The development and maintenance of a public market, having the desirable characteristics of depth, liquidity and orderliness, depend on the existence of willing buyers and sellers.

The median market capitalization of the Comparative Group companies was $58.6 million as of February 21, 2023. The All Public Thrift median market capitalization was much higher at $170.3 million. Of the 12 companies in the Comparative Group, all are traded on NASDAQ Stock Market and indicated an overall average daily trading volume of approximately 4,200 shares over the LTM period. Due to the smaller size of the Stock Offering and its anticipated listing on the OTCQB Market, it is questionable that an active trading market for the Company's common shares will develop to the extent experienced by the stock issues of the Comparative Group traded on the NASDAQ Stock Market. Therefore, we have concluded that a downward adjustment to the Bank's estimated pro forma market value is warranted to address the comparative difference in liquidity of the issue.

Feldman Financial Advisors, Inc.

**<u>Subscription Interest</u>**

The Bank has retained the services of Keefe, Bruyette & Woods, Inc. to assist in the marketing and sale of the Stock Offering. The Bank's ESOP intends to purchase shares in the Stock Offering equal to 8.0% of the total amount of common stock to be outstanding. The Bank expects its directors and executive officers, together with their associates, to purchase 140,000 shares of common stock in the Stock Offering for an aggregate amount of $1.4 million based on a $10.00 offering price per share. The minimum number of shares of common stock that may be purchased in the Stock Offering is 25 shares ($250 equivalent). Excluding the ESOP purchase, the maximum number of shares of common stock that may be purchased in the Stock Offering by any individual or individuals acting through a single qualifying account held jointly is 25,000 shares ($250,000 equivalent). No person together with an associate or group of persons acting in concert may purchase more than 40,000 shares ($400,000 equivalent).

Recent subscription interest in thrift stock conversion offerings has been varied. Three standard conversion offerings were completed in 2022. Only one of these three was oversubscribed in the subscription phase. NSTS Bancorp (Waukegan, Illinois) completed its offering in January 2022 with gross proceeds raised of $52.9 million, representing the adjusted maximum of its offering range. ECB Bancorp (Everett, Massachusetts) closed its offering in July 2022 at a level between the minimum and the midpoint of the offering and raised gross proceeds of $89.2 million. VWF Bancorp (Van Wert, Ohio) closed its offering in July 2022 at a level between the minimum and the midpoint of the offering and raised gross proceeds of $19.2 million.

Investor interest in recent thrift stock issues has been supported by the overall favorable performance results of the banking industry, stable housing market conditions, after-market pricing trends, and the expectation of continued merger and acquisition activity. We are not currently aware of any additional market evidence or characteristics that may help predict the level of interest in the Bank's subscription offering. Accordingly, absent actual results of the subscription offering, we believe that subscription interest is currently a neutral factor and, at the present time, requires no further adjustment.

Feldman Financial Advisors, Inc.

**<u>Recent Acquisition Activity</u>**

Table 24 summarizes recent acquisition activity involving banks and thrifts based in the state of Illinois from January 1, 2020 to February 21, 2023. Table 24 displays the 15 transactions wherein financial terms are available. The largest transaction involved the merger of equals between Old National Bancorp (based in Evansville, Indiana with $23.7 billion of assets) and First Midwest Bancorp (based in Chicago, Illinois with $21.2 billion in assets). The acquisition valuation ratios paid in these transactions generally have followed the nationwide acquisition valuation trends. Given that there will be significant regulatory restrictions on the ability to acquire control of PFS Bancorp for a period of three years following the Conversion, we do not believe that acquisition premiums are a significant factor to consider in analyzing the Bank's pro forma market value. Moreover, the standard of value applied herein does not require an acquisition value determination.

**<u>Effect of Banking Regulations and Regulatory Reform</u>**

In response to the financial crisis of 2008 and 2009, Congress took actions intended to strengthen confidence and encourage liquidity in financial institutions. The Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") was enacted in 2010, and provided for new restrictions and an expanded framework of regulatory oversight for financial institutions. The legislation also created the Consumer Financial Protection Bureau that has broad authority to issue regulations governing the services and products provided by financial institutions. Community bankers believe that the Dodd-Frank legislation has led to increased compliance costs. Legislation was enacted in 2018 that preserves the fundamental elements of the post-Dodd-Frank regulatory framework, but included modifications that was expected to result in some meaningful regulatory relief for smaller and certain larger banking organizations.

Feldman Financial Advisors, Inc.

**Table 24**

**Summary of Illinois Bank and Thrift Acquisition Activity**

Transactions Completed or Announced After January 1, 2020

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Seller's Prior Financial Data | Seller's Prior Financial Data | Seller's Prior Financial Data | Seller's Prior Financial Data |  |  |  | Offer Value to | Offer Value to | Offer Value to | Offer Value to |
|  |  |  |  | Total | Equity/ | LTM | LTM |  |  | Offer | Book | Tang. | LTM | Total |
|  |  |  |  | Assets | Assets | ROA | ROE | Date | Date | Value | Value | Book | EPS | Assets |
| Buyer | St. | Seller | St. | ($Mil.) | (%) | (%) | (%) | Anncd. | Completed | ($Mil.) | (%) | (%) | (x) | (%) |
| **Overall Median** |  |  |  | **223.3** | **10.83** | **0.83** | **8.07** | **NA** | **NA** | **32.5** | **123.3** | **127.1** | **14.5** | **11.64** |
| **Overall Average** |  |  |  | **1970.4** | **10.40** | **0.65** | **5.65** | **NA** | **NA** | **225.3** | **119.5** | **127.2** | **14.7** | **11.42** |
| Byline Bancorp Inc. | IL | Inland Bancorp Inc. | IL | 1233 | 13.26 | 0.69 | 5.16 | 11/30/22 | Pending | 165 | 123.3 | 123.3 | 22.2 | 13.39 |
| Fisher Bancorp Inc. | IL | Butler Point Inc. | IL | 84.4 | 9.72 | 1.05 | 10.28 | 10/11/22 | Pending | 11.2 | 136.9 | 136.9 | 12.1 | 13.30 |
| HBT Financial Inc. | IL | Town & Country Fin'l Corp | IL | 876.2 | 9.07 | 1.36 | 14.66 | 08/23/22 | 02/01/23 | 101.4 | 127.6 | 139 | 8.3 | 11.57 |
| Scott CU | IL | Tempo Bank | IL | 92.9 | 11.30 | 1.42 | 14.44 | 08/20/21 | 06/18/22 | 14.3 | 135.8 | 135.8 | 10.3 | 15.34 |
| Finward Bancorp | IN | Royal Financial Inc. | IL | 533.7 | 9.01 | 1.01 | 11.07 | 07/29/21 | 01/31/22 | 52.9 | 108 | 113.4 | 10.1 | 9.91 |
| Old Second Bancorp Inc. | IL | West Suburban Bancorp | IL | 2972.4 | 8.24 | 0.75 | 8.77 | 07/26/21 | 12/01/21 | 285.9 | 121.3 | 121.7 | 14.5 | 9.62 |
| Old National Bancorp (2) | IN | First Midwest Bancorp Inc. | IL | 21208.6 | 12.51 | 0.63 | 5.06 | 06/01/21 | 02/15/22 | 2468.6 | 101.8 | 165.1 | 20.4 | 11.64 |
| Frst Bncp of Taylorville Inc. | IL | Mackinaw Valley Fin'l Svcs.. | IL | 95.4 | 9.07 | 0.20 | 2.19 | 04/23/21 | 10/01/21 | 6.1 | 135.9 | 165.6 | NA | 6.39 |
| First Busey Corp. | IL | Cummins-American Corp. | IL | 1395.4 | 12.55 | 0.91 | 7.38 | 01/19/21 | 05/31/21 | 130.8 | 112.4 | 112.4 | 17.1 | 9.79 |
| South Porte Financial Inc. | IL | SouthernTrust Bancshares | IL | 58.7 | 9.75 | 0.64 | 6.65 | 03/02/20 | 07/17/20 | 7.3 | 127.2 | 127.2 | 20.8 | 12.50 |
| American Pacific Bancorp | MD | Main Street Bancshares | IL | 29.6 | 6.55 | (1.78) | (25.98) | 12/19/19 | 12/31/20 | 1.2 | 45.1 | 45.1 | NA | 3.88 |
| First Waterloo Bancshares | IL | Best Hometown Bancorp | IL | 114.5 | 10.83 | NA | NA | 10/09/19 | 02/05/20 | 12.3 | 99.3 | 99.3 | NA | 10.75 |
| RBB Bancorp | CA | PGB Holdings Inc. | IL | 223.3 | 10.96 | 1.45 | 13.12 | 09/06/19 | 01/10/20 | 32.5 | 169.5 | 169.5 | 9.7 | 14.55 |
| Associated Banc-Corp | WI | First Staunton Bancshares | IL | 539.8 | 12.00 | 1.28 | 10.88 | 07/25/19 | 02/14/20 | 76.3 | 121.9 | 126.9 | 16.7 | 14.13 |
| Corporate America Family CU | IL | Ben Franklin Finl Inc. | IL | 97.8 | 11.25 | (0.55) | (4.64) | 07/16/19 | 04/30/20 | 14.2 | 127.1 | 127.1 | NA | 14.49 |

---

(1) P = pending; C = completed.

(2) Merger of equals transaction.

Source: S&P Global.

Feldman Financial Advisors, Inc.

As a stock savings institution insured by the FDIC and supervised by its primary regulators, the Bank will continue to operate in the same regulatory environment that is substantially similar to that faced by the Comparative Group companies. As of December 31, 2022, the Bank was not subject to any regulatory enforcement action and was considered well capitalized, similar to all the members of the Comparative Group. Therefore, given these factors, we believe that no specific adjustment is necessary for the effect of banking regulations and regulatory reform.

**<u>Stock Market Conditions</u>**

Financial stocks performed well in the economic recovery following the financial crisis, and bank and thrift stocks participated fully in the sustained market rally from 2009 to 2019. Robust corporate earnings growth, sustained economic expansion, and generally low interest rates were significant factors influencing equity market returns over this period, the second longest market rally in U.S. history. However, beginning in February 2020, market volatility was spurred by the outbreak of the coronavirus and concerns about its impact on the U.S. economy, supply chains, and consumer spending. The coronavirus evolved into a global pandemic, disrupting major economies worldwide and abruptly ending the bull market run. U.S. equities fell sharply, then rebounded off their lows from March 2020 and performed strongly for the remainder of 2020.

U.S. equity markets continued to appreciate during 2021, extending the gains that began in the aftermath of March 2020, and many market indexes reached all-time highs in successive months through August 2021. The successful rollout of coronavirus vaccines, unprecedented fiscal and monetary stimulus, healthy consumer balance sheets, and tightening labor markets created optimism about U.S. economic growth and helped propel stock market returns.

Feldman Financial Advisors, Inc.

U.S. equity markets were volatile and declined in the first half of 2022, reversing their exceptional performance in 2021, when the S&P 500 rose by 27%. Every sector of the S&P 500 posted negative returns in the first half, except for energy stocks, amid geopolitical tensions, higher inflation, and a shift toward less accommodative monetary policy in the United States. Russia's invasion of Ukraine and the fallout from related sanctions exacerbated commodity price pressures and amplified geopolitical risks. Supply chain bottlenecks and labor market shortages have further constrained supply and propelled prices higher. U.S. inflation soared to 9.1% for the year ended June 30, 2022 (as measured by the Consumer Price Index), the largest increase in 40 years. In response, the Federal Reserve Board aggressively increased interest rates and tapered its balance sheet during 2022. Investors have begun to raise concerns that the actions by the Federal Reserve Board to slow the economy and temper inflation would lead to a recession. Overall, the decline in U.S equity markets largely reflected valuation ratio compression and the S&P 500 was down by 19.4% for the overall year in 2022.

Thus far in 2023, on a year-to-date basis, the S&P 500 has advanced 4.1%. Recent economic indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation has been declining over the past several months against a backdrop of moderate growth. The Federal Reserve Board noted that future monetary policy actions will continue to monitor a wide range of information, including public health trends, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Table 25 displays the one-year performance of the S&P 500 and NASDAQ Bank indexes. The NASDAQ Bank Index decreased by 16.7% over the one-year period ended February 21, 2023, falling further than broader S&P 500 Index, which was down 7.1% during this period. Over the three-year period, the NASDAQ Bank Index is up 10.2% as compared to the S&P 500 Index advancing 19.8%, as shown in Table 26.

Feldman Financial Advisors, Inc.

**Table 25**

**Comparative One-Year Stock Index Performance**

For the One-Year Period Ended February 21, 2023

![](tm238313d1_ex99-3img05.jpg)

---

| | |
|:---|:---|
| S&P 500 Stock Index | -7.1% |
| &nbsp;&nbsp;&nbsp;NASDAQ Bank Index | - 16.7% |

---

Feldman Financial Advisors, Inc.

**Table 26**

**Comparative Three-Year Stock Index Performance**

For the Three-Year Period Ended February 21, 2023

![](tm238313d1_ex99-3img06.jpg)

---

| | |
|:---|:---|
| S&P 500 Stock Index | +19.8% |
| &nbsp;&nbsp;&nbsp;NASDAQ Bank Index | +10.2% |

---

Feldman Financial Advisors, Inc.

A "new issue" discount that reflects investor concerns and investment risks inherent in all initial public offerings is a factor to be considered for purposes of valuing converting thrifts. Table 27 presents a summary of the ten standard thrift conversion offerings completed since January 1, 2020. There were three, five, and two such full conversion offerings that closed in 2022, 2021, and 2020, respectively. The final pricing of these offerings confirms the presence of the new issue discount in the pro forma market valuations of converting thrifts versus the trading valuations of existing publicly traded thrifts.

The distinction of the new issue discount is most apparent with the price-to-book value ratio because the pro forma equity calculation involves combining the net new capital proceeds with the historical equity of the converting company. The median pro forma price-to-book value ratio for standard thrift conversion offerings was 59.2% for the 2020 to 2022 period, and the median pro forma price-to-tangible book ratio was 59.7%.

Historically, newly converted thrifts have gradually traded upward in the after-market to a range near existing thrift stock valuation levels, but found resistance approaching book value until a discernible trend in earnings improvement was evident. Pricing a new offering at a relatively high ratio in relation to pro forma book value, because of the mathematics of the calculation, would require very large increases in valuations resulting in unsustainable price-to-earnings ratios and very marginal returns on equity.

Accordingly, thrift conversions continue to be priced at discounts to comparable publicly traded companies. This is due to the relatively high pro forma equity ratios, expected low returns on equity, and the uncertainty regarding the prospects of an institution to leverage the balance sheet prudently and effectively in the current economic environment and against the backdrop of an increasingly competitive banking sector and volatile equities market.

Feldman Financial Advisors, Inc.

**Table 27**

**Summary of Standard Conversion Offerings**

Transactions Completed Since January 1, 2020

---

| | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  | Pro Forma Ratios | Pro Forma Ratios | Pro Forma Ratios | Pro Forma Ratios |  |  | After-Market | After-Market | After-Market | Price |
|  |  |  |  |  | Gross | Price/ | Price/ | Price/ | Tang. |  | 2/21/23 | Price Change | Price Change | Price Change | Change |
|  |  |  | Stock | Total | Offering | Book | Tang. | LTM | Eqty./ | IPO | Closing | One | One | One | Through |
|  |  | Stock | Offering | Assets | Proceeds | Value | Book | EPS | Assets | Price | Price | Day | Week | Month | 2/21/23 |
| Company | State | Exchange | Date | ($Mil.) | ($Mil.) | (%) | (%) | (x) | (%) | ($) | ($) | (%) | (%) | (%) | (%) |
| 2020 to 2022 -- Average |  |  |  | 1828.5 | 240.0 | 58.3 | 59.3 | 58.2 | 23.19 | NA | NA | 31.6 | 34.0 | 37.2 | 41.4 |
| 2020 to 2022 -- Median |  |  |  | 298.8 | 50.9 | 59.2 | 59.7 | 62.5 | 21.97 | NA | NA | 29.0 | 32.4 | 36.2 | 50.9 |
| **<u>Standard Conversion Offerings</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| ECB Bancorp, Inc. | MA | NASDAQ | 07/27/22 | 688.6 | 89.2 | 59.8 | 59.8 | 25.9 | 20.64 | 10.00 | 15.63 | 40.9 | 41.3 | 40.6 | 56.3 |
| VWF Bancorp, Inc. | OH | OTCQB | 07/13/22 | 137.0 | 19.2 | 50.2 | 50.2 | NA | 24.84 | 10.00 | 15.09 | 29.0 | 45.0 | 49.0 | 50.9 |
| NSTS Bancorp, Inc. | IL | NASDAQ | 01/18/22 | 259.9 | 52.9 | 59.7 | 59.7 | NA | 31.81 | 10.00 | 10.45 | 25.9 | 23.0 | 25.0 | 4.5 |
| Catalyst Bancorp, Inc. | LA | NASDAQ | 10/12/21 | 238.3 | 52.9 | 55.5 | 55.5 | NA | 33.84 | 10.00 | 13.00 | 35.6 | 38.5 | 37.6 | 30.0 |
| TC Bancshares, Inc. | GA | NASDAQ | 07/20/21 | 363.6 | 49.0 | 59.9 | 59.9 | NA | 20.84 | 10.00 | 16.32 | 21.1 | 20.7 | 28.9 | 63.2 |
| Blue Foundry Bancorp | NJ | NASDAQ | 07/15/21 | 1963.6 | 277.7 | 66.1 | 66.1 | NA | 19.90 | 10.00 | 11.86 | 29.0 | 27.0 | 34.1 | 18.6 |
| Texas Community Bancshares, Inc. | TX | NASDAQ | 07/14/21 | 316.5 | 32.1 | 53.2 | 56.0 | 86.3 | 17.83 | 10.00 | 15.73 | 50.8 | 53.5 | 54.0 | 57.3 |
| PB Bankshares, Inc. | PA | NASDAQ | 07/14/21 | 281.1 | 27.8 | 61.7 | 61.7 | NA | 15.10 | 10.00 | 13.40 | 30.8 | 32.4 | 29.0 | 34.0 |
| Eastern Bankshares, Inc. | MA | NASDAQ | 10/14/20 | 13996.5 | 1792.9 | 58.2 | 65.9 | NA | 23.10 | 10.00 | 15.80 | 21.5 | 24.8 | 36.2 | 58.0 |
| Systematic Savings Bank | MO | OTCPK | 10/13/20 | 40.0 | 6.0 | 58.7 | 58.7 | 62.5 | 24.01 | 10.00 | NA | NA | NA | NA | NA |

---

Source: S&P Global.

Feldman Financial Advisors, Inc.

The 4,746 FDIC-insured commercial banks and savings institutions reported quarterly net income of $71.7 billion in the third quarter of 2022, up $7.3 billion or 11.3% from the second quarter of 2022 and $2.2 billion or 3.2% higher than the corresponding third quarter in 2021. As compared to the second quarter of 2022, the increased profits reflected an increase in net interest income that more than offset increase in provisions for credit losses and non-interest expense. The aggregate banking industry's annualized ROA was 1.21% for third quarter 2022, up 13 basis points from 1.08% in second quarter 2022 but unchanged from third quarter 2021. On a year-to-date basis for the first three quarters of 2022, the banking industry's annualized ROA decreased to 1.10% as compared to 1.28% for the year-ago period.

The banking industry's net interest margin increased 35 basis points from the prior quarter and 58 basis points from the year-ago quarter to 3.14%. Growth in net interest income outpaced growth in earning assets, resulting in a strong quarterly increase in net interest margin. This is the first time the industry net industry margin has been above 3.00% since first quarter 2020. The average yield on earning assets increased 73 basis points from second quarter 2022 to 3.78% due to strong loan growth and rising market interest rates. Average funding costs increased 38 basis points from second quarter 2022 to 0.64%. Provision expense increased to $14.6 billion in third quarter 2022 from $11.1 billion in second quarter 2022 and negative $5.2 billion in third quarter 2021. Non-current loans have continued to decline and measured 0.72% of total loans at the end of third quarter 2022, marking the lowest level since second quarter 2006.

Bank and thrift industry earnings results have continued to be solid in comparison to historical levels, but earnings growth has been challenged recently by increasing credit-related charges. Industry operating expenses generally continue to rise in the face of sluggish growth in non-interest operating income. While bank and thrift industry capital levels remain strong and overall asset quality has stabilized, there continue to be volatile swings in the market for bank and thrift stocks in response to the economic outlook and the anxiety in the overall market that is contributing to the current fluctuations. Therefore, we believe that with the heightened uncertainty attendant to prevailing stock market conditions, the new issue discount continues to be highly relevant because of the risks and uncertainties associated with a new stock offering in the current market and warrants a downward adjustment.

Feldman Financial Advisors, Inc.

**<u>Adjustments Conclusion</u>**

It is our opinion that the Bank's pro forma market value should be discounted relative to the Comparative Group. Our conclusion is based on downward adjustments for earnings growth and viability, market area, liquidity of the issue, and the new issue discount underlying current stock market conditions. Converting thrifts are often valued at meaningful discounts to peer trading companies relative to price-to-book value and price-to-tangible book value ratios. Due to initially restrained levels of post-offering earnings growth without the benefit of sustained leveraging of balance sheets, resulting price-to-earnings ratios may reflect premiums to established trading companies. It is the judgment of the appraiser to balance the relative dynamics of price-to-book and price-to-earnings discounts or premiums.

**<u>Valuation Approach</u>**

In determining the estimated pro forma market value of the Bank, we have employed the comparative company approach and considered the following pricing ratios: price-to-book value per share ("P/B"), price-to-tangible book value per share ("P/TB"), price-to-earnings per share ("P/E"), and price-to-assets ("P/A"). Table 28 presents the trading market valuation ratios of the Comparative Group and All Public Thrift averages and medians as of February 21, 2023. As shown in Table 28, the median P/B ratio for the Comparative Group was 85.0%. Ten of the 12 members of the Comparative Group were valued at levels under book value (P/B ratio less than 100.0%). The median P/TB ratio for the Comparative Group was 85.0%. Higher equity levels have a restraining impact on P/B and P/TB ratios because of the accompanying challenge to generate competitive ROE results on such excess capital. Among the Comparative Group members, Catalyst Bancorp reported the highest equity capital ratio at 33.60% of total assets along with a P/B ratio of 76.8%. NSTS Bancorp reported an equity capital ratio of 29.52% and a P/B ratio of 71.3%. The median P/E ratio based on LTM earnings for the Comparative Group was 19.2x. On a core earnings basis, the median core P/E ratio of the Comparative Group was also 19.2x. Some companies within the Comparative Group and All Public Thrift aggregate generated P/E ratios that were either negative or distortedly high due to low levels of profitability, and their corresponding P/E ratios are expressed as "NA" or not applicable.

Feldman Financial Advisors, Inc.

Investors continue to make decisions to purchase thrift conversion stocks and more seasoned thrift issues based upon consideration of core earnings profitability and P/B comparisons. The P/E ratio remains an important valuation ratio in the current thrift stock market. However, as noted above, the P/E ratio is not useful for companies reporting negative or low earnings. The Company's earnings for the LTM ended December 31, 2022 amounted to $831,000 and its LTM core earnings amounted to $1.0 million. On a pro forma basis, after making adjustments for re-investment of net offering proceeds and expensing charges related to the implementation of various stock benefit plans, including the ESOP, restricted stock plan ("RSP"), and stock option plan, the Bank's pro forma earnings results are moderately higher than the historical earnings levels. (The pro forma earnings results do not take into account the capacity of the Bank to leverage the capital because of the attendant risks of executing and implementing operating strategies and business expansion initiatives.)

Feldman Financial Advisors, Inc.

Based on our comparative financial and valuation analyses, we concluded that the Bank should be discounted relative to the trading valuation ratios of the overall Comparative Group. In consideration of the foregoing factors along with the additional adjustments discussed in this chapter, we have determined pro forma P/B and P/TB ratios of 53.4% at the midpoint for the Bank, which reflects an aggregate midpoint of $18.4 million for the Valuation Range based on the assumptions summarized in Exhibit IV and including the issuance of $400,000 of common stock to the Foundation. Employing a range of approximately 15% above and below the midpoint, the resulting minimum value of approximately $15.7 million reflects a 48.9% P/B ratio and the resulting maximum value of approximately $21.1 million reflects a 57.3% P/B ratio. The adjusted maximum value, computed as an additional 15% above the maximum, is positioned at approximately $24.2 million and a P/B ratio of 61.2%. The Bank's pro forma P/B and P/TB ratios are equivalent since the Bank had no intangible assets as of December 31, 2022.

The Bank's pro forma midpoint P/B and P/TB ratios of 53.4% reflect a discount of 37.2% to the Comparative Group median P/B and P/TB ratios of 85.0%. The Bank's pro forma maximum P/B and P/TB ratios of 57.3% reflect a discount of 32.6% to the Comparative Group median P/B and P/TB ratios of 85.0%. At the adjusted maximum, the Bank's pro forma P/B and P/TB ratios of 61.0% are positioned at a 28.0% discount to the Comparative Group median P/B and P/TB ratios of 85.0%.

Based on the Valuation Range as indicated above, the Bank's pro forma LTM P/E ratios measured 15.6x, 17.9x, 20.0x, and 22.0x at the minimum, midpoint, maximum, and adjusted maximum, respectively, of the Valuation Range and are in reasonable range of the Comparative Group median P/E ratio of 19.2x. The Bank's pro forma core P/E ratios were 13.2x, 15.2x, 16.9x, and 18.9x at the minimum, midpoint, maximum, and adjusted maximum, respectively, of the Valuation Range. The Bank's pro forma LTM P/E ratios represent discounts of 18.7% and 7.1% at the minimum and midpoint, respectively, of the Valuation Range as compared to the Comparative Group median LTM P/E ratio of 19.2x. The Bank's pro forma LTM P/E ratios represent premiums of 4.0% and 15.6% at the maximum and adjusted maximum, respectively, of the Valuation Range as compared to the Comparative Group median LTM P/E ratio of 19.2x. The Bank's pro forma core P/E ratios represent discounts of 31.6%, 21.2%, 11.9%, and 1.9% at the minimum, midpoint, maximum, and adjusted maximum, respectively, of the Valuation Range as compared to the Comparative Group median core P/E ratio of 19.2x.

Feldman Financial Advisors, Inc.

Based on the price-to-assets valuation metric, the Bank's pro forma midpoint of the Valuation Range at $18.4 million reflects a corresponding P/A ratio of 9.76%, ranging from 8.44% at the minimum valuation to 11.06% and 12.50% at the maximum and adjusted maximum, respectively. The Bank's pro forma P/A ratios represent discounts of 33.7%, 23.3, 13.1%, and 1.7% at the minimum, midpoint, maximum, and adjusted maximum, respectively, of the Valuation Range as compared to the Comparative Group median P/A ratio of 12.72%. On a pro forma consolidated basis, the Company's total equity-to-assets ratios range from 17.25% at the minimum valuation and 18.29% at the midpoint valuation to 19.31% at the maximum valuation and 20.45%. Thus, upon completion of the Conversion and Stock Offering, the Company's pro forma equity capital ratios would exceed the Comparative Group average of 16.68% and median of 13.25%. Among the Comparative Group companies, only four of the members would have higher ratios of total equity-to-assets: Catalyst Bancorp at 33.60%, NSTS Bancorp at 29.52%, Cullman Bancorp at 24.26%, and TC Bancshares at 20.84%. As noted earlier, the solid post-Conversion equity capital levels of the Company will provide greater expansion opportunity and flexibility, but also present challenges in generating competitive returns on equity.

Feldman Financial Advisors, Inc.

**<u>Valuation Conclusion</u>**

It is our opinion that, as of February 21, 2023, the estimated pro forma market value of the Bank (inclusive of the common stock to be contributed to the Foundation) was within a Valuation Range of $15,700,000 to $21,100,000 with a midpoint of $18,400,000. Pursuant to applicable appraisal guidelines, the Valuation Range was based upon a decrease of approximately 15% decrease from the midpoint value to determine the minimum value and an increase of approximately 15% from the midpoint value to establish the maximum value. Assuming an additional increase of approximately above the maximum value would result in an adjusted maximum of $24,205,000. Based on the Valuation Range, the range of shares to be sold in the Stock Offering (excluding the shares of common stock to be contributed to the Foundation) is as follows: $15,300,000 at the minimum, $18,000,000 at the midpoint, $20,700,000 at the maximum, and $23,805,000 at the adjusted maximum. Based on an initial offering price of $10.00 per share, the number of shares to be sold in the Stock Offering is as follows: 1,530,000 at the minimum, 1,800,000 at the midpoint, 2,070,000 at the maximum, and 2,380,500 at the adjusted maximum. Table 28 compares the Bank's pro forma valuation ratios to the market valuation ratios of the Comparative Group.

Exhibit IV-1 displays the assumptions utilized in calculating the pro forma financial consequences of the Stock Offering. Exhibit IV-2 displays the pro forma financial data at the minimum, midpoint, maximum, and adjusted maximum levels of the Valuation Range. Exhibit IV-3 provides more detailed data and calculations at the pro forma midpoint level of the Valuation Range. Exhibit IV-4 compares the pro forma valuation ratios with the averages and medians reported by the Comparative Group.

Feldman Financial Advisors, Inc.

**Table 28**

**Comparative Pro Forma Market Valuation Analysis**

Computed from Market Price Data as of February 21, 2023

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Current | Total | Price/ | Price/ | Price/ | Price/ | Price/ | Total | Tang. | Current |
|  | Stock | Market | LTM | Core | Book | Tang. | Total | Equity/ | Equity/ | Dividend |
|  | Price | Value | EPS | EPS | Value | Book | Assets | Assets | Assets | Yield |
| Company | ($) | ($Mil.) | (x) | (x) | (%) | (%) | (%) | (%) | (%) | (%) |
| **PFS Bancorp, Inc.**<sup>(1)</sup> |  |  |  |  |  |  |  |  |  |  |
| **Pro Forma Minimum** | **10.00** | **15.7** | **15.6** | **13.2** | **48.9** | **48.9** | **8.44** | **17.25** | **17.25** | **0.00** |
| **Pro Forma Midpoint** | **10.00** | **18.4** | **17.9** | **15.2** | **53.4** | **53.4** | **9.76** | **18.29** | **18.29** | **0.00** |
| **Pro Forma Maximum** | **10.00** | **21.1** | **20.0** | **16.9** | **57.3** | **57.3** | **11.06** | **19.31** | **19.31** | **0.00** |
| **Pro Forma Adj. Maximum** | **10.00** | **24.2** | **22.2** | **18.9** | **61.2** | **61.2** | **12.50** | **20.45** | **20.45** | **0.00** |
| **Comparative Group Average** | **NA** | **57.7** | **19.4** | **18.8** | **88.2** | **88.5** | **14.11** | **16.68** | **16.64** | **0.75** |
| **Comparative Group Median** | **NA** | **58.6** | **19.2** | **19.2** | **85.0** | **85.0** | **12.72** | **13.25** | **13.25** | **0.31** |
| **All Public Thrift Average**<sup>(2)</sup> | **NA** | **556.5** | **15.4** | **15.0** | **99.0** | **108.8** | **12.51** | **13.53** | **13.01** | **1.62** |
| **All Public Thrift Median**<sup>(2)</sup> | **NA** | **170.3** | **13.5** | **11.4** | **93.8** | **97.2** | **11.64** | **11.62** | **11.41** | **1.02** |
| <u>Comparative Group</u> |  |  |  |  |  |  |  |  |  |  |
| 1895 Bancorp of Wisconsin, Inc. | 9.90 | 64.5 | NA | NA | 81.2 | 81.2 | 11.64 | 14.34 | 14.34 | 0.00 |
| Catalyst Bancorp, Inc. | 13.00 | 63.3 | NA | NA | 76.8 | 76.8 | 24.03 | 33.60 | 33.60 | 0.00 |
| Cullman Bancorp, Inc. | 11.71 | 86.7 | 22.1 | 22.1 | 88 | 88 | 21.36 | 24.26 | 24.26 | 1.02 |
| Generations Bancorp NY, Inc. | 10.98 | 25.7 | 16.4 | 15.4 | 69.1 | 72 | 6.96 | 10.08 | 9.71 | 0.00 |
| Home Federal Bancorp, Inc. | 17.31 | 59.9 | 9.9 | 9.9 | 111 | 111 | 9.37 | 8.44 | 8.44 | 2.40 |
| IF Bancorp, Inc. | 18.08 | 57.4 | 10.3 | 9.7 | 84.9 | 84.9 | 7.33 | 8.63 | 8.63 | 2.21 |
| Magyar Bancorp, Inc. | 12.60 | 87.5 | 10.5 | 10.5 | 85 | 85 | 10.34 | 12.16 | 12.16 | 0.93 |
| Mid-Southern Bancorp, Inc. | 13.08 | 35.4 | 19.2 | 19.2 | 121.8 | 121.8 | 14.18 | 11.65 | 11.65 | 1.84 |
| NSTS Bancorp, Inc. | 10.45 | 57.4 | NA | NA | 71.3 | 71.3 | 21.03 | 29.52 | 29.52 | 0.00 |
| PB Bankshares, Inc. | 13.40 | 33.3 | 26.8 | 24.9 | 82.3 | 82.3 | 9.74 | 11.84 | 11.84 | 0.00 |
| TC Bancshares, Inc. | 16.32 | 73.5 | 30.2 | 30.2 | 93.5 | 93.5 | 19.47 | 20.84 | 20.84 | 0.61 |
| Texas Community Bancshares, Inc. | 15.73 | 48.1 | 29.1 | 27 | 93.2 | 94 | 13.81 | 14.81 | 14.71 | 0.00 |

---

<sup>(1)</sup> Pro forma ratios assume an estimated pro forma market value of $15.7 million at the minimum, $18.4 million at the midpoint, $21.1 million at the maximum, and $24.2 million at the adjusted maximum (inclusive of the shares of common stock issued to the Foundation).

<sup>(2)</sup> All public thrifts traded on a major exchange, excluding mutual holding companies and companies being acquired in announced merger transactions.

Source: Peru Federal Savings Bank; S&P Global.

Feldman Financial Advisors, Inc.

**Exhibit I**

**Background of Feldman Financial Advisors, Inc.**

**<u>Overview of Firm</u>**

**Feldman Financial Advisors** provides consulting and advisory services to financial institutions and mortgage companies in the areas of corporate valuations, mergers and acquisitions, strategic planning, branch sales and purchases, developing and implementing regulatory business and capital plans, and expert witness testimony and analysis. Our senior staff members have been involved in the stock conversion process since 1982 and have valued more than 350 converting institutions.

**Feldman Financial Advisors** was incorporated in February 1996 by a group of consultants who were previously associated with Credit Suisse First Boston and Kaplan Associates. Each of the principals at Feldman Financial Advisors has more than 35 years of experience in consulting, and all were officers of their prior firm. Our senior staff collectively has worked with more than 1,000 commercial banks, savings institutions, credit unions, insurance companies, and mortgage companies nationwide. The firm's office is located outside of Washington, D.C. in McLean, Virginia.

**<u>Background of Senior Professional Staff</u>**

**<u>Trent Feldman</u>** - President. Trent is a nationally recognized expert in providing strategic advice to and valuing financial service companies and advising on mergers and acquisitions. Trent was with Kaplan Associates for 14 years and was one of three founding principals at that firm. Trent also has worked at the Federal Home Loan Bank Board and with the California legislature. Trent holds Bachelor's and Master's Degrees from the University of California, Los Angeles.

**<u>Peter Williams</u>** - Principal. Peter specializes in merger and acquisition analysis, mutual-to-stock conversion valuations, corporate valuations, strategic business plans, and fair value accounting analysis. Peter previously was with Kaplan Associates for 13 years. Peter also worked as a Corporate Planning Analyst with the Wilmington Trust Company in Delaware. Peter holds a BA in Economics from Yale University and an MBA in Finance and Investments from The George Washington University.

Feldman Financial Advisors, Inc.

**Exhibit II-1**

**Consolidated Balance Sheets**

**Peru Federal Savings Bank**

As of December 31, 2020 to 2022

(Dollars in Thousands)

---

| | | | |
|:---|:---|:---|:---|
|  | December 31, | December 31, | December 31, |
|  | 2022 | 2021 | 2020 |
| **<u>Assets</u>** |  |  |  |
| Cash and cash equivalents | $12651 | $21542 | $8115 |
| Available-for-sale debt securities | 63329 | 71705 | 70729 |
| Held-to-maturity debt securities | 3146 | 3054 | 2821 |
| Equity securities | 88 | 112 | 219 |
| Federal Home Loan Bank stock | 347 | 330 | 254 |
| Loans | 85459 | 81407 | 82644 |
| Allowance for loan losses | (543) | (567) | (576) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans, net | 84916 | 80840 | 82068 |
| Premises and equipment, net | 2150 | 2159 | 2277 |
| Interest receivable | 592 | 566 | 585 |
| Bank-owned life insurance | 3783 | 3696 | 3611 |
| Other assets | 3132 | 1552 | 1304 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Assets | $174134 | $185556 | $171983 |
| **<u>Liabilities and Equity</u>** |  |  |  |
| Deposits: |  |  |  |
| &nbsp;&nbsp;&nbsp;Demand accounts | $17248 | $18611 | $17206 |
| &nbsp;&nbsp;&nbsp;Savings, NOW, and money market accounts | 87120 | 90320 | 76452 |
| &nbsp;&nbsp;&nbsp;Certificate of deposit accounts | 48339 | 46981 | 49817 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Deposits | 152707 | 155912 | 143475 |
| Federal Home Loan Bank advances |  | 5000 | 4000 |
| Deferred compensation | 687 | 635 | 588 |
| Interest payable and other liabilities | 601 | 569 | 599 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities | 153995 | 162116 | 148662 |
| Retained earnings | 23828 | 22997 | 21995 |
| Accumulated other comprehensive income (loss) | (3689) | 443 | 1326 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Equity | 20139 | 23440 | 23321 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities and Equity | $174134 | $185556 | $171983 |

---

Source: Peru Federal Savings Bank, financial statements.

Feldman Financial Advisors, Inc.

**Exhibit II-2**

**Consolidated Income Statements**

**Peru Federal Savings Bank**

For the Years Ended December 31, 2020 to 2022

(Dollars in Thousands)

---

| | | | |
|:---|:---|:---|:---|
|  | Year Ended December 31, | Year Ended December 31, | Year Ended December 31, |
|  | 2022 | 2021 | 2020 |
| Total interest and dividend income | $4803 | $4584 | $4847 |
| Total interest expense | 640 | 611 | 963 |
| &nbsp;&nbsp;&nbsp;Net interest income | 4163 | 3973 | 3884 |
| Provision (credit) for loan losses | 61 | (6) | 445 |
| &nbsp;&nbsp;&nbsp;Net interest income after provision | 4102 | 3979 | 3439 |
| Commission income | 28 | 28 | 21 |
| Customer service fees | 368 | 339 | 294 |
| Net realized gain on loan sales | 140 | 144 | 295 |
| Loan servicing fees | 78 | 81 | 87 |
| Realized loss on sale of available-for-sale securities | (221) |  | (25) |
| Other income | 116 | 68 | 259 |
| &nbsp;&nbsp;&nbsp;Total non-interest income | 509 | 660 | 931 |
| Salaries and employee benefits | 2002 | 1962 | 2076 |
| Occupancy | 244 | 232 | 223 |
| Depreciation | 145 | 152 | 159 |
| Data processing | 573 | 434 | 387 |
| Professional fees | 152 | 100 | 99 |
| Marketing | 129 | 124 | 126 |
| Printing and office supplies | 69 | 63 | 64 |
| Foreclosed assets, net | 13 |  | 9 |
| Deposit insurance premiums | 140 | 163 | 130 |
| Other expense | 158 | 132 | 201 |
| &nbsp;&nbsp;&nbsp;Total non-interest expense | 3625 | 3362 | 3474 |
| Income before income taxes | 986 | 1277 | 896 |
| Provision for income taxes | 155 | 275 | 120 |
| &nbsp;&nbsp;&nbsp;Net income | $831 | $1002 | $776 |

---

Source: Peru Federal Savings Bank, financial statements.

Feldman Financial Advisors, Inc.

**Exhibit II-3**

**Loan Portfolio Composition**

**Peru Federal Savings Bank**

As of December 31, 2020 to 2022

(Dollars in Thousands)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, |
|  | 2022 | 2022 | 2021 | 2021 | 2020 | 2020 |
| Loan | Amount | Percent | Amount | Percent | Amount | Percent |
| Category | (000s) | (%) | (000s) | (%) | (000s) | (%) |
| Real estate loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Residential one- to four-family | $59112 | 69.17 | $55138 | 67.73 | $53387 | 64.53 |
| &nbsp;&nbsp;&nbsp;Multi-family real estate | 1526 | 1.79 | 1248 | 1.53 | 1235 | 1.49 |
| &nbsp;&nbsp;&nbsp;Commercial real estate | 16371 | 19.16 | 16473 | 20.24 | 15743 | 19.03 |
| &nbsp;&nbsp;&nbsp;Construction and land dev. | 1518 | 1.78 | 2034 | 2.50 | 1428 | 1.73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total real estate loans | 78527 | 91.89 | 74893 | 92.00 | 71793 | 86.78 |
| Commercial business loans | 2116 | 2.48 | 2202 | 2.70 | 6709 | 8.11 |
| Home equity loans/lines of credit | 2013 | 2.36 | 1584 | 1.95 | 1955 | 2.36 |
| Consumer loans | 2803 | 3.28 | 2728 | 3.35 | 2271 | 2.75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross total loans | 85459 | 100.00 | 81407 | 100.00 | 82728 | 100.00 |
| Allowance for loan losses | (543) |  | (567) |  | (576) |  |
| Deferred loan fees | - |  | - |  | (84) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net total loans | $84916 |  | $80840 |  | $82068 |  |

---

Source: Peru Federal Savings Bank, financial statements.

Feldman Financial Advisors, Inc.

**Exhibit II-4** 

**Cash and Investments Composition**

**Peru Federal Savings Bank**

As of December 31, 2020 to 2022

(Dollars in Thousands)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, |
|  | 2022 | 2022 | 2021 | 2021 | 2020 | 2020 |
| Cash or Investment | Amount | Percent | Amount | Percent | Amount | Percent |
| Category | (000s) | (%) | (000s) | (%) | (000s) | (%) |
| Cash and cash equivalents | $12651 | 15.90 | $21542 | 22.27 | $8115 | 9.88 |
| Available-for-sale securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Govt. and agency obligations | 5327 | 6.70 | 7541 | 7.79 | 4127 | 5.02 |
| &nbsp;&nbsp;&nbsp;Mortgage-backed securities | 38224 | 48.04 | 41593 | 42.99 | 41886 | 50.99 |
| &nbsp;&nbsp;&nbsp;State and political subdivisions | 19778 | 24.86 | 22571 | 23.33 | 24716 | 30.09 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total available-for-sale securities | 63329 | 79.60 | 71705 | 74.12 | 70729 | 86.11 |
| Held-to-maturity securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Govt. and agency obligations | 917 | 1.15 | 1056 | 1.09 |  |  |
| &nbsp;&nbsp;&nbsp;Mortgage-backed securities | 5 | 0.01 | 18 | 0.02 | 46 | 0.06 |
| &nbsp;&nbsp;&nbsp;Certificates of deposit | 2224 | 2.80 | 1980 | 2.05 | 2725 | 3.32 |
| &nbsp;&nbsp;&nbsp;Other | - | - | - | - | 50 | 0.06 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total held-to-maturity securities | 3146 | 3.95 | 3054 | 3.16 | 2821 | 3.43 |
| Other investments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Equity securities | 88 | 0.11 | 112 | 0.12 | 219 | 0.27 |
| &nbsp;&nbsp;&nbsp;Federal Home Loan Bank stock | 347 | 0.44 | 330 | 0.34 | 254 | 0.31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other investments | 435 | 0.55 | 442 | 0.46 | 473 | 0.58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cash and investments | $79561 | 100.00 | $96743 | 100.00 | $82138 | 100.00 |
| <u>Percent of total assets (%)</u> |  |  |  |  |  |  |
| Cash and cash equivalents |  | 7.27 |  | 11.61 |  | 4.72 |
| Available-for-sale securities |  | 36.37 |  | 38.64 |  | 41.13 |
| Held-to-maturity securities |  | 1.81 |  | 1.65 |  | 1.64 |
| Other investments |  | 0.25 |  | 0.24 |  | 0.28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cash and investments |  | 45.69 |  | 52.14 |  | 47.76 |

---

Source: Peru Federal Savings Bank, financial statements.

Feldman Financial Advisors, Inc.

**Exhibit II-5**

**Deposit Accounts Composition**

**Peru Federal Savings Bank**

As of December 31, 2021 and 2022

(Dollars in Thousands)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | December 31, | December 31, | December 31, | December 31, |
|  | 2022 | 2022 | 2021 | 2021 |
| Deposit Account | Amount | Percent | Amount | Percent |
| Category | (000s) | (%) | (000s) | (%) |
| Non-interest bearing demand deposits | $17248 | 11.29 | $18611 | 11.94 |
| Regular savings deposit accounts | 36682 | 24.02 | 36032 | 23.11 |
| NOW deposit accounts | 24266 | 15.89 | 26833 | 17.21 |
| Money market deposit accounts | 26172 | 17.14 | 27455 | 17.61 |
| &nbsp;&nbsp;&nbsp;Total non-certificate accounts | 104368 | 68.35 | 108931 | 69.87 |
| Certificate of deposit accounts | 48339 | 31.65 | 46981 | 30.13 |
| &nbsp;&nbsp;&nbsp;Total deposits | $152707 | 100.00 | $155912 | 100.00 |

---

Source: Peru Federal Savings Bank, financial statements.

Feldman Financial Advisors, Inc.

**Exhibit II-6**

**Borrowed Funds Composition**

**Peru Federal Savings Bank**

As of or For the Year Ended December 31, 2021 and 2022

(Dollars in Thousands)

---

| | | |
|:---|:---|:---|
|  | As of or For the | As of or For the |
|  | Year Ended | Year Ended |
|  | December 31, | December 31, |
|  | 2022 | 2021 |
| **<u>Federal Home Loan Bank Advances</u>** |  |  |
| Average balance outstanding during the period | $1769 | $4581 |
| Balance outstanding at end of period |  | 5000 |
| Maximum amount of borrowings outstanding at any month-end during the period | 5000 | 5000 |
| Weighted average interest rate during the period | 0.00% | 0.00% |
| Weighted average interest rate at end of period | NA | 0.00% |

---

Source: Peru Federal Savings Bank, financial data.

Feldman Financial Advisors, Inc.

**Exhibit II-7**

**Professional Background Summaries of Executive Officers**

**Peru Federal Savings Bank**

**<u>Eric J. Heagy, CPA</u>** has served as President, Chief Executive and Chief Financial Officer of Peru Federal since 2007. Mr. Heagy graduated from Illinois State University with a bachelor's degree in accounting and is a licensed Certified Public Accountant. He joined Peru Federal in 2002 following four years in public accounting, auditing various entities including financial institutions. He began his career at Peru Federal as Controller, was promoted to Chief Financial Officer in 2004, and then to President and Chief Executive Officer in 2007. During his time at Peru Federal, in addition to his primary responsibilities, Mr. Heagy has guided Peru Federal in other operational areas as compliance officer, information technology officer, lending officer, and human resources officer. He has served the community in leadership roles of many local organizations and currently is the Board Treasurer of the Illinois Valley YMCA and Treasurer of the Peru Elementary School District 124. He has 21 years of community banking experience.

**<u>Dale R. Tieman</u>** is the Executive Vice President and Chief Operations Officer of Peru Federal. Mr. Tieman has been with Peru Federal since 2001. He began his career with Peru Federal as a Financial Advisor and has advanced to different positions with Peru Federal. In 2009, he was promoted to Executive Vice President/Chief Operations Officer. Mr. Tieman serves on the board for several local non-for-profit organizations. Mr. Tieman holds Series 7, 63, and 65 securities licenses and is a graduate of the Graduate School of Banking, Madison. He has over 25 years of community banking experience.

**<u>Christopher J. Vaske</u>** has served as Senior Vice President and Chief Lending Officer since 2012. Before joining Peru Federal, he served as a commercial lending officer, commercial underwriter and credit officer for two regional financial institutions. He received his Bachelor of Science in Marketing, with a minor in finance, and a Masters of Business Administration from the University of Iowa. Mr. Vaske has served the community in leadership roles for many local organizations and currently is the Board Treasurer of the Lighted Way Association, Autism Foundation of the Illinois Valley, LPHS Band Parent Association, LaSalle Rotary Park Foundation and the Depue Community Unit School District 103.

Source: Peru Federal Savings Bank.

Feldman Financial Advisors, Inc.

**Exhibit III**

**Financial and Market Data for All Public Thrifts**

---

| | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Total | Tang. |  |  | Closing | Total | Price/ | Price/ | Price/ | Price/ | Price/ |  |
|  |  |  | Total | Equity/ | Equity/ | LTM | LTM | Price | Market | LTM | Core | Book | Tang. | Total | Div. |
|  |  |  | Assets | Assets | Assets | ROA | ROE | 2/21/23 | Value | EPS | EPS | Value | Book | Assets | Yield |
| Company | State | Ticker | ($Mil.) | (%) | (%) | (%) | (%) | ($) | ($Mil.) | (x) | (x) | (%) | (%) | (%) | (%) |
| **<u>All Public Thrifts</u>** (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| 1895 Bancorp of Wisconsin, Inc. | WI | BCOW | 529 | 14.34 | 14.34 | (0.08) | (0.52) | 9.90 | 64.5 | NA | NA | 81.2 | 81.2 | 11.64 | 0.00 |
| Affinity Bancshares, Inc. | GA | AFBI | 791 | 14.80 | 12.75 | 0.93 | 6.05 | 16.25 | 107 | 15.3 | 14 | 91.7 | 108.9 | 13.56 | 0.00 |
| Axos Financial, Inc. | NV | AX | 18741 | 9.54 | 8.77 | 1.52 | 15.69 | 47.33 | 3014.4 | 11 | 9.6 | 158.9 | 174.2 | 15.15 | 0.00 |
| Blue Foundry Bancorp | NJ | BLFY | 2043 | 19.27 | 19.24 | 0.12 | 0.58 | 11.86 | 333.7 | NM | NM | 82.9 | 83.1 | 15.98 | 0.00 |
| Broadway Financial Corporation | CA | BYFC | 1184 | NA | NA | 0.50 | 2.55 | 1.30 | 63.4 | 16.3 | NA | 73.9 | 94.6 | NA | 0.00 |
| Capitol Federal Financial, Inc. | KS | CFFN | 9930 | 10.62 | 10.52 | 0.67 | 6.83 | 8.42 | 1140.5 | 14.5 | 14.3 | 108.7 | 109.9 | 11.54 | 4.04 |
| Carver Bancorp, Inc. | NY | CARV | 712 | 6.34 | 6.34 | (0.39) | (5.38) | 4.42 | 19.6 | NM | NM | 96.1 | 96.1 | 2.76 | 0.00 |
| Catalyst Bancorp, Inc. | LA | CLST | 263 | 33.60 | 33.60 | 0.06 | 0.19 | 13.00 | 63.3 | NA | NA | 76.8 | 76.8 | NA | 0.00 |
| Cullman Bancorp, Inc. | AL | CULL | 406 | 24.26 | 24.26 | 1.05 | 3.91 | 11.71 | 86.7 | 22.1 | 22.1 | 88 | 88 | 21.36 | 1.02 |
| ECB Bancorp, Inc. | MA | ECBK | 874 | 18.44 | 18.44 | NA | 1.86 | 15.63 | 142.3 | NA | NA | 89 | 89 | 16.42 | 0.00 |
| ESSA Bancorp, Inc. | PA | ESSA | 1927 | 11.22 | 10.57 | 1.09 | 9.48 | 20.20 | 196.9 | 9.7 | 9.6 | 97.2 | 103.9 | 10.90 | 2.96 |
| First Northwest Bancorp | WA | FNWB | 2042 | 7.75 | 7.70 | 0.68 | 7.84 | 14.87 | 137.8 | 8.7 | 9.5 | 89.3 | 89.9 | 7.05 | 1.85 |
| First Seacoast Bancorp, Inc. | NH | FSEA | 524 | 9.11 | 9.11 | 0.29 | 2.58 | 10.29 | 52.2 | 34.4 | 35.4 | 109.3 | 109.3 | 9.96 | 0.00 |
| FS Bancorp, Inc. | WA | FSBW | 2633 | 8.80 | 8.60 | 1.22 | 11.66 | 36.41 | 279.5 | 9.8 | 9.6 | 121.6 | 124.6 | 10.70 | 2.75 |
| Generations Bancorp NY, Inc. | NY | GBNY | 374 | 10.08 | 9.71 | 0.42 | 3.74 | 10.98 | 25.7 | 16.4 | 15.4 | 69.1 | 72 | 6.96 | 0.00 |
| HarborOne Bancorp, Inc. | MA | HONE | 5360 | 11.51 | 10.31 | 0.95 | 7.14 | 13.69 | 639.3 | 14.1 | 13.7 | 108.6 | 123 | 12.51 | 2.01 |
| Hingham Institution for Savings | MA | HIFS | 4194 | 9.20 | 9.20 | 0.98 | 10.01 | 287.20 | 627.3 | 16.9 | 11.6 | 159.8 | 159.8 | 14.71 | 0.86 |
| HMN Financial, Inc. | MN | HMNF | 1096 | 8.88 | 8.81 | 0.75 | 7.03 | 21.86 | 94.9 | 11.9 | NA | 100.6 | 101.5 | 8.94 | 1.09 |
| Home Federal Bancorp, Inc. | LA | HFBL | 577 | 8.44 | 8.44 | 0.99 | 11.45 | 17.31 | 59.9 | 9.9 | 9.9 | 111 | 111 | 9.37 | 2.40 |
| IF Bancorp, Inc. | IL | IROQ | 824 | 8.63 | 8.63 | 0.69 | 7.51 | 18.08 | 57.4 | 10.3 | 9.7 | 84.9 | 84.9 | 7.33 | 2.21 |
| Kearny Financial Corp. | NJ | KRNY | 8289 | 10.53 | NA | 0.62 | 5.19 | 9.91 | 651.1 | 14.2 | 11.4 | 76.5 | 101.8 | 8.06 | 4.39 |
| Magyar Bancorp, Inc. | NJ | MGYR | 822 | 12.16 | 12.16 | 1.01 | 8.11 | 12.60 | 87.5 | 10.5 | 10.5 | 85 | 85 | 10.34 | 0.93 |
| Mid-Southern Bancorp, Inc. | IN | MSVB | 265 | 11.65 | 11.65 | 0.72 | 4.69 | 13.08 | 35.4 | 19.2 | 19.2 | 121.8 | 121.8 | 14.18 | 1.84 |
| New York Community Bancorp, Inc. | NY | NYCB | 90144 | 9.79 | 6.99 | 1.01 | 9.18 | 9.13 | 6396.6 | 7.2 | 8.1 | 74.7 | 110.9 | 6.94 | 7.24 |
| Northeast Community Bancorp, Inc. | NY | NECB | 1425 | 18.39 | 18.38 | 1.95 | 9.60 | 15.90 | 235.3 | 10.1 | 9.5 | 97.4 | 97.5 | 17.91 | 1.51 |
| Northfield Bancorp, Inc. | NJ | NFBK | 5601 | 12.52 | 11.87 | 1.09 | 8.57 | 14.67 | 703.1 | 11.1 | 11.1 | 99.2 | 105.4 | 12.43 | 3.51 |
| NSTS Bancorp, Inc. | IL | NSTS | 268 | 29.52 | 29.52 | (0.02) | (0.09) | 10.45 | 57.4 | NA | NA | 71.3 | 71.3 | 21.03 | 0.00 |
| PB Bankshares, Inc. | PA | PBBK | 377 | 11.84 | 11.84 | 0.35 | 2.66 | 13.40 | 33.3 | 26.8 | 24.9 | 82.3 | 82.3 | 9.74 | 0.00 |
| Ponce Financial Group, Inc. | NY | PDLB | 2312 | 21.31 | 21.31 | (1.55) | (7.47) | 9.22 | 213.5 | NM | NA | 85.6 | 85.6 | 10.98 | 0.00 |
| Provident Bancorp, Inc. | MA | PVBC | 1636 | 12.68 | 12.68 | (1.24) | (9.26) | 9.36 | 170.3 | NM | NM | 79.7 | 79.7 | 10.11 | 0.00 |
| Provident Financial Holdings, Inc. | CA | PROV | 1271 | 10.17 | 10.17 | 0.71 | 6.69 | 14.22 | 101.4 | 11.9 | 11.9 | 78.5 | 78.5 | 7.98 | 3.92 |

---

Feldman Financial Advisors, Inc.

**Exhibit III (continued)**

**Financial and Market Data for All Public Thrifts**

---

| | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Total | Tang. |  |  | Closing | Total | Price/ | Price/ | Price/ | Price/ | Price/ |  |
|  |  |  | Total | Equity/ | Equity/ | LTM | LTM | Price | Market | LTM | Core | Book | Tang. | Total | Div. |
|  |  |  | Assets | Assets | Assets | ROA | ROE | 2/21/23 | Value | EPS | EPS | Value | Book | Assets | Yield |
| Company | State | Ticker | ($Mil.) | (%) | (%) | (%) | (%) | ($) | ($Mil.) | (x) | (x) | (%) | (%) | (%) | (%) |
| Provident Financial Services, Inc. | NJ | PFS | 13783 | 11.59 | 8.53 | 1.29 | 10.86 | 23.53 | 1799.6 | 10 | 9.8 | 110.7 | 155.6 | 12.83 | 4.01 |
| Riverview Bancorp, Inc. | WA | RVSB | 1599 | 9.51 | 7.93 | 1.13 | 12.29 | 7.12 | 153.7 | 8.1 | 8.1 | 100.7 | 122.9 | 9.57 | 3.36 |
| Sterling Bancorp, Inc. | MI | SBT | 2445 | 13.53 | 13.53 | 0.15 | 1.19 | 6.11 | 317 | NM | NM | 93.8 | 93.8 | 12.70 | 0.00 |
| TC Bancshares, Inc. | GA | TCBC | 406 | 20.84 | 20.84 | 0.68 | 3.13 | 16.32 | 73.5 | 30.2 | 30.2 | 93.5 | 93.5 | 19.47 | 0.61 |
| Territorial Bancorp Inc. | HI | TBNK | 2169 | 11.83 | 11.83 | 0.75 | 6.27 | 23.33 | 208 | 13 | 13.6 | 82.5 | 82.5 | 9.76 | 3.94 |
| Texas Community Bancshares, Inc. | TX | TCBS | 376 | 14.81 | 14.71 | 0.44 | 3.37 | 15.73 | 48.1 | 29.1 | 27 | 93.2 | 94 | 13.81 | 0.00 |
| Third Coast Bancshares, Inc. | TX | TCBX | 3773 | 10.12 | 9.66 | 0.58 | 5.76 | 18.82 | 259.7 | 15.1 | NA | 80.7 | 85.9 | 6.87 | 0.00 |
| Timberland Bancorp, Inc. | WA | TSBK | 1836 | 12.18 | 11.41 | 1.38 | 11.92 | 34.45 | 286.5 | 11.2 | 11.1 | 126.8 | 136.6 | 15.45 | 2.64 |
| Triumph Financial, Inc. | TX | TFIN | 5334 | 16.67 | 12.30 | 1.79 | 11.46 | 61.92 | 1442.7 | 15.6 | 18.3 | 176.5 | 257.6 | 28.16 | 0.00 |
| TrustCo Bank Corp NY | NY | TRST | 6000 | 10.00 | 9.99 | 1.22 | 12.60 | 36.70 | 704.6 | 9.3 | 9.4 | 116.4 | 116.5 | 11.64 | 3.92 |
| Waterstone Financial, Inc. | WI | WSBF | 2032 | 18.24 | 18.21 | 0.96 | 4.88 | 16.02 | 345.8 | 18 | 18.3 | 95.9 | 96 | 17.48 | 4.99 |
| Western New England Bancorp, Inc. | MA | WNEB | 2553 | 8.94 | 8.41 | 1.02 | 11.85 | 10.04 | 222.8 | 8.5 | 9.1 | 97.8 | 104.5 | 8.74 | 2.79 |
| William Penn Bancorporation | PA | WMPN | 871 | 20.58 | 20.08 | 0.46 | 2.05 | 11.94 | 155.4 | 39.8 | 36.9 | 94.2 | 97.2 | 19.39 | 1.01 |
| WSFS Financial Corporation | DE | WSFS | 19915 | 11.06 | 6.29 | 1.09 | 9.28 | 50.02 | 3133 | 14.3 | 11.2 | 139.8 | 258.4 | 15.47 | 1.20 |
| **Average** |  |  | **5123** | **13.53** | **13.01** | **0.68** | **5.67** | **NA** | **556.5** | **15.4** | **15.0** | **99.0** | **108.8** | **12.51** | **1.62** |
| **Median** |  |  | **1636** | **11.62** | **11.41** | **0.74** | **6.27** | **NA** | **170.3** | **13.5** | **11.4** | **93.8** | **97.2** | **11.64** | **1.02** |

---

(1) Public thrifts traded on NYSE, NYSE American, and NASDAQ stock markets; excludes companies subject to pending acquisitions or mutual holding company ownership.

Source: S&P Global.

Feldman Financial Advisors, Inc.

**Exhibit IV-1**

**Pro Forma Assumptions for the Stock Offering**

1. The
 total amount of the net offering proceeds was fully invested at the beginning of the applicable
 period.

2. The
 net offering proceeds are invested to yield a return of 3.99%, which represented the yield
 on five-year U.S. Treasury securities at December 31, 2022. The effective income tax
 rate was assumed to be 28.5%, resulting in a net after-tax yield of 2.85%.

3. It
 is assumed that a contribution of $100,000 in cash and 40,000 shares of common stock (aggregate
 value of $400,000) will be issued to the Foundation in connection with the Conversion and
 Stock Offering.

4. It
 is assumed that 8.0% of the total shares of common stock to be issued in the Conversion (including
 shares issued to the Foundation) will be acquired by the Bank's employee stock ownership
 plan ("ESOP"). Pro forma adjustments have been made to earnings and equity to
 reflect the impact of the ESOP. The annual expense is estimated based on a 25-year loan to
 the ESOP from the Bank. No re-investment is assumed on proceeds used to fund the ESOP.

5. It
 is assumed that that the Bank's restricted stock plan ("RSP") will purchase
 in the open market a number of shares equal to 4.0% of the total shares issued in the Conversion
 (including shares issued to the Foundation). Also, it is assumed that these shares are acquired
 at the initial public offering price of $10.00 per share. Pro forma adjustments have been
 made to earnings and equity to reflect the impact of the RSP. The annual expense is estimated
 based on a five-year vesting period. No re-investment is assumed on proceeds used to fund
 the RSP.

6. It
 is assumed that an additional 10.0% of the total shares sold in the Stock Offering will be
 reserved for issuance by the Bank's stock option plan. The pro forma net income has
 been adjusted to reflect the expense associated with the granting of options at an assumed
 options value of $4.07 per option. It is further assumed that options for all shares reserved
 under the plan were granted to plan participants at the beginning of the period and 25.0%
 were non-qualified options for income tax purposes, the options would vest at a rate of 20.0%
 per year, and compensation expense will be recognized on a straight-line basis over the five-year
 vesting period

7. The
 fair value of stock options has been estimated at $4.07 per option using the Black-Scholes
 option pricing model with the following assumptions: a grant-date share price and option
 exercise price of $10.00; dividend yield of 0.00%; an expected option life of 10 years; a
 risk-free interest rate of 3.88%; and a volatility rate of 20.27% based a selected bank stock
 index.

8. Total
 offering expenses are estimated at $1,500,000.

9. No
 effect has been given to withdrawals from deposit accounts for the purpose of purchasing
 common stock in the Stock Offering.

10. No
 effect has been given in the pro forma equity calculation for the assumed earnings on the
 net proceeds.

Feldman Financial Advisors, Inc.

**Exhibit IV-2**

**Peru Federal Savings Bank**

**Pro Forma Conversion Valuation Range**

Historical Financial Data as of December 31, 2022

(Dollars in Thousands, Except Per Share Data)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **MINIMUM** | **MIDPOINT** | **MAXIMUM** | **ADJ. MAX.** |
| Total shares outstanding | 1570000 | 1840000 | 2110000 | 2420500 |
| Shares sold in the offering | 1530000 | 1800000 | 2070000 | 2380500 |
| Shares issued to charitable foundation | 40000 | 40000 | 40000 | 40000 |
| Offering price | $10.00 | $10.00 | $10.00 | $10.00 |
| **Pro forma market value** | $**15700** | $**18400** | $**21100** | $**24205** |
| **Gross offering proceeds** | $**15300** | $**18000** | $**20700** | $**23805** |
| Less: estimated offering expenses | (1500 | (1500 | (1500 | (1500 |
| &nbsp;&nbsp;&nbsp;Net offering proceeds | 13800 | 16500 | 19200 | 22305 |
| Less: cash contribution to foundation | (100) | (100) | (100) | (100) |
| Less: ESOP purchase | (1256) | (1472) | (1688) | (1936) |
| Less: RSP purchase | (628 | (736 | (844 | (968 |
| &nbsp;&nbsp;&nbsp;Net investable proceeds | $11816 | $14192 | $16568 | $19301 |
| **Net income - LTM ended 12/31/22** | $831 | $831 | $831 | $831 |
| &nbsp;&nbsp;&nbsp;Pro forma income on net proceeds | 337 | 405 | 473 | 551 |
| &nbsp;&nbsp;&nbsp;Pro forma ESOP adjustment | (36) | (42) | (48) | (55) |
| &nbsp;&nbsp;&nbsp;Pro forma RSP adjustment | (90) | (105) | (121) | (138) |
| &nbsp;&nbsp;&nbsp;Pro forma option adjustment | (119 | (139 | (160 | (183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma net income | $923 | $950 | $975 | $1006 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma earnings per share | $0.64 | $0.56 | $0.50 | $0.45 |
| **Core earnings - LTM ended 12/31/22** | $1006 | $1006 | $1006 | $1006 |
| &nbsp;&nbsp;&nbsp;Pro forma income on net proceeds | 337 | 405 | 473 | 551 |
| &nbsp;&nbsp;&nbsp;Pro forma ESOP adjustment | (36) | (42) | (48) | (55) |
| &nbsp;&nbsp;&nbsp;Pro forma RSP adjustment | (90) | (105) | (121) | (138) |
| &nbsp;&nbsp;&nbsp;Pro forma option adjustment | (119 | (139 | (160 | (183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma core earnings | $1098 | $1125 | $1150 | $1181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma core earnings per share | $0.76 | $0.66 | $0.59 | $0.53 |
| **Total equity - 12/31/22** | $20139 | $20139 | $20139 | $20139 |
| &nbsp;&nbsp;&nbsp;Net offering proceeds | 13800 | 16500 | 19200 | 22305 |
| &nbsp;&nbsp;&nbsp;Plus: common stock issued to foundation | 400 | 400 | 400 | 400 |
| &nbsp;&nbsp;&nbsp;Less: charitable contribution expense | (358) | (358) | (358) | (358) |
| &nbsp;&nbsp;&nbsp;Less: ESOP purchase | (1256) | (1472) | (1688) | (1936) |
| &nbsp;&nbsp;&nbsp;Less: RSP purchase | (628 | (736 | (844 | (968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma total equity | $32097 | $34473 | $36849 | $39582 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma book value | $20.44 | $18.74 | $17.46 | $16.35 |
| **Tangible equity - 12/31/22** | $20139 | $20139 | $20139 | $20139 |
| &nbsp;&nbsp;&nbsp;Net offering proceeds | 13800 | 16500 | 19200 | 22305 |
| &nbsp;&nbsp;&nbsp;Plus: common stock issued to foundation | 400 | 400 | 400 | 400 |
| &nbsp;&nbsp;&nbsp;Less: charitable contribution expense | (358) | (358) | (358) | (358) |
| &nbsp;&nbsp;&nbsp;Less: ESOP purchase | (1256) | (1472) | (1688) | (1936) |
| &nbsp;&nbsp;&nbsp;Less: RSP purchase | (628 | (736 | (844 | (968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma tangible equity | $32097 | $34473 | $36849 | $39582 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma tangible book value | $20.44 | $18.74 | $17.46 | $16.35 |
| **Total assets - 12/31/22** | $174134 | $174134 | $174134 | $174134 |
| &nbsp;&nbsp;&nbsp;Net offering proceeds | 13800 | 16500 | 19200 | 22305 |
| &nbsp;&nbsp;&nbsp;Plus: common stock issued to foundation | 400 | 400 | 400 | 400 |
| &nbsp;&nbsp;&nbsp;Less: charitable contribution expense, net | (358) | (358) | (358) | (358) |
| &nbsp;&nbsp;&nbsp;Less: ESOP purchase | (1256) | (1472) | (1688) | (1936) |
| &nbsp;&nbsp;&nbsp;Less: RSP purchase | (628 | (736 | (844 | (968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma total assets | $186092 | $188468 | $190844 | $193577 |
| **Pro Forma Ratios:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Price / LTM EPS | 15.6 | 17.9 | 20.0 | 22.2 |
| &nbsp;&nbsp;&nbsp;Price / Core EPS | 13.2 | 15.2 | 16.9 | 18.9 |
| &nbsp;&nbsp;&nbsp;Price / Book Value | 48.9 | 53.4 | 57.3 | 61.2 |
| &nbsp;&nbsp;&nbsp;Price / Tangible Book Value | 48.9 | 53.4 | 57.3 | 61.2 |
| &nbsp;&nbsp;&nbsp;Price / Total Assets | 8.44 | 9.76 | 11.06 | 12.50 |
| &nbsp;&nbsp;&nbsp;Total Equity / Assets | 17.25 | 18.29 | 19.31 | 20.45 |
| &nbsp;&nbsp;&nbsp;Tangible Equity / Assets | 17.25 | 18.29 | 19.31 | 20.45 |

---

Feldman Financial Advisors, Inc.

**Exhibit IV-3**

**Pro Forma Conversion Analysis at the Midpoint Value**

**Peru Federal Savings Bank**

Historical Financial Data as of December 31, 2022

---

| | | | |
|:---|:---|:---|:---|
| **Valuation Parameters** | **Symbol** | **Data** |  |
| Net income -- LTM | Y | $831000 |  |
| Core earnings -- LTM | Y | 1006000 |  |
| Net worth | B | 20139000 |  |
| Tangible net worth | B | 20139000 |  |
| Total assets | A | 174134000 |  |
| Expenses in conversion | X | 1500000 |  |
| Other proceeds not reinvested | O | 2708000 |  |
| ESOP purchase | E | 1472000 |  |
| ESOP expense (pre-tax) | F | 58741 |  |
| RSP purchase | M | 736000 |  |
| RSP expense (pre-tax) | N | 146853 |  |
| Stock option expense (pre-tax) | Q | 149776 |  |
| Cash contribution to foundation | C | 100000 |  |
| Stock contribution to foundation | K | 400000 |  |
| Option expense tax-deductible | D | 25.00 | % |
| Re-investment rate (after-tax) | R | 2.85 | % |
| Tax rate | T | 28.50 | % |
| Shares for EPS | S | 92.32 | % |
| **<u>Pro Forma Valuation Ratios at Midpoint Value</u>** |  |  |  |
| Price / LTM EPS | P/E | 17.86 | x |
| Price / Core EPS | P/E | 15.15 | x |
| Price / Book Value | P/B | 53.4 | % |
| Price / Tangible Book | P/TB | 53.4 | % |
| Price / Assets | P/A | 9.76 | % |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **<u>Pro Forma Calculation at Midpoint Value</u>** | **<u>Pro Forma Calculation at Midpoint Value</u>** |  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Based on</u> |
| &nbsp;&nbsp;V = | &nbsp;&nbsp;(**P/E** / S)\*((Y-R\*(O+X)-(F+N)\*(1-T)-(Q-Q\*D\*T))) | &nbsp;&nbsp;= | &nbsp;&nbsp;$18400000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[LTM earnings] |
|  | &nbsp;&nbsp;1 - (**P/E** / S) \* R |  |  |  |
| &nbsp;&nbsp;V = | &nbsp;&nbsp;(**P/E** / S)\*((Y-R\*(O+X)-(F+N)\*(1-T)-(Q-Q\*D\*T)) | &nbsp;&nbsp;= | &nbsp;&nbsp;$18400000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Core earnings] |
|  | &nbsp;&nbsp;1 - (**P/E** / S) \* R |  |  |  |
| &nbsp;&nbsp;V = | &nbsp;&nbsp;**P/B** \* (B - X - E - M - (C+K)\*(1-T))) | &nbsp;&nbsp;= | &nbsp;&nbsp;$18400000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Book value] |
|  | &nbsp;&nbsp;1 - **P/B** |  |  |  |
| &nbsp;&nbsp;V = | &nbsp;&nbsp;**P/TB** \* (B - X - E - M - (C+K)\*(1-T))) | &nbsp;&nbsp;= | &nbsp;&nbsp;$18400000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Tangible book] |
|  | &nbsp;&nbsp;1 - **P/TB** |  |  |  |
| &nbsp;&nbsp;V = | &nbsp;&nbsp;**P/A** \* (A - X - E - M - (C+K)\*(1-T)) | &nbsp;&nbsp;= | &nbsp;&nbsp;$18400000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Total assets] |
|  | &nbsp;&nbsp;1 - **P/A** |  |  |  |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Pro Forma** | **Pro Forma** | **Pro Forma** | **Pro Forma** | **Pro Forma** | **Pro Forma** | | | |
| **Valuation Range** | **Valuation Range** | **Valuation Range** | **Valuation Range** | **Valuation Range** | **Valuation Range** | **Valuation**<br>**Range** | **Offering**<br>**Range** | **Foundation**<br>**Shares** |
| Minimum | = | $18400000 | x | 0.8533 | = | $15700000 | $15300000 | $400000 |
| Midpoint | = | $18400000 | x | 1.0000 | = | $18400000 | $18000000 | $400000 |
| Maximum | = | $18400000 | x | 1.1467 | = | $21100000 | $20700000 | $400000 |
| Adj. Max. | = | $21100000 | x | 1.1493 | = | $24205000 | $23805000 | $400000 |

---

Feldman Financial Advisors, Inc.

**Exhibit IV-4**

**Comparative Valuation Ratio Analysis**

**Pro Forma Conversion Valuation**

Computed from Market Price Data as of February 21, 2023

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | | Peru | | | | |
|  | | Federal | Comparative | Comparative | All Public | All Public |
| Valuation |  | Savings | Group | Group | Thrifts (1) | Thrifts (1) |
| Ratio | Symbol | Bank | Average | Median | Average | Median |
| **Price / LTM EPS** | P/E |  | **19.4** | **19.2** | **15.4** | **13.5** |
| &nbsp;&nbsp;&nbsp;Minimum | (x) | **15.6** | -19.5% | -18.7% | 1.4% | 15.4% |
| &nbsp;&nbsp;&nbsp;Midpoint |  | **17.9** | -7.9% | -7.1% | 15.9% | 31.9% |
| &nbsp;&nbsp;&nbsp;Maximum |  | **20.0** | 3.1% | 4.0% | 29.8% | 47.7% |
| &nbsp;&nbsp;&nbsp;Adjusted Maximum |  | **22.2** | 14.6% | 15.6% | 44.2% | 64.2% |
| **Price / Core EPS** | P/E |  | **18.8** | **19.2** | **15.0** | **11.4** |
| &nbsp;&nbsp;&nbsp;Minimum | (x) | **13.2** | -29.9% | -31.6% | -12.1% | 15.9% |
| &nbsp;&nbsp;&nbsp;Midpoint |  | **15.2** | -19.3% | -21.2% | 1.2% | 33.4% |
| &nbsp;&nbsp;&nbsp;Maximum |  | **16.9** | -9.8% | -11.9% | 13.2% | 49.2% |
| &nbsp;&nbsp;&nbsp;Adjusted Maximum |  | **18.9** | 0.5% | -1.9% | 26.0% | 66.1% |
| &nbsp;&nbsp;&nbsp;**Price / Book Value** | P/B |  | **88.2** | **85.0** | **99.0** | **93.8** |
| &nbsp;&nbsp;&nbsp;Minimum | (%) | **48.9** | -44.5% | -42.4% | -50.6% | -47.8% |
| &nbsp;&nbsp;&nbsp;Midpoint |  | **53.4** | -39.5% | -37.2% | -46.1% | -43.1% |
| &nbsp;&nbsp;&nbsp;Maximum |  | **57.3** | -35.0% | -32.6% | -42.1% | -38.9% |
| &nbsp;&nbsp;&nbsp;Adjusted Maximum |  | **61.2** | -30.6% | -28.0% | -38.2% | -34.8% |
| &nbsp;&nbsp;&nbsp;**Price / Tangible Book** | P/TB |  | **88.5** | **85.0** | **108.8** | **97.2** |
| &nbsp;&nbsp;&nbsp;Minimum | (%) | **48.9** | -44.7% | -42.4% | -55.0% | -49.7% |
| &nbsp;&nbsp;&nbsp;Midpoint |  | **53.4** | -39.7% | -37.2% | -51.0% | -45.1% |
| &nbsp;&nbsp;&nbsp;Maximum |  | **57.3** | -35.3% | -32.6% | -47.4% | -41.1% |
| &nbsp;&nbsp;&nbsp;Adjusted Maximum |  | **61.2** | -30.9% | -28.0% | -43.8% | -37.1% |
| &nbsp;&nbsp;&nbsp;**Price / Total Assets** | P/A |  | **14.11** | **12.72** | **12.51** | **11.64** |
| &nbsp;&nbsp;&nbsp;Minimum | (%) | **8.44** | -40.2% | -33.7% | -32.6% | -27.5% |
| &nbsp;&nbsp;&nbsp;Midpoint |  | **9.76** | -30.8% | -23.3% | -22.0% | -16.1% |
| &nbsp;&nbsp;&nbsp;Maximum |  | **11.06** | -21.6% | -13.1% | -11.6% | -5.0% |
| &nbsp;&nbsp;&nbsp;Adjusted Maximum |  | **12.50** | -11.4% | -1.7% | 0.0% | 7.5% |

---

(1) Excludes companies subject to mutual holding company ownership or pending acquisition.

## Exhibit 99.4

**Exhibit 99.4**

![](tm238313d1_ex99-4img011.jpg)

Dear Valued Customer:

I am pleased to tell you about an investment opportunity and, just as importantly, to request your vote. Pursuant to a plan of conversion, Peru Federal Savings Bank ("Peru Federal") will convert from the mutual (meaning no stockholders) form of organization to the stock form of organization. To accomplish the conversion, PFS Bancorp, Inc. ("PFS Bancorp"), a newly formed Maryland corporation that will become the holding company of Peru Federal, is conducting an offering of its shares of common stock. Enclosed you will find a Prospectus, a Stock Order Form, Proxy Materials and a Questions and Answers Brochure describing the conversion and stock offering.

To further our commitment to our local community, we intend to establish and fund a charitable foundation, the Peru Federal Savings Charitable Foundation, Inc., as part of the conversion and stock offering. We intend to contribute to our charitable foundation 40,000 shares of common stock and $100,000 in cash, for an aggregate contribution of $500,000 based on the $10.00 per share purchase price.

The purpose of the charitable foundation is to provide financial support to charitable organizations in our market area and to enable the communities that we serve to share in our long-term growth. Our charitable foundation will be dedicated exclusively to community activities and the promotion of charitable causes, and may be able to support such activities in ways that are not presently available to us.

**THE PROXY VOTE:**

**Your vote is extremely important for us to complete the conversion and stock offering.** Although we have received conditional regulatory approval to implement the plan of conversion, we must receive the approval of the eligible depositors of Peru Federal. **NOT VOTING YOUR ENCLOSED PROXY CARD(S) WILL HAVE THE SAME EFFECT AS VOTING "AGAINST" THE PLAN OF CONVERSION AND "AGAINST" THE ESTABLISHMENT AND FUNDING OF THE CHARITABLE FOUNDATION. Note that you may receive more than one Proxy Card, depending on the ownership structure of your accounts at Peru Federal. Please vote all the Proxy Cards you receive — <u>none are duplicates</u>! To cast your vote, please sign and date each Proxy Card and return the card(s) in the Proxy Reply Envelope provided. Alternatively, you may vote by telephone or Internet by following the instructions on the Proxy Card.**

**OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "<u>FOR</u>" BOTH PROPOSALS.**

Please note:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The proceeds resulting from the sale of stock by PFS Bancorp will
 support our business strategy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• There will be no change to account numbers, interest rates or
 other terms of your deposit accounts or loans at Peru Federal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Deposit accounts will not be converted to stock. Your deposit
 accounts will continue to be insured by the FDIC, up to the maximum legal limits, without
 interruption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• You will continue to enjoy the same services with the same board
 of directors, management and staff.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Voting does not obligate you to purchase shares of common stock
 in our stock offering.

**THE STOCK OFFERING:**

**As an eligible depositor of Peru Federal, you have non-transferable rights, but no obligation, to subscribe for shares of common stock in our Subscription Offering before any shares are offered for sale to the general public.** The common stock is being offered for sale at $10.00 per share, and there will be no sales commission charged to purchasers in the stock offering. The enclosed Prospectus describes the stock offering in more detail. **Please read the Prospectus carefully before making an investment decision.**

If you are interested in purchasing shares of common stock, please complete the enclosed Stock Order Form and return it, with full payment, **by paying for overnight delivery to the indicated address on the Stock Order Form,** by hand-delivery to Peru Federal's main office, located at 1730 Fourth Street, Peru, Illinois, or by mail using the Stock Order Reply Envelope provided. **Original Stock Order Forms and full payment must be *received* (not postmarked) before 1:00 p.m., Central time, on** **<u> </u>, 2023.** If you are considering purchasing stock with funds you have in an IRA or other retirement account, please call our Stock Information Center *promptly* for guidance, because these orders require additional processing time.

I invite you to consider this opportunity to share in our future as a PFS Bancorp, Inc. stockholder. Thank you for your continued support as a Peru Federal customer.

Sincerely,

![](tm238313d1_ex99-4img012.jpg)

Eric J. Heagy

President, Chief Executive Officer and Chief Financial Officer

**This letter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus when accompanied by a stock order form. The shares of common stock being offered by the Prospectus are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.**

---

| |
|:---|
| **QUESTIONS?** |
| Call our Stock Information Center at 1-(877)<u> </u>-<u> </u>, |
| from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday, except bank holidays. |

---

PFS-M

![](tm238313d1_ex99-4img011.jpg)

Dear Valued Depositor:

I am pleased to tell you that pursuant to a plan of conversion, Peru Federal Savings Bank ("Peru Federal") will convert from the mutual (meaning no stockholders) form of organization to the stock form of organization.

To further our commitment to our local community, we intend to establish and fund a charitable foundation, the Peru Federal Savings Charitable Foundation, Inc., as part of the conversion and stock offering. We intend to contribute to our charitable foundation 40,000 shares of common stock and $100,000 in cash, for an aggregate contribution of $500,000 based on the $10.00 per share purchase price. The purpose of the charitable foundation is to provide financial support to charitable organizations in our market area and to enable the communities that we serve to share in our long-term growth. Our charitable foundation will be dedicated exclusively to community activities and the promotion of charitable causes, and may be able to support such activities in ways that are not presently available to us.

**THE PROXY VOTE:**

**Your vote is extremely important for us to complete the conversion and stock offering.** Although we have received conditional regulatory approval to implement the plan of conversion, we must receive the approval of the eligible depositors of Peru Federal. **NOT VOTING YOUR ENCLOSED PROXY CARD(S) WILL HAVE THE SAME EFFECT AS VOTING "AGAINST" THE PLAN OF CONVERSION AND "AGAINST" THE ESTABLISHMENT AND FUNDING OF THE CHARITABLE FOUNDATION. Note that you may receive more than one Proxy Card, depending on the ownership structure of your accounts at Peru Federal. Please vote all the Proxy Cards you receive — <u>none are duplicates</u>! To cast your vote, please sign and date each Proxy Card and return the card(s) in the Proxy Reply Envelope provided. Alternatively, you may vote by telephone or Internet by following the instructions on the Proxy Card.**

**OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "<u>FOR</u>" BOTH PROPOSALS.**

**THE STOCK OFFERING:**

Although you may vote on the plan of conversion, we regret that Peru Federal is unable to offer its shares of common stock to you because of the small number of customers in your jurisdiction makes registration or qualification of the common stock under your state securities laws prohibitively expensive or otherwise impractical.

Thank you for your continued support as a Peru Federal customer.

Sincerely,

![](tm238313d1_ex99-4img012.jpg)

Eric J. Heagy

President, Chief Executive Officer and Chief Financial Officer

**This letter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus when accompanied by a stock order form. The shares of common stock being offered by the Prospectus are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.**

---

| |
|:---|
| **QUESTIONS?** |
| Call our Stock Information Center at 1-(877)<u> </u>-<u> </u>, |
| from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday, except bank holidays. |

---

PFS-M-B

![](tm238313d1_ex99-4img011.jpg)

Dear Valued Depositor:

I am pleased to tell you that pursuant to a plan of conversion, Peru Federal Savings Bank ("Peru Federal") will convert from the mutual (meaning no stockholders) form of organization to the stock form of organization.

To further our commitment to our local community, we intend to establish and fund a charitable foundation, the Peru Federal Savings Charitable Foundation, Inc., as part of the conversion and stock offering. We intend to contribute to our charitable foundation 40,000 shares of common stock and $100,000 in cash, for an aggregate contribution of $500,000 based on the $10.00 per share purchase price. The purpose of the charitable foundation is to provide financial support to charitable organizations in our market area and to enable the communities that we serve to share in our long-term growth. Our charitable foundation will be dedicated exclusively to community activities and the promotion of charitable causes, and may be able to support such activities in ways that are not presently available to us.

**THE PROXY VOTE:**

**Your vote is extremely important for us to complete the conversion and stock offering.** Although we have received conditional regulatory approval to implement the plan of conversion, we must receive the approval of the eligible depositors of Peru Federal. **NOT VOTING YOUR ENCLOSED PROXY CARD(S) WILL HAVE THE SAME EFFECT AS VOTING "AGAINST" THE PLAN OF CONVERSION AND "AGAINST" THE ESTABLISHMENT AND FUNDING OF THE CHARITABLE FOUNDATION. Note that you may receive more than one Proxy Card, depending on the ownership structure of your accounts at Peru Federal. Please vote all the Proxy Cards you receive — <u>none are duplicates</u>! To cast your vote, please sign and date each Proxy Card and return the card(s) in the Proxy Reply Envelope provided. Alternatively, you may vote by telephone or Internet by following the instructions on the Proxy Card.**

**OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "<u>FOR</u>" BOTH PROPOSALS.**

**THE STOCK OFFERING:**

Although you may vote on the plan of conversion, we regret that Peru Federal is unable to offer its shares of common stock to you because of the small number of customers in your jurisdiction makes registration or qualification of the common stock under your state securities laws prohibitively expensive or otherwise impractical.

Thank you for your continued support as a Peru Federal customer.

Sincerely,

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Eric J. Heagy

President, Chief Executive Officer and Chief Financial Officer

**This letter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus when accompanied by a stock order form. The shares of common stock being offered by the Prospectus are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.**

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| **QUESTIONS?** |
| Call our Stock Information Center at 1-(877)<u> </u>-<u> </u>, |
| from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday, except bank holidays. |

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PFS-M-B

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Dear Potential Investor:

I am pleased to tell you about an investment opportunity. PFS Bancorp, Inc., a newly formed Maryland corporation and the proposed holding company of Peru Federal Savings Bank ("Peru Federal"), is offering shares of its common stock for sale at a price of $10.00 per share. No sales commission will be charged to purchasers in the stock offering. The stock offering is being conducted pursuant to a plan of conversion that provides for the conversion of Peru Federal from the mutual (meaning no stockholders) form of organization to the stock form of organization.

To further our commitment to our local community, we intend to establish and fund a charitable foundation, the Peru Federal Savings Charitable Foundation, Inc., as part of the conversion and stock offering. We intend to contribute to our charitable foundation 40,000 shares of common stock and $100,000 in cash, for an aggregate contribution of $500,000 based on the $10.00 per share purchase price. The purpose of the charitable foundation is to provide financial support to charitable organizations in our market area and to enable the communities that we serve to share in our long-term growth. Our charitable foundation will be dedicated exclusively to community activities and the promotion of charitable causes, and may be able to support such activities in ways that are not presently available to us.

Please read the enclosed Prospectus carefully before making an investment decision. If you are interested in purchasing shares of common stock, please complete the enclosed Stock Order Form and return it, with full payment, **by paying for overnight delivery to the indicated address on the Stock Order Form,** by hand-delivery to Peru Federal's main office, located at 1730 Fourth Street, Peru, Illinois, or by mail using the Stock Order Reply Envelope provided. **Original Stock Order Forms and full payment must be *received* (not postmarked) before 1:00 p.m., Central time, on** **<u> </u>, 2023.** If you are considering purchasing stock with funds you have in an IRA or other retirement account, please call our Stock Information Center *promptly* for guidance, because these orders require additional processing time.

If you have questions about our organization or purchasing shares, please refer to the enclosed Prospectus or call our Stock Information Center at the number shown below.

I invite you to consider this opportunity to share in our future as a PFS Bancorp, Inc. stockholder.

Sincerely,

![](tm238313d1_ex99-4img012.jpg)

Eric J. Heagy

President, Chief Executive Officer and Chief Financial Officer

**This letter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus when accompanied by a stock order form. The shares of common stock being offered by the Prospectus are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.**

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| **QUESTIONS?** |
| Call our Stock Information Center at 1-(877)<u> </u>-<u> </u>, |
| from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday, except bank holidays. |

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PFS-C

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**Dear Prospective Investor:**

Keefe, Bruyette & Woods, A Stifel Company has been retained by Peru Federal Savings Bank and its proposed holding company, PFS Bancorp, Inc., as marketing agent in connection with the stock offering by PFS Bancorp, Inc.

At the request of Peru Federal Savings Bank, we are enclosing a Prospectus and Stock Order Form regarding the offering of shares of PFS Bancorp, Inc. common stock. We encourage you to read the enclosed Prospectus carefully before making an investment decision. If you have questions after reading the enclosed material, please call the Stock Information Center at 1-(877)<u> </u>-<u> </u> , from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday, except bank holidays.

We have been asked to forward these documents to you in view of certain requirements of the securities laws of your jurisdiction. This is not a recommendation or solicitation for any action by you with regard to the enclosed material.

Sincerely,

![](tm238313d1_ex99-4img015.jpg)

*This letter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus when accompanied by a stock order form. The shares of common stock being offered by the Prospectus are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Keefe, Bruyette & Woods is a member of FINRA and SIPC.*

PFS-BD

**READ THIS FIRST**

**<u>Office of the Comptroller of the Currency Guidance <br> for Account Holders</u>**

Your financial institution is in the process of selling stock to the public in a mutual-to-stock conversion transaction. As an account holder at this institution, you have certain priority subscription rights to purchase stock in the stock offering. These priority subscription rights are non-transferable. If you subscribe for stock, you will be asked to sign a statement that the purchase is for your own account, and that you have no agreement or understanding regarding the subsequent sale or transfer of any shares you receive.

On occasion, unscrupulous people attempt to persuade account holders to transfer subscription rights, or to purchase shares in the stock offering based on the understanding that the shares will subsequently be transferred to others. Such arrangements violate federal regulations. If you participate in these schemes, you are breaking the law and may be subject to prosecution. If someone attempts to persuade you to participate in such a scheme, please contact the Office of the Comptroller of the Currency (OCC) Customer Assistance Group, toll-free, at 1-(800) 613-6743. The OCC is very interested in ensuring that the prohibitions on transfer of subscription rights are not violated.

How will you know if you are being approached illegally? Typically, a fraudulent opportunist will approach you and offer to "loan" you money to purchase a significant amount of stock in the stock offering. In exchange for that "loan" you most likely will be asked either to transfer control of any stock purchased with that money to an account the other person controls, or sell the stock and give the majority of the profits to the other person. You may be told, untruthfully, that there is no risk to you, that the practice is common, and even if you are caught, that your legal expenses will be covered.

On the back of this page is a list of some key concepts that you should keep in mind when considering whether to participate in a mutual-to-stock conversion offering. If you have questions, please contact Peru Federal Savings Bank's Stock Information Center at the toll-free number listed in the materials you are receiving. Alternatively, you can contact the OCC at: The Midwest Office located at 425 South Financial Place, Suite 1700, Chicago, Illinois 60605; (312) 360-8863.

*(over)*

**What Investors Need to Know**

Key concepts for investors to bear in mind when considering whether to participate in a conversion offering include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** **Know the Rules** — By law, account holders cannot sell or transfer their priority
 subscription rights, or the stock itself, prior to the completion of a financial institution's
 conversion. Moreover, account holders cannot enter into agreements or arrangements to sell
 or transfer either their subscription rights or the underlying conversion stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** **"Neither a Borrower nor a Lender Be"** — If someone offers to lend you money so that
 you can participate — or participate more fully — in a conversion, be extremely
 wary. Be even more wary if the source of the money is someone you do not know. The loan agreement
 may make you unable to certify truthfully that you are the true holder of the subscription
 rights and the true purchaser of the stock and that you have no agreements regarding the
 sale or transfer of the stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** **Watch Out for Opportunists** — The opportunist may tell you that he or she is a lawyer
 — or a consultant or a professional investor or some similarly impressive tale —
 who has experience with similar conversion transactions. The opportunist may go to extreme
 lengths to assure you that the arrangement you are entering into is legitimate. They might
 tell you that they have done scores of these transactions and that this is simply how they
 work. Or they might downplay the warnings or restrictions in the prospectus or stock order
 form, telling you that "everyone" enters into such agreements or that the deal
 they are offering is legitimate. They may also tell you that you have no risk in the transaction.
 The cold, hard truth is that these are lies, and if you participate, you are breaking the
 law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** **Get the Facts from the Source** — If you have any questions about the securities offering,
 ask your financial institution for more information. If you have any doubts about a transaction
 proposed to you by someone else, ask the financial institution whether the proposed arrangement
 is proper. You may be able to find helpful resources by visiting your financial institution.

The bottom line for investors is always to remember that if an opportunity sounds too good to be true, it probably is too good to be true.

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| &nbsp;&nbsp;![GRAPHIC](tm238313d1_ex99-4img001.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;REVOCABLE PROXY 1. The approval of a plan of conversion whereby Peru Federal Savings Bank will convert from the mutual form of organization to the stock form of organization and will become the wholly owned subsidiary of a new stock holding company to be known as PFS Bancorp, Inc., as described in more detail in the accompanying proxy statement. 2. The establishment of the Peru Federal Savings Charitable Foundation, Inc. and the contribution to it of 40,000 shares of common stock and $100,000 in cash, for an aggregate contribution of $500,000; and Such other business as may properly come before the Special Meeting or any adjournment thereof. Note: The board of directors is not aware of any other matter that may come before the Special Meeting of Members. This proxy is revocable and will be voted as directed, but if no instructions are specified, this proxy will be voted "FOR" each proposal, only if signed and dated. If any other business is presented at the Special Meeting of Members (the "Meeting"), including whether or not to adjourn the Meeting, this proxy will be voted by the proxies in their best judgment. This proxy also confers discretionary authority on the board of directors to vote with respect to any other business that may come before the Meeting or any adjournment of the Meeting. The undersigned acknowledges receipt from Peru Federal Savings Bank, before the execution of this proxy, of both Notice of Special Meeting of Members and the Proxy Statement for the Meeting. Signature: ______________________________________________________________ Date: ____________________, 2023 NOTE: Only one signature is required in the case of a joint account. Please sign your name exactly as it appears on this Proxy Card. When signing as attorney, executor, administrator, trustee, guardian, etc., please add your full title to your signature. Corporation or partnership Proxy Cards should be signed by an authorized officer. YOUR PROMPT VOTE IS IMPORTANT! NOT VOTING HAS THE SAME EFFECT AS VOTING "AGAINST" BOTH PROPOSALS Internet and telephone voting are quick and simple ways to vote, available through 11:59 p.m., Central time, on ________, 2023 FOLD AND DETACH THE PROXY CARD HERE FOR AGAINST CONTROL NUMBER 4 Please vote by marking one of the boxes as shown. If you vote by Internet or by telephone, you do NOT need to return your Proxy Card by mail. PLEASE VOTE ALL PROXY CARDS RECEIVED. NONE ARE DUPLICATES. (844) 258-8899 Use any touch-tone telephone to vote your proxy. Have your Proxy Card in hand when you call. You will be prompted to enter your 12 digit control number, located in the shaded box above. Each Proxy Card has a unique control number. myproxyvotecounts.com Use the Internet to vote your proxy. Have your Proxy Card in hand when you access the website via the URL on a computer or the QR code on a mobile device. You will be prompted to enter online your 12 digit control number, located in the shaded box above. Each Proxy Card has a unique control number. VOTE BY TELEPHONE (available 24 hours a day) VOTE BY INTERNET (available 24 hours a day) Mark, sign and date your Proxy Card and return it in the postage-paid Proxy Reply Envelope provided. VOTE BY MAIL OR OR PFS-PC FOR AGAINST |

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| &nbsp;&nbsp;![GRAPHIC](tm238313d1_ex99-4img002.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;REVOCABLE PROXY PERU FEDERAL SAVINGS BANK SPECIAL MEETING OF MEMBERS TO BE HELD ON JUNE __, 2023 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PERU FEDERAL SAVINGS BANK FOR USE AT THE SPECIAL MEETING OF MEMBERS TO BE HELD ON JUNE __, 2023, AND ANY ADJOURNMENTS OR POSTPONEMENTS OF THE SPECIAL MEETING, FOR THE PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE OF SPECIAL MEETING. YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH PROPOSAL. The above-signed being a member of Peru Federal Savings Bank hereby authorizes the full board of directors, and each of them, with full powers of substitution, to represent the above-signed at the Special Meeting of Members (the "Meeting") to be held on June __, 2023, at _:00 a.m., Central time, at the __________, Peru, Illinois and at any adjournment or postponement of the Meeting, to act with respect to all votes that the undersigned would be entitled to cast if then personally present, as set forth on the reverse side. Any member giving a proxy may revoke it at any time before it is voted by delivering to the Secretary of Peru Federal Savings Bank either a written revocation of the proxy, or a duly executed proxy bearing a later date, or by voting in person at the Meeting. (CONTINUED ON REVERSE SIDE) THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE PLAN OF CONVERSION AND "FOR" THE ESTABLISHMENT AND FUNDING OF OUR CHARITABLE FOUNDATION. NOT VOTING IS THE EQUIVALENT OF VOTING "AGAINST" BOTH PROPOSALS. PLEASE VOTE ALL CARDS THAT YOU RECEIVE. NONE ARE DUPLICATES. VOTING DOES NOT REQUIRE YOU TO PURCHASE SHARES OF PFS BANCORP, INC. COMMON STOCK IN THE STOCK OFFERING. FOLD AND DETACH THE PROXY CARD HERE PFS-PC |

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| &nbsp;&nbsp;![GRAPHIC](tm238313d1_ex99-4img003.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Questions and Answers About Our Conversion and Stock Offering |

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| &nbsp;&nbsp;![GRAPHIC](tm238313d1_ex99-4img004.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GENERAL — THE CONVERSION AND STOCK OFFERING Our board of directors has unanimously determined that the conversion and stock offering is in the best interests of our organization, our customers and the communities we serve. Q. What is the conversion and stock offering? A. Pursuant to our plan of conversion, Peru Federal Savings Bank ("Peru Federal") will convert from the mutual (meaning no stockholders) form of organization to the stock form of organization, through the sale of shares of PFS Bancorp, Inc. common stock. Upon completion of the conversion and stock offering, 100% of the common stock of PFS Bancorp, Inc. will be owned by stockholders, and PFS Bancorp, Inc. will own Peru Federal. Q. What are the reasons for the conversion and stock offering? A. Our primary reasons for converting to stock form and raising additional capital through the stock offering are: ● to increase capital to support future growth and profitability; ● to retain and attract qualified personnel by establishing stock-based benefit plans for management and employees; and ● to offer our customers and employees an opportunity to purchase an equity interest in Peru Federal by purchasing shares of common stock of PFS Bancorp, Inc. Q. Is Peru Federal considered "well-capitalized" for regulatory purposes? A. Yes. As of December 31, 2022, Peru Federal was considered "well-capitalized" for regulatory purposes. Q. Will customers notice any change in Peru Federal's day-to-day activities as a result of the conversion and stock offering? A. No. It will be business as usual. The conversion is an internal change to our corporate structure. There will be no change to our board of directors, management, and staff as a result of the conversion and stock offering. Peru Federal will continue to operate as an independent savings bank. Q. Will the conversion and stock offering affect customers' deposit accounts or loans? A. No. The conversion and stock offering will not affect the balance or terms of deposits or loans, and deposits will continue to be federally insured by the Federal Deposit Insurance Corporation up to the maximum legal limits and without interruption. Deposit accounts will not be converted to stock. THE CHARITABLE FOUNDATION Q. What is the Peru Federal Savings Charitable Foundation, Inc. and why is it being established in connection with the conversion? A. We intend to establish and contribute to the charitable foundation a total of 40,000 shares of our common stock and $100,000 in cash, for an aggregate contribution of $500,000 based on the $10.00 per share purchase price. The purpose of the charitable foundation is to provide financial support to charitable organizations in our market area and to enable the communities that we serve to share in our long-term growth. Our charitable foundation will be dedicated exclusively to community activities and the promotion of charitable causes, and may be able to support such activities in ways that are not presently available to us. Q. Will the charitable foundation be established and funded if the conversion and stock offering are not approved and completed? A. No. The charitable foundation will only be established and funded if both the plan of conversion and the charitable foundation are approved by our eligible depositors. However, if we receive all other approvals, we will be permitted to complete the conversion without the charitable foundation if the establishment and funding of the charitable foundation is not approved by depositors. THE PROXY VOTE Although we have received conditional regulatory approval, the plan of conversion and the establishment and funding of the charitable foundation are also subject to approval by Peru Federal's members (i.e. depositors of Peru Federal). Q. Why should I vote "FOR" both proposals? A. Your vote "FOR" both proposals is extremely important to us. Each eligible Peru Federal member as of ________, 2023 should have received a Proxy Card. These packages also included a Proxy Statement describing the plan of conversion and the charitable foundation, neither of which can be implemented without the approval of the members of Peru Federal. If you have more than one eligible account, you may receive multiple packages. Please open each package and vote all the Proxy Cards that were sent to you. Our board of directors believes that converting to a fully public ownership structure will best support our future growth. Voting does not obligate you to purchase shares of common stock in the stock offering. Q. What happens if I don't vote? A. Your vote is very important. Proxy Cards not voted will have the same effect as voting ''Against'' both proposals. Without sufficient favorable votes, we cannot complete the conversion and stock offering or establish and fund the charitable foundation. Q. How do I vote? A. You may vote by Internet or telephone by following the instructions on the proxy card. Internet and telephone voting is available 24 hours a day, and your vote will be recorded immediately. Alternatively, you may mark your This pamphlet answers questions about the conversion and stock offering. Investing in shares of common stock involves certain risks. Before making an investment decision, please read the enclosed Prospectus carefully, including the "Risk Factors" section. |

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| &nbsp;&nbsp;![GRAPHIC](tm238313d1_ex99-4img005.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vote, sign, date and mail the proxy card(s) in the enclosed proxy reply envelope today. Regardless of how you choose to cast your vote, please vote today. Not voting has the same effect as voting "Against" both proposals. Q. How many votes are available to me? A. Depositors of Peru Federal at the close of business on ________, 2023 are entitled to one vote for each $100 or fraction thereof on deposit. No depositor may cast more than 1,000 votes. Proxy Cards are not imprinted with your number of votes; however, votes will be automatically tallied by computer. Q. Why did I receive more than one Proxy Card? A. If you had more than one deposit account at Peru Federal at the close of business on ________, 2023, you may have received more than one Proxy Card, depending on the ownership structure of your account(s). Open all packages that you receive. There are no duplicate cards — please promptly vote all the Proxy Cards sent to you. Q. More than one name appears on my Proxy Card. Who must sign? A. The name(s) reflect the title of your account. Proxy Cards for joint accounts require the signature of only one of the account holders. Proxy Cards for trust or custodian accounts must be signed by the trustee or the custodian, not the listed beneficiary. THE STOCK OFFERING AND PURCHASING SHARES Q. How many shares are being offered for sale and at what price? A. PFS Bancorp, Inc. is offering for sale between 1,530,000 and 2,070,000 shares of common stock (subject to increase to 2,380,500 shares) at $10.00 per share. No sales commission will be charged to purchasers. Q. Who is eligible to purchase stock in the stock offering? A. Pursuant to the plan of conversion, non-transferable rights to subscribe for shares of PFS Bancorp, Inc. common stock in the Subscription Offering have been granted in the following order of priority: Priority #1 — Depositors with accounts at Peru Federal with aggregate balances of at least $50 as of the close of business on December 31, 2021; Priority #2 — Our tax-qualified employee benefit plans; Priority #3 — Depositors with accounts at Peru Federal with aggregate balances of at least $50 as of the close of business on March 31, 2023; and Priority #4 — Depositors of Peru Federal as of the close of business on ________, 2023. Shares of common stock not purchased in the Subscription Offering may be offered for sale to the public in a Community Offering, with a preference given to natural persons and trusts of natural persons residing in Bureau, LaSalle and Putnam Counties in Illinois. Shares not sold in the Subscription and Community Offerings may be offered for sale to the general public through a Syndicated Community Offering. Q. I am eligible to subscribe for shares of common stock in the Subscription Offering but am not interested in investing. May I allow someone else to use my Stock Order Form to take advantage of my priority as an eligible account holder? A. No. Subscription rights are non-transferable! Only those eligible to subscribe for common stock in the Subscription Offering, as listed above, may subscribe for shares in the Subscription Offering. To preserve subscription rights, the shares may only be registered in the name(s) of eligible account holder(s). On occasion, unscrupulous people attempt to persuade account holders to transfer subscription rights, or to subscribe shares in the offering based on an understanding that the shares will be subsequently transferred to others. Participation in such schemes is against the law and may subject involved parties to prosecution. If you become aware of any such activities, please notify our Stock Information Center promptly so that we can take the necessary steps to protect our eligible account holders' subscription rights in the Subscription Offering. Q. How may I order shares in the Subscription and Community Offerings? A. Shares can be ordered by completing an original Stock Order Form and returning it, with full payment, so that it is received (not postmarked) before the offering deadline. You may submit your Stock Order Form by paying for overnight delivery to the indicated address on the Stock Order Form, by hand-delivery to Peru Federal's main office, located at 1730 Fourth Street, Peru, Illinois, or by mail using the Stock Order Reply Envelope provided. Hand-delivered stock order forms will only be accepted at this location. Stock order forms may not be delivered to our other office. Please do not mail Stock Order Forms to Peru Federal. Q. What is the deadline for ordering shares? A. To purchase shares in the Subscription Offering, you must deliver a properly completed, signed original Stock Order Form, with full payment, so that it is received (not postmarked) before 1:00 p.m., Central time, on ________, 2023. Acceptable methods for delivery of Stock Order Forms are described above. Q. How may I pay for the shares? A. Payment for shares can be remitted in three ways: (1) By personal check, bank check or money order, made payable to PFS Bancorp, Inc. These will be deposited upon receipt. We cannot accept wires or third party checks. (2) By authorized deposit account withdrawal of funds from your Peru Federal deposit account(s). The Stock Order Form section titled "Method of Payment — Deposit Account Withdrawal" allows you to list the account number(s) and amount(s) to be withdrawn. Funds designated for direct withdrawal must be in the account(s) at the time the Stock Order Form is received. You may not authorize direct withdrawal from accounts with check-writing privileges. Please submit a check instead. If you request direct withdrawal from such accounts, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your checking account(s). Also, IRA or other retirement accounts held at Peru Federal may not be listed for direct withdrawal.  |

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| &nbsp;&nbsp;![GRAPHIC](tm238313d1_ex99-4img006.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See information on retirement accounts below. (3) By cash. Cash will only be accepted at Peru Federal's main office and will be converted to a bank check. Please do not mail cash! Q. Will I earn interest on my funds? A. Yes. If you pay by cash, personal check, bank check or money order, you will earn interest at 0.10% per annum, from the date your order is received until the completion of the conversion and stock offering. At that time, you will be issued a check for interest earned on these funds. If you pay for shares by authorizing a direct withdrawal from your Peru Federal deposit account(s), your funds will continue earning interest within the account at the contractual rate. The interest will remain in your account(s) when the designated withdrawal is made, upon completion of the conversion and stock offering. Q. Are there limits to how many shares I can order? A. Yes. The minimum order is 25 shares ($250). The maximum number of shares that may be purchased by an individual, or individuals acting through a single qualifying account held jointly is 25,000 shares ($250000). Additionally, no person or entity, together with any associate or group of persons acting in concert, may purchase more than 40,000 shares ($400000) in all categories of the stock offering combined. More detail on purchase limits, including the definition of "associate" and "acting in concert", can be found in the Prospectus section entitled "The Conversion and Stock Offering — Limitations on Common Stock Purchases". Q. May I use my Peru Federal individual retirement account ("IRA") to purchase shares? A. It's possible to use funds currently held in retirement accounts with Peru Federal. However, before you place your stock order, the funds you wish to use must be transferred to a self-directed retirement account maintained by an independent trustee or custodian, such as a brokerage firm. If you are interested in using IRA or any other retirement funds held at Peru Federal or elsewhere, please call our Stock Information Center for guidance as soon as possible but in no event later than two weeks before the ________, 2023 offering deadline. Your ability to use such funds for this purchase may depend on time constraints, because this type of purchase requires additional processing time, and may be subject to limitations imposed by the institution where the funds are held. Q. May I get a loan from Peru Federal to pay for shares? A. No. Peru Federal, by regulation, may not extend a loan for the purchase of PFS Bancorp, Inc. common stock in the offering. Similarly, you may not use existing Peru Federal line of credit checks to purchase stock in the offering. Q. May I change my mind and cancel my order after I place an order to subscribe for stock? A. No. After receipt, your executed Stock Order Form cannot be modified or revoked without our consent or unless the stock offering is terminated or is extended beyond ________, 2023 or the number of shares of common stock to be sold is increased to more than 2,380,500 shares or decreased to less than 1,530,000 shares. Q. Are directors and executive officers of Peru Federal planning to purchase stock? A. Yes! Directors and executive officers, together with their associates, are expected to subscribe for an aggregate of 155,000 shares ($1550000) or approximately 9.9% of the shares to be outstanding based on the sale of stock at the minimum of the offering range. Q. Will the common stock be insured? A. No. Like any common stock, PFS Bancorp, Inc.'s common stock will not be insured by the Federal Deposit Insurance Corporation. Q. Will dividends be paid on the stock? A. Following completion of the conversion and stock offering, PFS Bancorp, Inc.'s board of directors will have the authority to declare dividends on our shares of common stock. However, no decision has been made with respect to the payment of dividends. The payment and amount of any dividend payments will depend upon a number of factors, including, capital requirements, our financial condition and results of operations, other uses of funds for the long term value of stockholders, tax considerations, statutory and regulatory limitations, and general economic conditions. Q. How will the shares of PFS Bancorp, Inc. trade? A. We anticipate that the common stock sold in the offering will be quoted on the OTCQB Market operated by OTC Markets Group. Once the shares have begun trading, you may contact a firm offering investment services in order to buy or sell PFS Bancorp, Inc. common stock. Q. If I purchase shares in the offering, when will I receive my shares? A. All shares of PFS Bancorp, Inc. common stock sold in the stock offering will be issued in book-entry form on the books of our transfer agent, through the Direct Registration System. Paper stock certificates will not be issued. As soon as practicable after completion of the stock offering, our transfer agent will send, by first class mail, a statement reflecting your stock ownership. WHERE TO GET MORE INFORMATION Q. How can I get more information? A. For more information, refer to the enclosed Prospectus or call our Stock Information Center, at 1-(877) ___-____, from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday. The Stock Information Center will be closed on bank holidays. This brochure is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus when accompanied by a stock order form. The shares of common stock being offered by the Prospectus are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. |

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| &nbsp;&nbsp;![](tm238313d1_ex99-4img008.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IMPORTANT NOTICE IF YOU HAVE MORE THAN ONE ELIGIBLE VOTING ACCOUNT YOU MAY RECEIVE MULTIPLE PACKAGES. PLEASE OPEN EACH PACKAGE AND VOTE ALL THE PROXY CARDS THAT WERE SENT TO YOU. THEY DO NOT DUPLICATE EACH OTHER! THANK YOU! Questions? Call our Information Center, toll-free, at 1-(877)___-____ from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday, except bank holidays. This flyer is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus when accompanied by a stock order form. The shares of common stock being offered by the Prospectus are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. PFS-PF |

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![](tm238313d1_ex99-4img009.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;YOUR VOTE IS IMPORTANT! PLEASE VOTE THE ENCLOSED PROXY CARD! If you have not yet voted the Proxy Card(s) we recently mailed to you in a large white package, please vote the enclosed replacement Proxy Card. You may vote by mail using the enclosed envelope or follow the telephone or Internet voting instructions on the Proxy Card. PLEASE JOIN YOUR BOARD OF DIRECTORS IN VOTING "FOR" THE PLAN OF CONVERSION AND "FOR" THE ESTABLISHMENT AND FUNDING OF THE CHARITABLE FOUNDATION. Not voting has the same effect as voting "against" both proposals. Voting does not obligate you to purchase common stock in the stock offering. The Conversion will change our form of corporate structure, but will not result in changes to bank staff, management or your deposit accounts or loans at Peru Federal Savings Bank. Deposit accounts will not be converted to common stock. Deposit accounts will continue to be insured by the FDIC, up to the maximum legal limits and without interruption. IF YOU RECEIVE MORE THAN ONE OF THESE REMINDER MAILINGS, PLEASE VOTE EACH PROXY CARD RECEIVED. THEY DO NOT DUPLICATE EACH OTHER! QUESTIONS? Please call our Information Center at 1-(877) ___-____, from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday, except bank holidays. PFS-PG1<br>

![](tm238313d1_ex99-4img010.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Toppan Merrill 4079 Eureka Homestead Proxy Grams PG1 Proof 1 HAVE YOU VOTED YET? PLEASE VOTE THE ENCLOSED PROXY CARD! Our records indicate that you have not voted the Proxy Card(s) we mailed to you. If you are unsure whether you voted, please vote the enclosed replacement proxy card. Your vote will not be counted twice. Not voting has the same effect as voting "against" the plan of conversion and "against" the establishment and funding of the charitable foundation. YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" BOTH PROPOSALS. Voting does not obligate you to purchase shares of common stock during the stock offering, nor does it affect your Peru Federal Savings Bank deposit accounts or loans. IF YOU RECEIVE MORE THAN ONE OF THESE REMINDER MAILINGS, PLEASE VOTE EACH PROXY CARD RECEIVED. THEY DO NOT DUPLICATE EACH OTHER! QUESTIONS? Please call our Information Center at 1-(877) ___-____, from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday, except bank holidays. PFS-PG2<br>

![](tm238313d1_ex99-4img007.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Toppan Merrill 4079 Eureka Homestead Proxy Grams PG1 Proof 1 YOUR VOTE IS IMPORTANT! Not voting has the same effect as voting "against" the plan of conversion and "against" the establishment and funding of the charitable foundation. IN ORDER TO IMPLEMENT THE PLAN OF CONVERSION, WE MUST OBTAIN THE APPROVAL OF OUR VOTING MEMBERS. Please disregard this notice if you have already voted. If you are unsure whether you voted, Vote the enclosed replacement Proxy Card. Your vote will not be counted twice! IF YOU RECEIVE MORE THAN ONE OF THESE REMINDER MAILINGS, PLEASE VOTE EACH PROXY CARD RECEIVED. THEY DO NOT DUPLICATE EACH OTHER! Please note: Implementing the plan of conversion and establishing and funding the charitable foundation will not affect your deposit accounts or loans at Peru Federal Savings Bank. Deposit accounts will continue to be insured by the FDIC, up to the maximum legal limits and without interruption. Voting does not obligate you to purchase common stock in the stock offering. THANK YOU VERY MUCH! QUESTIONS? Please call our Information Center at 1-(877) ___-____, from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday, except bank holidays. PFS-PG3<br>

## Exhibit 99.5

**Exhibit 99.5**

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| &nbsp;&nbsp;![GRAPHIC](tm238313d1_ex99-5img001.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ORDER DEADLINE & DELIVERY: A Stock Order Form, properly completed and with full payment, must be received (not postmarked) before 1:00 p.m., Central time, on ________, 2023. Subscription rights will become void after the deadline. Stock Order Forms can be delivered by paying for overnight delivery to the Stock Information Center address on this form, by hand-delivery to Peru Federal Savings Bank's main office, located at 1730 Fourth Street, Peru, Illinois, or by using the Stock Order Reply Envelope provided. Hand-delivered stock order forms will only be accepted at this location. You may not deliver this form to our other office. Do not mail Stock Order Forms to Peru Federal Savings Bank. Faxes or copies of this form will not be accepted. STOCK ORDER FORM SEND OVERNIGHT PACKAGES TO: Stock Information Center c/o Keefe, Bruyette & Woods 18 Columbia Turnpike, Suite 100 Florham Park, NJ 07932 1(877) ___-____ For Internal Use Only BATCH #_____________ ORDER #____________ PRIORITY #_____________ REC'D__________________________________ C _______________________ PLEASE PRINT CLEARLY AND COMPLETE ALL APPLICABLE SHADED AREAS. READ THE ENCLOSED STOCK ORDER FORM INSTRUCTIONS (BLUE SHEET) AS YOU COMPLETE THIS FORM. SUBSCRIPTION (1) NUMBER OF SHARES PRICE PER SHARE (2) TOTAL PAYMENT DUE X $10.00 = (4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL The undersigned authorizes withdrawal from the Peru Federal Savings Bank deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds designated for withdrawal must be in the listed account(s) at the time this form is received. IRA and other retirement accounts held at Peru Federal Savings Bank and accounts with check-writing privileges may NOT be listed for direct withdrawal below. (3) METHOD OF PAYMENT – CASH, CHECK OR MONEY ORDER Enclosed is a personal check, bank check or money order, from the purchaser, made payable to PFS Bancorp, Inc. in the amount of: Wire transfers and third party checks will not be accepted for this purchase. Checks and money orders will be cashed upon receipt. Peru Federal Savings Bank line of credit checks may not be remitted as payment. Cash will only be accepted at Peru Federal Savings Bank's main office. (6) MANAGEMENT Check if you are a PFS Bancorp, Inc. or Peru Federal Savings Bank: Director Officer Immediate family member, as defined in the Stock Order Form Instructions (7) MAXIMUM PURCHASER IDENTIFICATION Check here if you, individually or together with others (see Section 8), are subscribing in the Subscription Offering for the maximum purchase allowed and are interested in purchasing more shares if the maximum purchase limitation(s) is/are increased. If you do not check the box, you will not be contacted and resolicited in the event the maximum purchase limitations are increased. (8) ASSOCIATES/ACTING IN CONCERT Check here if you, or any associate or persons acting in concert with you, have submitted other orders for shares in the Subscription Offering. If you check the box, list below all other orders submitted by you or your associates or by persons acting in concert with you. (continued on reverse side of this form) (9) STOCK REGISTRATION The name(s) and address that you provide below will be reflected on your stock ownership statement, and will be used for other communications related to this order. Please PRINT clearly and use full first and last name(s), not initials. If purchasing in the Subscription Offering, you cannot add the names of others for joint stock registration unless they are also named on the qualifing deposit or loan account. See Stock Order Form Instructions for further guidance. Individual Tenants in Common Uniform Transfers to Minors Act (for reporting SSN, use minor's) FOR TRUSTEE/BROKER USE ONLY: Joint Tenants Corporation Partnership Trust – Under Agreement Dated___________ Other ___________ IRA (SSN of Beneficial Owner) ____-____ - ____ (10) ACKNOWLEDGMENT AND SIGNATURE(S) I understand that, to be effective, this form, properly completed, together with full payment, must be received (not postmarked) before 1:00 p.m., Central time, on ________ , 2023, otherwise this form and all subscription rights will be void. (continued on reverse side of this form) ORDER NOT VALID UNLESS SIGNED ONE SIGNATURE REQUIRED, UNLESS SECTION 4 OF THIS FORM INCLUDES ACCOUNTS REQUIRING MORE THAN ONE SIGNATURE TO AUTHORIZE WITHDRAWAL. IF SIGNING AS A CUSTODIAN, TRUSTEE, CORPORATE OFFICER, ETC., PLEASE INCLUDE YOUR FULL TITLE. Signature (title, if applicable) Date Signature (title, if applicable) Date Minimum Number of Shares: 25 ($250). Maximum Number of Shares: 25,000 ($250000). See Stock Order Form Instructions for more information regarding maximum number of shares. $.00 $.00 For Internal Use Only Peru Federal Savings Bank Deposit Account Number Withdrawal Amount(s) $.00 $.00 Total Withdrawal Amount $.00 ATTACH A SEPARATE PAGE IF ADDITIONAL SPACE IS NEEDED. (5) PURCHASER INFORMATION Subscription Offering. Check the one box that applies, as of the earliest eligibility date, to the purchaser(s) listed in Section 9: a. Depositor of Peru Federal Savings Bank with aggregate balances of at least $50 at the close of business on December 31, 2021. b. Depositor of Peru Federal Savings Bank with aggregate balances of at least $50 at the close of business on March 31, 2023. c. Depositors of Peru Federal Savings Bank as of the close of business on _______, 2023. Community Offering. If (a), (b) or (c) above do not apply to the purchaser(s) listed in Section 9, check the first box that applies to this order: d. You are a resident of Bureau, LaSalle or Putnam Counties, Illinois. e. You are placing an order in the Community Offering, but (d) above does not apply. ACCOUNT INFORMATION – SUBSCRIPTION OFFERING If you checked box (a), (b) or (c) under ''Subscription Offering,'' please provide the following information as of the eligibility date under which purchaser(s) listed in Section 9 below qualify in the Subscription Offering: NOTE: NOT LISTING ALL ELIGIBLE ACCOUNTS, OR PROVIDING INCORRECT OR INCOMPLETE INFORMATION, COULD RESULT IN THE LOSS OF ALL OR PART OF ANY SHARE ALLOCATION. ATTACH A SEPARATE PAGE IF ADDITIONAL SPACE IS NEEDED. Deposit Account Title (Name(s) on Account) Peru Federal Savings Bank Deposit Account Number Name(s) listed in Section 9 on other Stock Order Forms Number of shares Name(s) listed in Section 9 on other Stock Order Forms Number of shares First Name, Middle Initial, Last Name Reporting SSN/ Tax ID No. First Name, Middle Initial, Last Name SSN/Tax ID No. Street Daytime Phone # City State Zip County (Important) Evening Phone # PFS-SOF (over) |

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| &nbsp;&nbsp;![GRAPHIC](tm238313d1_ex99-5img002.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) ASSOCIATES/ACTING IN CONCERT (continued from front of Stock Order Form) Associate – The term "associate" of a person means: (1) any corporation or organization other than Peru Federal Savings Bank or PFS Bancorp, Inc. or a majority-owned subsidiary of these entities, of which the person is a senior officer, partner or 10% or greater beneficial stockholder; (2) any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a fiduciary capacity excluding any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee or in a fiduciary capacity; and (3) any blood or marriage relative of the person, who either resides with the person or who is a director or officer of Peru Federal Savings Bank or PFS Bancorp, Inc. Acting in concert – The term "acting in concert" means: (1) knowing participation in a joint activity or parallel action towards a common goal whether or not pursuant to an express agreement; or (2) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement, or other arrangement, whether written or otherwise. In general, a person or company that acts in concert with another person or company ("other party") shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated. Our directors are not treated as associates of each other solely because of their membership on the board of directors. We have the right to determine, in our sole discretion, whether purchasers are associates or acting in concert. Persons having the same address or exercising subscription rights through qualifying accounts registered to the same address generally will be assumed to be associates of, and acting in concert with, each other. Please see the Prospectus section entitled "The Conversion and Stock Offering – Limitations on Common Stock Purchases" for more information on purchase limitations. (10) ACKNOWLEDGMENT AND SIGNATURE(S) (continued from front of Stock Order Form) I agree that, after receipt by PFS Bancorp, Inc., this Stock Order Form may not be modified or canceled without PFS Bancorp, Inc.'s consent, and that if withdrawal from a deposit account has been authorized, the authorized amount will not otherwise be available for withdrawal. Under penalty of perjury, I certify that (1) the Social Security Number or Tax ID information and all other information provided hereon are true, correct and complete, (2) I am purchasing shares solely for my own account and that there is no agreement or understanding regarding the sale or transfer of such shares, or my right to subscribe for shares, and (3) I am not subject to backup withholding tax [cross out (3) if you have been notified by the IRS that you are subject to backup withholding]. I acknowledge that my order does not conflict with the overall purchase limitation of $400,000 in all categories of the offering combined, for any person or entity, together with any associate or group of persons acting in concert, as set forth in the plan of conversion and the Prospectus dated ________, 2023. Subscription rights pertain to those eligible to subscribe in the Subscription Offering. Subscription rights are only exercisable by completing and submitting a Stock Order Form, with full payment for the shares subscribed for. Federal regulations prohibit any person from transferring or entering into any agreement directly or indirectly to transfer the legal or beneficial ownership of subscription rights, or the underlying securities, to the account of another. I ACKNOWLEDGE THAT THE SHARES OF COMMON STOCK ARE NOT DEPOSITS OR SAVINGS ACCOUNTS AND ARE NOT INSURED OR GUARANTEED BY PERU FEDERAL SAVINGS BANK, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY. If anyone asserts that the shares of common stock are federally insured or guaranteed, or are as safe as an insured deposit, I should call the Office of the Comptroller of the Currency. I further certify that, before subscribing for shares of the common stock of PFS Bancorp, Inc., I received the Prospectus dated ________, 2023, and I have read the terms and conditions described in the Prospectus, including disclosure concerning the nature of the security being offered and the risks involved in the investment, described by PFS Bancorp, Inc. in the "Risk Factors" section, beginning on page __. Risks include, but are not limited to the following: Risks Related to Our Lending Activities 1. Our commercial real estate loans and agricultural real estate loans involve credit risks that could adversely affect our financial condition and results of operations. 2. Our construction and land development loans involve credit risks that could adversely affect our financial condition and results of operations. 3. If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings could decrease. 4. We are subject to environmental liability risk associated with lending activities or properties we own. Risks Related to Market Interest Rates 5. The reversal of the historically low interest rate environment is likely to adversely affect our net interest income and profitability. 6. Future changes in interest rates could reduce our profits and asset values. Risks Related to Laws and Regulations 7. Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations. 8. Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions. 9. Monetary policies and regulations of the Federal Reserve Board could adversely affect our business, financial condition and results of operations. 10. We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors. 11. We are also a smaller reporting company, and even if we no longer qualify as an emerging growth company, any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to smaller reporting companies could make our common stock less attractive to investors. Risks Related to Economic Conditions 12. Inflation can have an adverse impact on our business and on our customers. 13. We have a high concentration of loans secured by real estate in our market area. Adverse economic conditions, both generally and in our market area, could adversely affect our financial condition and results of operations. 14. A worsening of economic conditions could reduce demand for our products and services and/or increase our level of non-performing loans, which could adversely affect our financial condition and results of operations. Risks Related to Competitive Matters 15. Strong competition within our market area may limit our growth and profitability. 16. Our small size makes it more difficult for us to compete. Risks Related to Operational Matters 17. We face significant operational risks because of our reliance on technology. Our information technology systems may be subject to failure, interruption or security breaches. 18. We depend on our management team to implement our business strategy and execute successful operations and we could be harmed by the loss of their services. 19. We are a community bank and our ability to maintain our reputation is critical to the success of our business. The failure to do so may materially adversely affect our performance. 20. Our funding sources may prove insufficient to replace deposits at maturity and support our future growth. Risks Related to Accounting Matters 21. Changes in management's estimates and assumptions may have a material impact on our consolidated financial statements and our financial condition or operating results. 22. Changes in accounting standards could affect reported earnings. Risks Related to the Stock Offering 23. We will have a relatively high capital level after the completion of the stock offering. We expect our return on equity to be low following the conversion and stock offering, which could negatively affect the trading price of our shares of common stock. 24. The future price of our shares of common stock may be less than the $10.00 purchase price per share in the stock offering. 25. There will be a limited trading market in our common stock, which could hinder your ability to sell our common stock and may lower the market price of the stock. 26. A significant percentage of our common stock will be held by our directors and executive officers and benefit plans. 27. Our failure to effectively deploy the net proceeds may have an adverse effect on our financial performance. 28. The cost of additional finance and accounting systems, procedures, compliance and controls in order to satisfy our new public company reporting requirements will increase our expenses. 29. Our stock-based benefit plans will increase our expenses and reduce our income. 30. The implementation of stock-based benefit plans may dilute your ownership interest. Historically, stockholders have approved these stock-based benefit plans. 31. We have not determined when we will adopt one or more new stock-based benefit plans. Stock-based benefit plans adopted more than 12 months following the completion of the conversion may exceed regulatory restrictions on the size of stock-based benefit plans adopted within 12 months, which would further increase our costs. 32. Our stock value may be negatively affected by applicable regulations that restrict stock repurchases. 33. Various factors may make takeover attempts more difficult to achieve. 34. Our articles of incorporation provide that, subject to limited exception, state and federal courts in the State of Maryland are the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, and other employees. 35. You may not revoke your decision to purchase PFS Bancorp common stock in the subscription offering or in any community offering after you send us your stock order form. 36. The distribution of subscription rights could have adverse income tax consequences. Risks Related to the Charitable Foundation 37. The contribution to the charitable foundation will dilute your ownership interest and adversely affect net income in 2023. 38. Our contribution to the charitable foundation may not be tax deductible, which could reduce our profits. By executing this form, the investor is not waiving any rights under federal or state securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. STOCK ORDER FORM – SIDE 2 PFS-SOF See Front of Stock Order Form  |

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| &nbsp;&nbsp;![GRAPHIC](tm238313d1_ex99-5img003.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFS BANCORP, INC. STOCK INFORMATION CENTER: 1-(877) ___-____ STOCK ORDER FORM INSTRUCTIONS – SIDE 1 Sections (1) and (2) – Number of Shares and Total Payment Due. Indicate the Number of Shares that you wish to subscribe for and the Total Payment Due. Calculate the Total Payment Due by multiplying the Number of Shares by the $10.00 price per share. The minimum purchase is 25 shares ($250). The maximum allowable purchase by an individual, or individuals on a single qualifying account held jointly is 25,000 shares ($250000). Further, no person or entity, together with any associate or group of persons acting in concert, may purchase more than 40,000 shares ($400000) in all categories of the offering combined. Please see the Prospectus section entitled "The Conversion and Stock Offering – Limitations on Common Stock Purchases" for more specific information. By signing this form, you are certifying that your order does not conflict with these purchase limitations. Section (3) – Method of Payment – Check, Money Order or Cash. Payment may be made by including with this form a personal check, bank check or money order, from the purchaser, made payable to PFS Bancorp, Inc. Cash will only be accepted at Peru Federal Savings Bank's main office and will be converted to a bank check. These will be deposited upon receipt. The funds remitted by personal check must be available within the account(s) when your Stock Order Form is received. Indicate the amount remitted. Interest will be calculated at 0.10% per annum from the date payment is processed until the stock offering is completed, at which time a subscriber will be issued a check for interest earned. Please do not mail cash. Peru Federal Savings Bank line of credit checks, wire transfers or third party checks will not be accepted for this purchase. Section (4) – Method of Payment – Deposit Account Withdrawal. Payment may be made by authorizing a direct withdrawal from your Peru Federal Savings Bank deposit account(s). Indicate the account number(s) and the amount(s) you wish withdrawn. Attach a separate page, if necessary. Funds designated for withdrawal must be available within the account(s) at the time this Stock Order Form is received. Upon receipt of this order, we will place a hold on the amount(s) designated by you – the funds will be unavailable to you for withdrawal thereafter. The funds will continue to earn interest within the account at the contractual rate until the stock offering is completed. There will be no early withdrawal penalty for withdrawal from a Peru Federal Savings Bank certificate of deposit (CD) account. You may not designate accounts with check-writing privileges. Please submit a check instead. If you request direct from such accounts, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your checking account(s). Additionally, you may not designate direct withdrawal from a Peru Federal Savings Bank IRA or other retirement accounts. For guidance on using retirement funds, whether held at Peru Federal Savings Bank or elsewhere, please contact the Stock Information Center as soon as possible – preferably at least two weeks before the ________, 2023 offering deadline. See the Prospectus section entitled "The Conversion and Stock Offering – Procedure for Purchasing Shares in the Subscription Offering and any Community Offering – Using Individual Retirement Account Funds." Your ability to use retirement account funds to purchase shares cannot be guaranteed and depends on various factors, including timing constraints and the institution where those funds are currently held. Section (5) – Purchaser Information. Please check the one box that applies to the purchaser(s) listed in Section 9 of this form. Purchase priorities in the Subscription Offering are based on eligibility dates. Boxes (a), (b) and (c) refer to the Subscription Offering. If you checked box (a) or (b) or (c), list all Peru Federal Savings Bank deposit account numbers that the purchaser(s) had ownership in as of the applicable eligibility date. Include all forms of account ownership (e.g., individual, joint, IRA, etc.). If purchasing shares for a minor, list only the minor's eligible accounts. If purchasing shares for a corporation or partnership, list only that entity's eligible accounts. Attach a separate page, if necessary. Failure to complete this section, or providing incorrect or incomplete information, could result in a loss of part or all of your share allocation in the event of an oversubscription. Boxes (d) and (e) refer to the Community Offering. Orders placed in the Subscription Offering will take priority over orders placed in the Community Offering. See the Prospectus section entitled "The Conversion and Stock Offering" for further details about the Subscription and Community Offerings. Section (6) – Management. Check the box if you are a Peru Federal Savings Bank or PFS Bancorp, Inc. director, officer or a member of their immediate family. "Immediate family" includes spouse, parents, siblings and children who live in the same house as the director or officer. Section (7) – Maximum Purchaser Identification. Check the box, if applicable. Failure to check the box will result in you not receiving notification in the event the maximum purchase limit(s) is/are increased. If you checked the box but have not subscribed for the maximum amount in the Subscription Offering, you will not receive this notification. Section (8) – Associates/Acting in Concert. Check the box, if applicable, and provide the requested information. Attach a separate page if necessary. Section (9) – Stock Registration. Clearly PRINT the name(s) in which you want the shares registered and the mailing address for all correspondence related to your order, including a stock ownership statement. Each Stock Order Form will generate one stock ownership statement, subject to the stock allocation provisions described in the Prospectus. IMPORTANT: Subscription rights are non-transferable. If placing an order in the Subscription Offering, you cannot add the names of persons/entities who do not have subscription rights or who qualify only in a lower purchase priority than yours. A Social Security Number or Tax ID Number must be provided. The first number listed will be identified with the stock for tax reporting purposes. Listing at least one phone number is important in the event we need to contact you about this form. NOTE FOR FINRA MEMBERS: If you are a member of the Financial Industry Regulatory Authority ("FINRA"), or a person affiliated or associated with a FINRA member, you may have additional reporting requirements. Please report this subscription in writing to the applicable department of the FINRA member firm within one day of payment thereof. PFS-SOI (over) |

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| &nbsp;&nbsp;![GRAPHIC](tm238313d1_ex99-5img004.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFS BANCORP, INC. STOCK INFORMATION CENTER: 1-(877) ___-____ STOCK ORDER FORM INSTRUCTIONS – SIDE 2 Form of Stock Ownership. For reasons of clarity and standardization, the stock transfer industry has developed uniform stockholder registrations for issuance of stock ownership statements. Beneficiaries may not be named on stock registrations. If you have any questions on wills, estates, beneficiaries, etc., please consult your legal advisor. When registering stock, do not use two initials – use the full first name, middle initial and last name. Omit words that do not affect ownership such as "Dr." or "Mrs." Check the one box that applies. Buying Stock Individually – Used when shares are registered in the name of only one owner. To qualify in the Subscription Offering, the individual named in Section 9 of the Stock Order Form must have been an eligible depositor at Peru Federal Savings Bank as of the close of business on December 31, 2021, March 31, 2023 or ________, 2023. Buying Stock Jointly – To qualify in the Subscription Offering, the persons named in Section 9 of the Stock Order Form must have been an eligible depositor at Peru Federal Savings Bank as of the close of business on December 31, 2021, March 31, 2023 or ________, 2023. Joint Tenants – Joint Tenancy (with Right of Survivorship) may be specified to identify two or more owners where ownership is intended to pass automatically to the surviving tenant(s). All owners must agree to the sale of shares. Tenants in Common – May be specified to identify two or more owners where, upon the death of one co-tenant, ownership of the stock will be held by the surviving co-tenant(s) and by the heirs of the deceased co-tenant. All owners must agree to the sale of shares. Buying Stock for a Minor – Shares may be held in the name of a custodian for a minor under the Uniform Transfer to Minors Act. To qualify in the Subscription Offering, the minor (not the custodian) named in Section 9 of the Stock Order Form must have been an eligible depositor at Peru Federal Savings Bank as of the close of business on December 31, 2021, March 31, 2023 or ________, 2023. The standard abbreviation for custodian is "CUST." The Uniform Transfer to Minors Act is "UTMA." Include the state abbreviation. For example, stock held by John Smith as custodian for Susan Smith under the IL Uniform Transfer to Minors Act, should be registered as John Smith CUST Susan Smith UTMA-IL (list only the minor's social security number). Buying Stock for a Corporation/Partnership – On the first name line indicate the name of the corporation or partnership and indicate the entity's Tax ID Number for reporting purposes. To qualify in the Subscription Offering, the corporation or partnership named in Section 9 of the Stock Order Form must have been an eligible depositor at Peru Federal Savings Bank as of the close of business on December 31, 2021, March 31, 2023 or ________, 2023. Buying Stock in a Trust/Fiduciary Capacity – Indicate the name of the fiduciary and the capacity under which the fiduciary is acting (for example, "Executor"), or name of the trust, the trustees and the date of the trust. Indicate the Tax ID Number to be used for reporting purposes. To qualify in the Subscription Offering, the entity named in Section 9 of the Stock Order Form must have been an eligible depositor at Peru Federal Savings Bank as of the close of business on December 31, 2021, March 31, 2023 or ________, 2023. Buying Stock in a Self-Directed IRA (for trustee/broker use only) – Registration should reflect the custodian or trustee firm's registration requirements. For example, on the first name line, indicate the name of the brokerage firm, followed by CUST or TRUSTEE. On the second name line, indicate the name of the beneficial owner (for example, "FBO JOHN SMITH IRA"). You can indicate an account number or other underlying information and the custodian or trustee firm's address and department to which all correspondence should be mailed related to this order, including a stock ownership statement. Indicate the TAX ID Number under which the IRA account should be reported for tax purposes. To qualify in the Subscription Offering, the beneficial owner named in Section 9 of this form must have been an eligible depositor at Peru Federal Savings Bank as of the close of business on December 31, 2021, March 31, 2023 or ________, 2023. Section (10) – Acknowledgment and Signature(s). Sign and date the Stock Order Form where indicated. Before you sign, please carefully review the information you provided and read the acknowledgment. Verify that you have printed clearly and completed all applicable shaded areas on the Stock Order Form. Only one signature is required, unless any account listed in Section 4 requires more than one signature to authorize a withdrawal. Please review the Prospectus carefully before making an investment decision. Deliver your completed original Stock Order Form, with full payment or deposit account withdrawal authorization, so that it is received (not postmarked) before 1:00 p.m., Central time, on ________, 2023. Stock Order Forms can be delivered by paying for overnight delivery to the Stock Information Center address on the front of the Stock Order Form, by hand-delivery to Peru Federal Savings Bank's main office, located at 1730 Fourth Street, Peru, Illinois, or by using the enclosed postage paid Stock Order Reply Envelope. Hand-delivered stock order forms will only be accepted at this location. You may not deliver this from to our other office. Please do not mail Stock Order forms to Peru Federal Savings Bank. We are not required to accept Stock Order Forms that are found to be deficient or incorrect, or that do not include proper payment or the required signature. Faxes or copies of this form are not required to be accepted. OVERNIGHT DELIVERY can be made to the Stock Information Center address provided on the front of the Stock Order Form. QUESTIONS? Call our Stock Information Center at 1-(877) ___-____, from 9:00 a.m. to 3:00 p.m., Central time, Monday through Friday. The Stock Information Center will be closed on bank holidays. PFS-SOI |

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## Ex-Filing

**Exhibit 107**

**Calculation of Filing Fee Tables**

**Form S-1**

(Form Type)

**PFS Bancorp, Inc.**

(Exact Name of Registrant as Specified in its Charter)

<u>Table 1: Newly Registered Securities</u>

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | Security Type | Security Class Title | Fee Calculation Rule | Amount Registered | Proposed Maximum Aggregate Offering Price Per Unit | Maximum Aggregate Offering Price (1) | Fee Rate | Amount of Registration Fee |
| Fees to be paid | Equity | Common stock, $0.01 par value per share | Rule 457(a) | 2420500 | $10.00 | $24205000 | &nbsp;&nbsp;&nbsp;&nbsp;0.00011020 | &nbsp;&nbsp;&nbsp;&nbsp;$2667.39 |
|  | Total Offering Amounts | Total Offering Amounts | Total Offering Amounts | Total Offering Amounts |  | $24205000 |  | $2667.39 |
|  | Total Fees Previously Paid | Total Fees Previously Paid | Total Fees Previously Paid | Total Fees Previously Paid |  |  |  | $0 |
|  | Total Fee Offsets | Total Fee Offsets | Total Fee Offsets | Total Fee Offsets |  |  |  | - |
|  | Net Fee Due | Net Fee Due | Net Fee Due | Net Fee Due |  |  |  | $2667.39 |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Estimated solely for the purpose of calculating the registration
fee.